There is good news on Connecticut health spending – and we can use it. Analysis of new data has found, not surprisingly, that Connecticut residents spend a lot on healthcare. But the good news is that our average annual rate of growth, at 1.8%, was the ninth lowest among states from 2013 to 2019.
In 2014, Connecticut spending was seventh in the nation, but by 2019 we were down to eleventh. We are doing something right. Before we make big (or even small) changes, we should be careful to sort out babies from bathwater. We need to follow the evidence, build on what is working, fix what isn’t, and avoid shiny new policy trends that aren’t working elsewhere.
In a Herculean effort, fourteen researchers from the University of Washington’s Institute for Health Metrics and Evaluation compared per person spending on healthcare across states from 2003 to 2019, before COVID hit. Unlike the controversial Office of Health Spending’s (OHS) Cost Cap project to reduce the growth of healthcare spending in Connecticut, the Washington researchers show their math. They publicly identified their sources for data, mirroring federal gold-standard research, and tested 368,640 models to see which would have best predicted past spending. Unlike OHS, the University of Washington data allows us to compare Connecticut to other states – apples to apples. They’ve also publicly posted their data online, unlike OHS. That is how you build trust in policymaking.
Parsing the data to focus on Connecticut, we found lessons and clues to guide policymakers to improve our healthcare spending. Growth in Connecticut per person spending slowed considerably after the 2008/2009 recession and never rebounded to the same levels. Between 2005 and 2019, Medicare costs grew the fastest. Unlike the years after managed care plans left Medicaid when we experienced significant savings, since 2005 Medicaid per person spending has crept back up to higher than private coverage. Policymakers need to drill down on this and determine if we are getting better value for this spending or not.
Hospitals are the largest share of Connecticut per person healthcare spending, consuming over one third. But hospitals are also responsible for the largest share, at 61%, of total increases. Unlike in prior years, drug spending growth lagged behind both hospitals and physicians/clinic costs between 2005 to 2019. Fewer new brand-name, patent-protected drugs have been released in recent years, and many of the most expensive new drugs are delivered in hospitals and doctors’ offices, so are found in different budget lines. To address hospitals driving up healthcare costs, policymakers need to push back on large, monopoly health systems driving up prices and restore competition in markets.
Connecticut per person costs are similar to nearby states with similar personal incomes, the largest contributor to state per person spending according to the University of Washington researchers. However, our total per person costs from 2005 to 2019 grew more slowly than comparator states and equal to Massachusetts’ rate. Since 2013, Massachusetts has had a Cost Cap project like the one OHS intends to implement in Connecticut. Connecticut’s Medicaid per person rate has grown faster than comparator states, but our private plan costs are growing more slowly. Our hospital spending per person is growing faster than other states and our drug costs more slowly than other states.
The Affordable Care Act had a massive impact on covering more Connecticut residents, expanding services, and limiting out-of-pocket costs, but the impact on healthcare spending was surprising. The 2008/2009 recession had a massive impact in lowering spending growth. In contrast, the ACA slightly lowered the growth of total per-person healthcare spending in our state by 12%. Medicaid and Medicare, and out-of-pocket spending fell after ACA implementation, but private costs per person rose. There are likely multiple reasons for this such as healthy populations coming into Medicaid, reforms to Medicare, fewer uninsured paying the highest prices for healthcare, and more people qualifying for private coverage due to prohibitions on pre-existing conditions.
Connecticut needs to embrace thoughtful, independent evidence-based policymaking – without biases. We have to resist convenient myths and health policy fashions that don’t work, such as pouring money into primary care to save money, shifting financial risk onto Medicaid providers, and the myth that lower Medicaid provider payments are jacking up commercial rates. Effective policymaking follows the data, even when it conflicts with strongly held biases and self-serving narratives. We can’t afford to keep disrupting things that are working.