Why Does Massachusetts Health Care Cost So Much? Here’s What the Health Policy Commission Thinks

It was no surprise when the Health Policy Commission reported this week that Massachusetts health care spending is much higher than the national average.

But physicians, health care leaders and others should take note of what commission believes are the causes of our high costs. Just as in medicine, diagnosis informs treatment.

Without commentary or endorsement, and as concisely as we can, here’s a summary of what the commission said in its preliminary report

  • Massachusetts is No. 1 in the country for personal health care expenditures:
    • Massachusetts: $9,278 per person
    • U.S.: $6,815
    • That’s a difference of 36%
    • If you adjust the data for our older population, broad access to care, and higher overhead costs (wages, rent, supplies, etc.) the difference is still 20%.
  • For private health insurance patients:
    • Hospital spending is 42% higher than the U.S. average
    • Long term care spending is 31% higher
    • Professional services spending is 24% higher (physician, clinical, dental and other services)
    • Spending on drugs and medical durables is about equal
  • For Medicare patients, spending is 9% higher than the U.S. average
    • Hospital care spending is 90% higher than the U.S. average
    • Long term care spending is 53% higher
    • Professional services spending is 35% lower
  • For Medicaid patients, spending is 21% higher than the U.S. average
    • Factors explaining the difference include the health status of enrollees, breadth of benefits, and higher reimbursement rates than the national average
    • Hospital care spending is 31% higher than the U.S. average
    • Long term care spending is 73% higher
    • Professional services spending is 5% higher
  • Why do we spend more? Higher utilization and higher unit prices
  • Hospital utilization
    • Inpatient admissions: 10% higher
    • Average length of stay: 7% lower
  • Outpatient  utilization
    • Patient visits, excluding emergencies: 72% higher
    • Outpatient surgeries: 27% higher
  • Why are prices higher? Higher fee schedules, and more care is delivered in higher-priced settings
    • Using claims data, fees paid by commercial payers, Medicare and Medicaid are higher than the national average
    • Portion of Mass. discharges from major teaching hospitals: 41% 
    • Portion of U.S. discharges from major teaching hospitals: 16%
  • Massachusetts outperforms national average on many quality benchmarks, such as
    • Childhood immunization rate
    • Low birth weight
    • Cholesterol management for patients with CV conditions
    • Controlling high blood pressure
    • Patient safety

Want more of the numbers? Here’s the commission’s preliminary report (pdf, 37 pages).

Its final report is due in January.

  1. michael posner says:

    the shortage of primary care is probably a major driver of use at more expensive service centers, and the reason for increased admission rates. the major medical centers in boston could cut rates if they weren’t all teaching hospitals, or actually expanded on site primary care options, including primary care access after 5 pm. this is not rocket science. who determined the need for all these admissions? better coordination between emergency care and primary care could decrease admission rates. in addition, a single payor national health program would cut administrative cost. where is don berwick when we need him?

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