CT’s health costs increasing twice as fast as goal set by Lamont

Connecticut’s first health care benchmark report says health costs in the state rose by 6% to $34 billion in 2021, double the aggressive goal set by Gov. Ned Lamont to limit cost growth to 2.9% in each of the next three years.

Less than $2 billion went to primary care that the governor’s health adviser says is crucial to preventing or stabilizing chronic conditions like diabetes and high blood pressure, saving residents from costly complications and hospitalizations.

The numbers were presented late Monday afternoon to the governor and a steering committee that includes the leaders of the state’s two largest hospital systems,  Hartford HealthCare and Yale New Haven Health.

Lamont is making health costs a priority of the second term that began in January, and the new report instantly became ammunition in the administration’s lobbying for two bills aimed at curbing costs, with a special focus on hospitals.

“The findings of this report reinforce the need for more sweeping action to ensure equitable access to affordable health care to all residents of Connecticut,” Lamont said in a statement issued by his office.

Dr. Deidre Gifford, the executive director of the Office of Health Strategy, said the benchmarking data out Monday and a full report to be released Friday are important tools for policy makers.

“It may not sound like it, but it’s big news that we have for the very first time in Connecticut a goal of how much we think it’s appropriate for health care spending to increase year over year,” Gifford said.

To the steering committee, Lamont expressed frustration at the difficulty in controlling costs that are outpacing income and economic growth, often beyond the increases in other states with benchmarking projects.

“I don’t know why Connecticut is not best in class. We got the best damn hospitals in the country, incredibly innovative,” Lamont said, adding that the state also is a major insurance center. “I feel like we’ve got the pieces of the puzzle. We’re a relatively small state, and here I feel like I’m always playing catch up.”

Hospitals are lobbying against Lamont’s bills, which would limit out-of-network costs for hospital services to Medicare rates, giving insurers greater leverage in negotiating prices, and would prohibit the facility fees charged by hospitals for services at free-standing clinics and offices.

Chris O’Connor, the chief executive of Yale New Haven, told the governor that while the hospitals “are crying foul,” they are willing to work with the administration.

O’Connor said hospital finances are fragile coming out of the worst of the COVID-19 pandemic, and the industry is “losing money for the first time in a long time.”

“But at the end of the day, you know, we have to be part of the solution,” O’Connor said. “And I just want to continue to reinforce the importance of working together at solutions.”

Connecticut is one of nine states trying to benchmark health costs and spending on primary care, with a target of 5% for primary care in 2021 that will rise to 6.9% in 2023, 8.5% in 2024 and 10% in 2025.

Statewide, the 2021 target was met with 8.3% of Medicaid spending on primary care, while the commercial and Medicare Advantage markets fell short, each below 4%. Two of five commercial payers reached the target, while all the Medicare Advantage payers fell short.

Analysts equate primary care with prevention, Gifford said.

“It’s actually based on pretty clear evidence that health systems that spend more as a proportion of total spending on primary care have lower overall costs and better health outcomes,” Gifford said. “So primary care is a bargain.”

The health care cost growth benchmark was 3.4%, judged against 2021 data, and will be 3.2% for 2022 and then 2.9% for three years.

While the overall state cost growth rate was 6% in 2021, commercial health care costs grew 18.8%. Medicare increased by 1.4% and Medicaid by 0.8%. 

Lamont was scheduled to make brief remarks, but he remained for more than half the two-hour meeting. As he left, he said he was pleased at the level of engagement by the hospital executives but acknowledged differences.

He repeated a message delivered directly to the executives.

“If you’ve got a better idea, let me know,” Lamont said. “I tried to come up with some real cost savings for consumers and taxpayers now. I don’t have all the answers. I presented ours. What I don’t want to do is have another couple of years of studies.”

The hospital executives said after the meeting they heard him.

“The governor has been, throughout his administration, a great ally for heath care,” said Jeffrey Flaks, the CEO of Hartford HealthCare. “He continues to express interest in hearing new and more ideas, as he expressed today. And if some of these proposals may not make the most sense for the benefit of health systems and how we deliver health care across Connecticut, he’s asking for new ideas.”

Kathy Silard, the CEO of Stamford Health, quickly added, “And we are willing to help with that.”