Annual report details increasingly unaffordable health care, spotlights policy opportunities to stabilize health care market and reprioritize health care access, affordability, and equity
BOSTON — Thursday, October 10, 2024 — Today, the Massachusetts Health Policy Commission (HPC) released its 2024 Health Care Cost Trends Report and comprehensive policy recommendations.
The issuance of this report takes place in a period of significant upheaval and reflection for the Commonwealth’s health care system. The bankruptcy and dissolution of Steward Health Care led to substantial market disruptions and has taken a significant toll on communities, patients, provider organizations, and health care workers across the region.
Alarmingly, alongside these challenges, health care costs continue to grow. The HPC found that total annual health care expenditures per Massachusetts resident grew 5.8 percent in 2022, from $9,700 to more than $10,264. Across all categories of care, the dominant factor driving this growth was higher prices, not more care being provided. Spending for prescription drugs and care provided in hospital outpatient departments were the largest drivers of this growth.
These high and growing health care costs contribute to mounting affordability issues and medical debt for Massachusetts residents. Massachusetts has the second highest family health insurance premiums in the country – including out of pocket spending, the average annual cost of health care for a family exceeds $29,000. The number of Massachusetts privately-insured residents who did not get needed health care due to cost increased from 600,000 to 900,000 from 2021 to 2023.
“In Massachusetts, a state renowned for health care quality and access, nearly one million of our privately-insured residents went without the care they needed due to cost last year. These continuing trends of rising health care costs and affordability issues further compound the significant impact Steward Health Care’s bankruptcy and dissolution has had on the health care system, patients, health care workers, and others across the Commonwealth,” said HPC Chair Deborah Devaux. “These challenges present a tremendous need and opportunity for transformative policy action to move the health care system from the status quo to a new, more affordable, sustainable, and equitable trajectory.”
“As we emerge from this challenging chapter for Massachusetts, we see many more opportunities for policymakers to further stabilize our health care market and ensure that there is no space for predatory actors in our health care system,” said HPC Executive Director David Seltz. “These policy recommendations bring us closer to ushering in the next chapter of health care in Massachusetts – one in which we can rebuild trust and reprioritize health care access, equity, and affordability for all residents.”
2024 Health Care Cost Trends Report – Policy Recommendations
Responsive to these issues and the impact that the dissolution of Steward Health Care continues to have on the Massachusetts health care system, the HPC has outlined policy recommendations to better protect the health care system, workforce, and patients from predatory actors, strengthen market oversight and transparency, including transactions involving private equity, and ensure greater market stability moving forward. These include:
1: Strengthen and expand the state’s market oversight tools.
- Strengthen and Expand the Material Change Notice (MCN) Process.
2: Strengthen and expand the state’s transparency requirements.
- Require that New Provider Types, including Types Frequently Targeted by Private Equity Investors, Report to the Massachusetts Registration of Providers Program.
- Enhance Enforcement Mechanisms for Financial Reporting.
3: Revitalize health planning to ensure that that the supply of health services aligns with community health needs and to protect the interests of historically underserved communities.
- Conduct Focused Assessments of Need, Supply, and Distribution.
- Strengthen Tools to Monitor and Regulate Supply of Health Care Services.
4: Address known market dysfunctions that both drive consolidation among providers and create opportunities for predatory actors to profit through actions that can harm patients, health care workers, and others.
- Address Long-Standing Inequities in Provider Prices.
- Require Site-Neutral Payment.
- Adopt Default Out-of-Network Payment Rate.
Urgent action on the reforms included in the 2024 HPC Health Care Cost Trends Policy Recommendations, aimed at addressing the causes and consequences of the Steward Health Care tragedy, will enable Massachusetts to rebuild a stronger health care system that is affordable, equitable, and puts patients first. Complementary action is also needed on the HPC’s policy recommendations from previous years.
2024 Health Care Cost Trends Report – Key Findings
Prices continue to be the primary driver of health care cost growth in Massachusetts.
