Massachusetts Market Update

It has been a while since we looked at Massachusetts’ experience with health care reform, but a new report from the state gives us an opportunity to do so.   (Mass. Mkt. Report)   The report contains a great deal of useful information, but the very concentrated structure of the Massachusetts payer and provider markets may not make the lessons applicable to all states.  Most of the analysis relates to commercial insurance, which covers about 62% of residents, a total which has declined since the state reform.  About half the commercial market is self-insured employers.  Blue Cross has 45% of the commercial market and the three largest payers have 80%.  Don’t expect much competition.  The average monthly premium was $421 in 2011, up 9.7% since 2009, almost double the rate of inflation.  That is $5000 a year, but all that money is buying less value, the benefits have declined 5.1% in the same period, largely due to higher deductibles and copays, so really the cost of insurance has gone up at triple the rate of inflation.  And wow, here is a shock, the three largest insurers had the highest premiums.  So much for benefits of scale or leverage.  But things are just as bad on the provider side, with a few large systems accounting for a large percent of all health care, inpatient and outpatient.  And here is another shock, the largest systems charge the highest prices.  Maybe there is some leverage from size on the provider side!   Fee-for-service payment is most common, but there has been good growth in global or capitated-type payments or budgets.  But there is a little good news–quality is above national averages for both payers and providers.