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Why Is Health Insurance Spending Rising in Massachusetts?

Gov. Deval Patrick

In Massachusetts, a recent report shows that healthcare spending on those with health insurance has risen by over 15% in three years. The state is one of the first in the nation to have enacted its own healthcare reform: theirs involves a health insurance mandate, coupled with government subsidies for lower- and middle-income individuals to increase access to affordable health insurance. The Senate has clearly taken their example as model for their bill.

Still, spending has continued unabated. Despite the mandate penalizing those who fail to buy health insurance, prices of health insurance plans have only increased. Some young, healthy people prefer to take the risk and pay a $1,000 annual fine instead of monthly premiums. That continues to leave older, sicker individuals in the risk pool–whom health insurance companies need to charge more in order to make a profit.

The state government’s report is a boon to Democratic Governor Deval Patrick, who wants the state to have the ability to cap health care prices. However, it also vindicates Massachusetts health insurance companies. It shows that at least some of their price increases are legitimately due to the higher cost of providing care. ¬†A higher percentage of outpatient care is being offered in expensive hospital settings, as opposed to less costly facilities. ¬†Spending in this category increased by over one-fourth, much of it passed onto consumers of health insurance.

Health care in Massachusetts, even with reform, is 15% more expensive than the national average. That figure can’t be entirely due to the higher cost of living in Boston! State legislators plan to hold a summit in March to get to the bottom of the issue.

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