MAHP Outlines A Crisis In Health Care Report Claims That Affordability Is The Most Pressing Issue Facing The Medical Field

BOSTON — With rapidly rising health care costs placing tremendous strain on employers and consumers, and with the state considering proposals that would significantly increase health insurance premiums, the Mass. Association of Health Plans (MAHP) has issued a series of alternative steps to control health care costs and maintain the affordability of health care coverage.


As policymakers debate strategies for improving access to affordable health care, MAHP’s booklet, The Affordability Crisis in Health Care, outlines 10 potential solutions designed to control costs, keep health coverage affordable, and maintain access to high-quality health care. Recommendations include:

• Enhancing flexibility in health plan design;
• A moratorium on all new mandates;
• Redefining the mission of the uncompensated care pool;
• Imposing greater accountability on the uncompensated care pool;
• Ending cost shifting by the state and federal government;
• Increasing consumer awareness of medical and pharmaceutical costs;
• Utilizing information technology to increase quality and improve efficiency;
• Instituting disease-management programs for Medicaid;
• Emphasizing evidence-based care; and
• Reforming the medical malpractice system.

“Affordability remains the most pressing issue in health care today. Adding new costs, such as the proposed $89.5 million tax on health insurers, fails to rein in health care spending, pushes premiums out of reach of employers and consumers, and leads to more uninsured,” said Marylou Buyse, M.D., MAHP president. “The current trend is unsustainable. Simply adding more money does nothing to address the factors contributing to rising costs. It is time to treat the ailment and not just the symptoms.”

In its new publication, The Afford-ability Crisis in Health Care, MAHP looks at what is driving health care costs, outlining several factors, including:

• The accelerating introduction and use of new drugs and medical technologies;
• The aging of the population;
• Personal injury suits and mandated benefits; and
• Increasing payments to hospitals and physicians.

For example, inpatient and outpatient hospital care accounted for more than half (51{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}) of the overall health care spending increase in 2001, brought on by the growing use of services and higher payment rates. Spending on physician services accounted for 28{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of overall spending increase in 2001, rising at an average annual rate of 6{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} between 1998 and 2001, when general inflation hovered between 2{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} and 3{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}. Also in 2001, personal injury suits and mandated benefits accounted for 22 cents of every new health care dollar. Litigation alone constituted 7 cents on every new health care dollar, or $5 billion in new health care spending, in 2001, while state and federal mandates accounted for 15 cents, or $10 billion.

The booklet also examines how rising health care costs affect consumers, employers, and the state.


Rising health care costs directly affect the number of people who can afford health insurance. Despite a reduction in the number of the uninsured by nearly half between 1995 and 2000, Massa-chusetts has seen a slight increase, as the number of individuals who lack insurance rose to 418,000, up from 365,000 two years ago. It has been estimated that if the employee share of premium costs increase by 10{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}, 65,000 Massachusetts employees would become uninsured.


In Massachusetts, employer-sponsored health insurance covers roughly 80{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of state residents under the age of 65. Most employers want to offer their employees insurance coverage, but rising health care costs have made it increasingly difficult. A 2001 survey of 1,100 businesses by the state’s Division of Health Care Policy and Finance found that 69{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of respondents provide coverage to their employees. Of the 31{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} who said they did not offer health insurance, more than half stated that they would be unlikely to provide coverage in the next three years. The top reason: cost.

The State

Continued growth in the cost of health care affects all taxpayers. In Massachusetts, health care comprises more than 30{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of the state’s $23 billion FY’ 03 budget, with more than a quarter of state spending dedicated to Medicaid and another $850 million spent on health care services for state workers and retirees, as well as other health care programs. The growth in health care spending, which increased nearly 25{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} between FY ‘01 and FY ‘03, has far exceeded the state’s revenue growth, squeezing funding for other important functions, such as higher education, public health initiatives, housing, and environmental services.

According to Buyse, MAHP member health plans add significant value to the health care system and are doing what they can to control rising health care costs.

“Over the past several years, health plans have begun introducing new products that include greater cost-sharing measures designed to maintain affordability, provide greater choice to employers and consumers, and encourage people to think about the cost of care,” she said. “While more can be done to keep health care coverage affordable, it will require increased participation on the part of physicians, hospitals, and government officials, and a greater understanding of the true cost of care to consumers.”

Often, individuals do not know the price of the health care services they receive beyond the office or pharmacy co-payment.

To help individuals understand the true cost of health care, The Affordability Crisis in Health Care includes an overview of billed charges, prior to any discounts negotiated by purchasers, for a variety of health care services, such as:

• Office visit for a sore throat: $88
• Emergency appendectomy: $9,098
• 30-day supply of Allegra: $71

For more information or to view a copy of the booklet, visit MAHP’s Web site atwww.mahp.com