Connecticut health insurance premiums are the sixth highest in the U.S. While our costs are rising less quickly than other states, that’s cold comfort to Connecticut’s households and employers. Health care premiums are squeezing out other critical priorities and investments, holding back our economy, and limiting opportunities.
This isn’t a new problem and it has not been ignored. We’ve tried the easy stuff to lower costs including shifting more costs onto consumers, raising administrative barriers to expensive care, and pushing patients toward lower-cost providers. The simple fixes haven’t been enough.
Candidates heard about excessive premiums loud and clear on the campaign trail. Democrats generally favor a state public insurance option again this year, while Republicans support reinsurance to cushion the costs of high-need patients. They’re both fine ideas that could help, but they won’t solve the underlying problems.
Controlling premium costs is going to take a range of smart solutions that target the drivers of rising costs. Health care utilization isn’t up, and declining health and rising age don’t explain it. There is growing evidence that the actual prices for care are to blame.
Candidates heard a lot about skyrocketing prescription drug prices during the campaign. Connecticut residents spend more for prescription drugs than any other state’s residents. Drug prices are rising faster than almost any other sector. Progress on the federal level isn’t likely, so states are taking the lead.
Most infuriating are increases in prices for older drugs, which are well past the need to recoup research costs. Predatory pricing of insulin, EpiPens, and other drugs have fueled public anger. Last year, Connecticut policymakers limited consumer out-of-pocket insulin costs to $25 per month, but we need to do much more.
Massachusetts and Washington have proposed penalties on drug companies that increase prices excessively without justification, such as new research on effectiveness or increased production costs. The legislative language is designed to avoid legal challenges. Other states are using independent resources to evaluate drug price hikes.
The Institute for Clinical and Economic Review (ICER), the independent nonprofit leader in fair health care pricing, provides an analysis of unsupported drug price increases every year. The report identifies the largest price hikes that have no justification such as new evidence of effectiveness or increases in manufacturing costs. The report released this week found that seven of the 10 drugs with the biggest price jumps were not justified, costing the U.S. health system an extra $1.2 billion for no reason. Unlike a state drug review board, utilizing ICER’s report and implementing penalties such as Massachusetts and Washington would cost Connecticut nothing, but could save Connecticut consumers millions.
The other main driver of premium increases is the consolidation of Connecticut health care institutions. As large health systems combine with each other and acquire physician practices, both consumers and payers have fewer choices. Consolidation drives down competition and drives up prices without improving the quality of care. Large health systems work to keep patients within their system, making referrals within the network for specialty or other care to maximize revenue.
While financial incentives push hospitals and practices to consolidate, other states are pushing back. Last year, California reached a historic antitrust settlement with Sutter Health, the dominant health system in Northern California. The settlement eliminates anti-competitive contract provisions and requires full price transparency.
Several large employer groups have called for a moratorium on mergers and across the country to allow for creation of a national task force to consider options to enhance competition. In contrast, over the last four years, Connecticut’s Office of Health Strategy has approved all but three of the 74 Certificate of Need applications that have come before it. Other states have an array of antitrust laws that govern contracts and promote competition that Connecticut should consider. Some regulate Accountable Care Organizationss, large health systems that accept financial risk. Sen. Martin Looney, who leads that chamber’s majority, has proposed tightening standards for health system acquisition of provider practices. Connecticut could adopt both ideas and create a balanced, bipartisan, transparent task force of independent experts to find other solutions that will work here.
Connecticut’s expensive and rising health insurance premiums are not sustainable. It’s a complex problem that took a long time to develop. It would be nice if solving it was simple, but there is no silver bullet. Changing the trajectory will take multiple interventions at multiple levels. We’ll need inventiveness, smarts and a lot of courage to resist powerful interests. I think we’re up to it.
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