State urged to lower benchmark for health care spending

Representatives from hospitals, the insurance industry and business groups struck a near unanimous chord Wednesday in urging state officials to adopt a lower target for measuring growth in health care spending.

After two years in which medical spending in Massachusetts exceeded the 3.6 percent benchmark established under a law intended to control cost growth, the benchmark for next year is set to drop to 3.1 percent. The Health Policy Commission, a state agency created under the law, has a limited authority to raise it back up.

With a March 29 vote planned on whether to set the growth benchmark at 3.1 percent, 3.6 percent or somewhere in between, the commission on Wednesday heard testimony from stakeholders who mostly urged the adoption of a more aggressive benchmark in hopes of reining in spending growth.

"We think it's important to signal to the health care community on all sides that our job of reducing health care cost growth has to be strengthened and intensified, and therefore we support allowing the benchmark to go down," Health Care For All policy director Brian Rosman said.

Total health care spending in Massachusetts increased 4.1 percent in 2015 to $57.4 billion after climbing 4.2 percent in 2014, according to the Center for Health Information and Analysis.

There are no penalties for exceeding the benchmark, a reality that lowers the stakes over where the goal it set.

Commission Chairman Stuart Altman said the figure is an important component of cost control efforts because it "puts in place an expectation of where we hope as a commonwealth overall health care spending will be."

Wendy Everett, the commission's vice chair, said the desire to lower the benchmark creates a "significant challenge" given "how poorly we have done compared to our current benchmark in the past two years."

"If we can't make the current benchmark, and we're trying to lower it going forward, then I think we absolutely...have to find ways to partner with every single sector of the health care community, obviously including the pharmaceutical community," she said.

Of the nine people who testified specifically about where to set the benchmark, eight recommended the lower level, including representatives from the Massachusetts Council of Community Hospitals, Greater Boston Interfaith Organization, Steward Health Care, Massachusetts Taxpayers Foundation, Massachusetts Association of Health Plans and Retailers Association of Massachusetts.

Massachusetts Health and Hospital Association President Lynn Nicholas offered her support for a 3.1 percent benchmark with a series of caveats, calling for a focus on pharmaceutical spending and asking that officials do not lower the cost growth threshold at which providers may be singled out for review.

"Not all my members are very happy with anything I say," she said. "They are very nervous about this. They want to do the right thing. They will continue to work hard. They need a little help from you folks and they need not to be the sole focus just because they're a larger part of the health care spend."

Jennifer Higgins of the Association of Developmental Disabilities Providers delivered the only testimony against the lower target, which she said "would be detrimental to the population that we serve."

She said that as the state's population ages and people increasingly wish to remain in their homes instead of in long-term facilities, demand is growing for home- and community-based services.

Before the testimony, commission staff presented data on demographic shifts in the state, noting the projected rise in average age from 38.8 years in 2011 to 40.2 years in 2019. Over that same time period, the percent of residents age 65 and older is projected to grow from 13.9 percent to 17 percent.

The relative aging of the population will contribute 0.6 percent to the growth in total health care expenditures from 2016 to 2019, according to commission data.

Altman said the need to care for an aging population further complicates the benchmark-setting process.

"A 3.1 is almost a 2.6 relative to what it was in 2012, which is not necessarily a bad thing," Altman said. "But understand that as the population ages, it's not inappropriate -- unfortunately, it's a fact of nature -- that we would spend more money on these individuals."