Health care spending in five states—Connecticut, Delaware, Massachusetts, Oregon, and Rhode Island—went beyond planned targets in 2023. This trend was reported by Health Affairs, pointing out that these states, alongside California, Nevada, New Jersey, and Washington, have been trying to control rising health care costs since 2012.
Researchers January Angeles and Jessica Mar from Bailit Health have analyzed spending across various sectors, including Medicaid and Medicare Advantage. Their findings are essential for understanding how much money flows through these systems and why costs keep climbing.
This situation is crucial for consumers and journalists. When health insurers acquire physician groups and other organizations, it often leads to increased costs. This practice, known as vertical integration, allows one part of the health care system to buy another, which can lead to inflated prices that aren’t beneficial for patients.
“We’ve seen anecdotal evidence of how this pressure impacts physicians, pushing them to send patients to more expensive facilities,” explains Christopher Whaley, a health services expert at Brown University. This suggests a systemic issue where profits may overshadow patient care.
The analysis by Angeles and Mar reveals important insights:
- Health spending in various sectors often exceeds the targets set for them.
- Reports highlight areas where states can rein in costs.
- The findings help clarify how insurers can exceed limits set by the Affordable Care Act’s medical loss ratio (MLR).
Under the MLR rule, insurers must allocate a significant portion of their premium revenue to clinical services. If they fall short of spending at least 80% or 85% on care and quality improvements, they owe rebates to consumers. Since 2012, insurers have paid out over $13 billion in these rebates to enrollees, according to the Kaiser Family Foundation.
An additional analysis highlighted a notable increase in non-claims payments, which are not directly tied to individual patient claims. These rose by an average of 40.4% across the five states. Much of this increase stems from spending by Medicare Advantage plans that isn’t tied to patient care.
Experts have raised concerns about vertical integration undermining the MLR’s effectiveness. Insurers that purchase providers can claim these financial transactions as medical spending while not being subject to the same MLR requirements. This structure creates an incentive for insurers to funnel funds to affiliated providers, who might charge higher prices.
In 2022, Louisiana’s Attorney General Jeff Landry filed a lawsuit against UnitedHealthcare, alleging that inflated drug prices were counted as legitimate health care expenses. This controversy reflects how corporate strategies can sometimes manipulate legal frameworks to protect profits at the expense of consumer interests.
In summary, the landscape of health care spending continues to grow more complex. As vertical integration trends ascend and more data becomes available, it is essential for journalists and consumers to stay informed about how these practices affect their costs and care options.
For further reading, you can explore the full analysis from Health Affairs [here](https://www.healthaffairs.org/content/forefront/states-cost-growth-targets-2023-spending-growth-high-across-board) and the KFF report on medical loss ratio rebates [here](https://www.kff.org/private-insurance/medical-loss-ratio-rebates/).
Source link
ACA,Affordable Care Act,medical loss ratio,Obamacare,UnitedHealth Group,unitedhealthcare
