Health care spending increased 6% between 2020 and 2021 and outpaced increases in household income.
The spending was well beyond the 3.4% growth the state of Connecticut determined is acceptable, according to the Office of Health Strategy.
The new report, which tracks overall state spending on health care, the health insurance market, individual insurance carriers, and providers, found that spending surpassed the benchmark set by the state.
“The findings of this report reinforce the need for more sweeping action to ensure equitable access to affordable healthcare to all residents of Connecticut,” Gov. Ned Lamont said. “This report shines a light on healthcare costs that will enable us to hold accountable those parties responsible for excessive increases.”
The state spent $34 billion on healthcare and insurance costs in 2021, up from $31.9 billion in 2019 and $30.9 billion in 2020. Cost growth in 2021 was driven by an 18.8% increase in commercial health insurance spending while increases in Medicare and Medicaid were more modest.
Connecticut’s increase in commercial growth was larger than that in other states with benchmarks such as Massachusetts, Rhode Island and Oregon. There are nine states with benchmark targets. Part of the increase is attributed to the lack of medical care sought in 2020 during the height of the COVID-19 pandemic.
“In 2021, when people started feeling comfortable returning for the essential procedures and care they needed but had deferred, they were often times sicker,” Jennifer Jackson, CEO of the Connecticut Hospital Association, said. “Putting off nonemergency healthcare resulted in the worsening of chronic and acute health conditions which require more resources to treat, and led to a surge in healthcare need and pressure on an already strained system.”
The benchmark report shows that Connecticut met its target to spend 5% of total healthcare costs on primary care in 2021, but that commercial payers did not meet the 5% benchmark. Since higher primary care spending is associated with better health outcomes and lower overall costs, the benchmark initiative has also set a goal of reaching 10% of spending on primary care by 2025.
“I don’t know why Connecticut is not best in class,” Lamont said. “We have the best damn hospitals in the country.”
He said the pharmaceutical industry and the insurance industry are well represented in the state too.
“I feel like we’ve gotten the pieces of the puzzle. We’re a relatively small state and yet I feel like I’m always playing catch-up,” Lamont added.
He said he likes the idea of benchmarking because they can see what the cost of things are and where the state stands when it comes to these costs to start to create policies to lower them.
Dr. Deidre Gifford, the executive director of the Office of Health Strategy, said the results are unacceptable.
“This target was set to better align household income, the state economy, and healthcare costs,” Gifford said. “The fact that healthcare increases are outpacing income and economic growth means that affordable healthcare is out of reach for many Connecticut residents.”
Senate Republican Leader Kevin Kelly pointed out that benchmarking is not a partisan issue.
“Everyone hears from their constituents about the cost of healthcare. People want solutions,” Kelly said. “Healthcare affordability needs to be tackled with a multipronged approach that includes controlling the growth of expenses.”
He said the Republican plan to lower health care costs also includes benchmarking for hospital and pharmaceutical costs, but he doesn’t believe the way Democrats are tackling it is the correct way.
Lamont proposed two pieces of legislation he believes will address the issue.
The two pieces of legislation would eliminate hospital facility fees charged at free-standing offices and clinics owned by large hospital groups. The bill would also assure compliance with the need to start or end specific services at these medical providers, and it requires Connecticut to join a multistate bulk purchasing consortium to negotiate prescription drug discounts. It would also limit out-of-network costs for hospital services to 100% of the Medicare rates and prevent anti-competitive contracting practices to prevent insurers from steering patients to higher value providers.
The Connecticut Hospital Association testified earlier this year that some of those practices are “unproven” and would actually restrict access to care.
“Based on today’s presentation and questions asked, the OHS has additional work to do so that we can better understand their data and we look forward to those conversations,” Jackson said. “We agree with the governor that everyone needs to be part of the solution on healthcare affordability.”
