Health care industry stakeholders began a Thursday morning hearing in Hartford with a sobering assessment of the state’s health metrics: Connecticut is among the most expensive states to receive health care in the United States, a country that pays more for worse health outcomes than most comparable nations.
Those were among the observations made by Cynthia Cox, a vice president at the Kaiser Family Foundation, during a 20-minute presentation to a room full of state officials and corporate executives from the insurance, hospital, and pharmaceutical industries.
On average, Connecticut spends $12,500 per person on health care versus the national average of around $10,000, Cox said, citing statistics from the Kaiser Family Foundation. Of the 50 states and Washington D.C., Connecticut ranks ninth in terms of per-person health care spending while state employers spend more on health insurance premiums than all but 11 other jurisdictions.
“For hospitals, physicians and prescription drugs, Connecticut spends more on just about every type of health care service or goods,” Cox said.
According to statistics from the National Health Expenditure and the Organisation for Economic Co-operation and Development, that puts the state near the back of a nation that does worse than many other large and wealthy countries in terms of the cost and the outcomes of its health care system, Cox said.
Americans spend more on in-patient and out-patient care, more on prescription drugs, and more on health care administration than its peers for which data was available like Australia, the United Kingdom and Switzerland.
Those increased costs were not driven by higher utilization of services, Cox said. In fact, people in the U.S. generally have fewer doctor visits and shorter hospital stays than many other comparable nations, she said.
Meanwhile, Cox said that more expensive health care has not resulted in better health outcomes in the United States.
“We would hope that we might be living longer lives or having better quality of life. That’s unfortunately not the case,” she said. “We’re not seeing that this high health care spending is translating to better health outcomes. In fact, in the U.S., we live shorter lives on average than people in other countries do.”
Cox was the first of many guest speakers to testify during the all-day hearing held in the Legislative Office Building. The hearing was an effort by the state Healthcare Advocate, Insurance Department and Office of Health Strategy to assess the drivers of health care costs in Connecticut and was set in motion over the summer when six health insurance carriers asked the state to approve double-digit rate hikes for many of next year’s plans.
In September, the Insurance Department approved rate increases of an average of 12.9%, down from the average of 20.4% requested by carriers on individual plans. Since then, ConnectiCare, a carrier that requested a 29.3% rate increase in its small group plans, announced it would be withdrawing from the state’s new fully insured small group market.
Thursday’s opening panel included two representatives of the Connecticut Hospital Association, the president of Anthem Blue Cross and Blue Shield in Connecticut, as well as representatives from trade associations for pharmaceutical manufacturers and pharmacy benefit managers.
At the start of the day, State Insurance Commissioner Andrew Mais cautioned the panelists about finger pointing.
“The purpose is to gather information and to have a dialogue with the panelists. It is not about blame. It is about sharing information, it is about asking questions, and it is about learning from each other as we proceed.”
Each industry pointed to different causes to explain the cost of health care in Connecticut. Hospital executives said staffing difficulties and the strain of the COVID-19 pandemic have taken a toll on the state’s hospital system.
“During this unprecedented public health crisis, hospitals and health systems have confronted many challenges including historic volumes, revenue losses as well as sky-rocketing expenses,” Jim Iacobellis, vice president of government affairs for the hospital association, said.
Louis Gianquinto, president of Anthem in Connecticut, agreed that the pandemic, in addition to economic pressures and labor shortages, had changed the state of health care in Connecticut.
“We will continue to see things unfold and trends unfold from the pandemic for really years to come,” Gianquinto said. “If we’re going to talk about affordability in the present tense, we have to acknowledge some of the impacts of the pandemic and how that’s changing the landscape and could change it for the long term.”
Kelly Ryan, a deputy vice president of the Pharmaceutical Research and Manufacturers of America, said that patients were increasingly paying for their pharmaceuticals out of their own pockets.
Ryan said that part of that shift in cost burden was due to vertical integration in an industry where insurance companies often own third-party pharmacy benefit managers, which administer prescription drug programs.
“It matters because more than half of spending on brand drugs goes to players in the system other than the manufacturers that research and develop the medicines,” she said. “We can’t really have a serious conversation about managing costs, trying to come up with meaningful solutions if we don’t acknowledge this is an incredibly vertically and horizontally integrated supply chain and there is, frankly, a shocking amount of money that’s getting lost throughout the system.”
Meanwhile, Sam Hallemeier, director of state affairs for the Pharmaceutical Care Management Association, argued that those same pharmacy benefit managers served to suppress the rising costs of prescriptions.
“The role of the PBM is to lower costs and we do that by using PBM tools and competition,” Hallemeier said.
The panel and other discussions during the hearing prompted statements on the cost of health care in Connecticut by several public officials, including Gov. Ned Lamont and the Senate Republican caucus.
Lamont, who during his first term effectively ended debate over a public health insurance option in Connecticut, called on providers, insurance carriers and pharmaceutical manufacturers to join together to address the problem.
“The status quo cannot and must not continue if we are to ensure high-quality, affordable health outcomes for every resident of Connecticut,” Lamont said in a press release.
Senate Republicans, meanwhile, blamed Democrats in part for pushing a public health care option.
“The challenges faced by our residents, the historic insurance rate increases, the failure of a state run public option, all these factors must be a wakeup call to our state to pursue common sense and achievable solutions to make health care more affordable for everyone,” Republican Senators Kevin Kelly of Stratford and Tony Hwang of Fairfield said.