Spending on Massachusetts health care has grown more than twice as fast as state hoped, new report shows
Lauren Peters, CHIA's executive director, expressed alarm about the soaring spending. With the 8.6 percent increase, health care spending in Massachusetts totaled $11,153 per resident.
'For 2023, we are seeing unsustainable cost growth trends persist, putting increasing pressure on residents, employers, and the system as a whole, emphasizing the urgent need for bold and systemic solutions,' Peters said in a statement.
Peters is expected to discuss the analysis on Thursday at a meeting of the state Health Policy Commission and the Legislature's Joint Committee on Health Care Financing. The report covers a variety of health care expenditures, including prescription drugs, outpatient and inpatient treatment at hospitals, and physician visits.
Prescription drugs, along with new MassHealth supplemental payments, spurred the growth in spending, according to the report. Total spending on medicines increased by $1 billion, while MassHealth — the Medicaid program in Massachusetts — made $1.5 billion in new incentive payments to hospitals that met certain standards for quality and equity.
Spending on prescription drugs represented the largest share of overall health care expenditures and increased by 11.6 percent over 2022, to $15.2 billion, the report stated. The next-largest category was outpatient care at hospitals, which totaled $14 billion, an increase of 8.3 percent over the previous year.
Pricey blockbuster weight-loss drugs such as Wegovy and Zepbound are believed to have contributed to increased spending on prescription medicines. The impact will likely prove bigger when CHIA does its report for 2024, given that
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While the affordability of health care overall was a pervasive issue in Massachusetts, with 41.3 percent of residents struggling to pay for treatment, the burden was greater for Hispanic residents (58.2 percent had difficulty affording it) and for non-Hispanic Black residents (48.7 percent had trouble affording it), said the report.
David Seltz, executive director of the Health Policy Commission, said health care costs are 'continuing to grow at an alarming pace.'
'Again this year, pharmacy spending was a major driver of cost growth, increasing by $1 billion from the previous year,' he said in a statement.
The chief executive of the Massachusetts Biotechnology Council, which represents more than 1,700 drug and life science companies in the state, challenged the suggestion that rising drug prices were largely to blame for increased health care spending.
Ozempic injection pens moved along a conveyor at the Novo Nordisk A/S production facilities in Hillerod, Denmark, in 2023.
Carsten Snejbjerg/Bloomberg
'MassBio is currently reviewing the latest cost trends report from CHIA, and we question whether the available data fully captures all factors contributing to the indicated rise in pharmacy spend,' Kendalle Burlin O'Connell, chief executive and president of MassBio, said in a statement. She said her trade group wants 'a more complete picture of the underlying causes of increased costs.'
For his part, Steve Walsh, president and chief executive of the Massachusetts Health & Hospital Association, said the report underscores that the benchmark of 3.6 percent for growth in annual spending is unrealistic. For several years, his group has argued that it should be raised.
'Massachusetts deserves a modernized approach to the benchmark that embraces the real-time needs of today's patients and healthcare providers — one that can account for inflation, labor costs, and the state's actual gross state product,' he said in a statement.
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One expert on health care policy said Massachusetts actually spent far more in 2023 than CHIA calculated.
Alan Sager, a professor of health law, policy, and management at the Boston University School of Public Health, said the actual total would be 45 percent higher if CHIA included expenses that the federal government does when calculating how much each state spends.
CHIA doesn't include, among other things, worksite health care, workers' compensation health spending, vocational rehab, school health, dental insurance, out-of-pocket spending for treatments not covered by insurers, and spending by several federal agencies, including the Department of Defense.
If those expenditures were included, he said, health care spending in Massachusetts would have totaled $113.5 billion in 2023, or about $16,200 per person.
'We spend so much on health care,' said Sager, who sits on a council that guides CHIA's research. 'It's enough to provide the care that works for everyone who needs it. We probably waste up to half the money we spend.'
Jonathan Saltzman can be reached at
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