Total annual Health Care Expenditures per Massachusetts resident grew 5.8 percent in 2022 from $9,700 to more than $10,264. This rate of growth exceeded the benchmark of 3.1%. The cost of health care for individuals with commercial coverage, including premiums and out of pocket spending, rose at an annual rate of 5.2% from 2019 to 2022, faster than faster than growth in the rest of the U.S. (3.8%), inflation (3.8%) and faster than residents’ incomes (3.4%) over this time.
The average cost of health care for a Massachusetts family in 2023, including out of pocket spending, employer and employee premium payments, was more than $29,000 per year. Massachusetts had the second-highest insurance premiums in the country, and the number of Massachusetts privately-insured residents who did not get needed health care due to cost increased from 600,000 to 900,000 from 2021 to 2023.
This high rate of spending growth was driven by spending for prescription drugs and care received in hospital outpatient departments. Across all categories of care, the dominant factor driving the spending increase was higher prices for care rather than more care provided.
Other findings include:
- Excessive spending from high prices. Commercial health care prices have continued to grow substantially in recent years, with variation by setting of care. Between 2018 and 2022, inpatient prices increased by 17.1%, hospital outpatient department (HOPD) prices increased by 15.4%, and physician office prices increased by 12.6%.
- Excessive spending from unnecessary use of care. Unnecessary utilization of care, such as low-risk newborns delivered via cesarean section seemingly unrelated to patient health, contributes to excessive spending. The percentage of low-risk newborns in Massachusetts delivered by c-section increased from 24.8% to 27.6% from 2019 to 2023, shifting from below to above the U.S. average.
- Price trends. Escalating price trends are evident from 2018 to 2022, with commercial prices increasing for various services including: office services, hospital outpatient care, and inpatient services. Payments for ED hospital care grew by 29% in this time period, while inpatient payments per stay for non-maternity stays increased 34%.
- Provider organization performance variation. Variation in provider organization performance continues, with medical spending differing between major provider groups, and the rate of avoidable visits and imaging utilization varying significantly. The price insurers paid for a set market basket of 50 common hospital outpatient services varied by more than a factor of two, from $23,000 to $57,000, across hospitals in 2022, with higher prices among academic medical centers, specialty hospitals, and those that are geographically isolated.
- Hospital utilization. Massachusetts continues to have higher rates of hospital utilization than the U.S. overall, including inpatient stays (10.5% higher), outpatient visits (41.8% higher), and ED visits (12.4% higher), and higher rates of potentially preventable hospital utilization including the second highest rate among states of preventable hospital admissions among Medicare beneficiaries in 2022 and the third highest readmission rate.
- Hospital consolidation. Hospital consolidation continued to increase in Massachusetts with the top 5 health systems in Massachusetts accounting for 62% of hospital visits in 2022, an all-time high.
- Primary care. In Massachusetts, primary care spending continues to grow more slowly than other categories of medical spending; from 2017-2022, primary care spending grew 11.8% compared to 24.7% for all other spending; significant disparities in access to primary care between low and high-income communities persist.
- Behavioral health. Behavioral health trends show an increase in mental health prescriptions, especially among young adults. In 2022, more than one in four commercially-insured adults had at least one mental-health related prescription and between 2018 and 2022 the proportion of young adults (18-25) with at least one antidepressant prescription grew from 14.6% to 20.0%. While opioid-related hospitalizations declined overall, Black non-Hispanic had higher rates of these hospitalizations compared to residents from any other racial/ethnic group in 2023.
The full 2024 Health Care Cost Trends Report, policy recommendations, interactive overview and dashboard, and chartpack are available on the HPC’s website. A recording of the board meeting and all presentation materials are also available on the HPC’s website.
The findings and recommendations of the 2024 Health Care Cost Trends Report will be discussed during the HPC Cost Trends Hearing on November 14, 2024 at Suffolk University in Boston, Massachusetts. Register to join the HPC Cost Trends Hearing at or watch via livestream on the HPC’s website.