Massachusetts Shows Why Obamacare’s Going to Drive Higher Costs

Published February 12, 2013

A similar model, a similar result. Massachusetts is the model for President Obama’s national health care overhaul, and there, insurers continue to see higher costs despite efforts to bend the cost curve, including all-out government price controls.

Here’s the latest from the Boston Globe:

Despite more modest increases in recent years and a state push to hold down costs, the message from health insurance executives gathered here Thursday for a market outlook seminar was clear: Massachusetts health spending is heading up in 2013.

Representatives from the state’s nonprofit health plans as well as national for-profit insurers doing business in Massachusetts estimated the “medical cost trend,” a key industry measure, will climb between 6 and 12 percent this year — higher than last year’s cost bump and more than double the 3.6 percent increase set as a target in a state law passed last year.

Medical cost trend is a mix of what doctors and hospitals bill insurers for care and the volume of services and procedures performed. Over the past five years, health care providers have come under pressure from payers and state officials to charge less, while many people have postponed elective surgeries and other care in a weak economy.

The new projections of accelerating costs are a sobering sign those moderating trends may be fading. The market outlook was discussed at an event hosted by the New England Employee Benefits Council, a trade group for insurance brokers and company benefits managers…

Among the cost drivers cited by executives were an improving economy where more ­people have insurance and can ­afford to pay for care, the influenza outbreak in Massachusetts this winter, a continuing rise in obesity, the impact of new taxes and rules under President Obama’s health care overhaul, and anticipated further cuts in Medicaid and Medicare, the government health insurance program for low-income and older residents.

Speakers at Thursday’s event weren’t in complete agreement. While all said costs will be climbing this year, ­Massachusetts nonprofit executives said they expected a 6 to 8 percent boost in the trend, while the national carriers said the increase would range from 7 to 12 percent.

The mandate and price control approach didn’t bend the cost curve in Massachusetts, and it won’t nationally, either.