AG REPORT SHOWS COMMERCIAL HEALTH CARE SPENDING CONCENTRATED ON HIGH INCOME, HEALTHIER COMMUNITIES

AG REPORT SHOWS COMMERCIAL HEALTH CARE SPENDING CONCENTRATED ON HIGH INCOME, HEALTHIER COMMUNITIES 

AG Healey Calls for Increased Focus on Linking Health Care Spending to Health Need

BOSTON – A report examining how health care spending is distributed in the commercial insurance market in Massachusetts shows that after controlling for health status, more money is spent on patients in higher income communities, Attorney General Maura Healey announced today.

This is the seventh report the AG’s Office has issued in its ongoing work to examine health care cost trends. These reports aim to increase transparency around the forces and conditions that affect health care spending. Last week, the AG’s Office released a report with a focus on pharmaceutical spending.

“Health insurance is a commitment all of us make to share the financial burden when some of us get sick,” AG Healey said. “This report focuses on equity. It suggests we still have work to do when considering the fair allocation of health care dollars across our communities.”

The AG’s report released today examines whether Massachusetts is spending health care dollars on those who most need care. It outlines three key findings that have significant implications for the commercial health care market in Massachusetts – the market for private health insurance that does not include government-sponsored plans such as Medicaid or Medicare:

1.      Health care dollars are concentrated in higher income, healthier communities in ways unexplained by health need.

o   Across the plans studied, almost half of the most affluent communities in Massachusetts are also the communities in which the most commercial dollars are spent relative to health burden. By contrast, only four percent of the lowest income communities are ones that receive the highest levels of spending.

o   Conversely, the lowest levels of spending are found in nearly one-third of the lowest income communities but in only one percent of the highest income communities.

o   This data is adjusted for health status, so the higher spending on affluent communities is not explained by residents of these communities being sicker, older, or having greater health needs. 

2.      Many factors may be driving spending disparities – including variation in the prices of different health care providers located in different communities, and structural and socioeconomic barriers that make it more difficult for lower income residents to access health care.

3.      Under current approaches to setting health insurance premiums, everyone shares not just in the costs of caring for the sick, but also the costs of certain members’ use of higher-priced providers.

These findings have important implications for ongoing policy discussions. The AG’s Office offers the following recommendations to advance that dialogue:

·         Implement standard monitoring of the extent to which health care spending tracks health burden, versus other factors like income, demographics, or geography. A stronger and expanded focus on the collection of this data will help to track socioeconomic disparities in health spending and health outcomes, especially as Massachusetts moves to global risk arrangements that may “bake in” historic disparities in the resources allocated for the care of different communities.

·         Consider strategies to help health care function like other, more effective markets. This includes examining new ideas for health insurance products that reward consumers at the point-of-enrollment for choosing high quality, lower-cost providers. Employer engagement is critical and employers should have access to timely, easily compared information about how provider choice and other factors are impacting their health care costs so that they can consider how to support higher value choices by their employees. 

Today’s report was prepared by Assistant Attorneys General Emily Gabrault and Sandra Wolitzky and Division Chief Karen Tseng, all of AG Healey’s Health Care Division.