Governor Lamont: Connecticut’s First-Ever Healthcare Cost Growth Benchmark Report Confirms the Need for Reforms To Make Healthcare More Affordable
Report Finds Connecticut’s Healthcare Spending Exceeds Cost Growth Benchmark
(HARTFORD, CT) – Governor Ned Lamont today said that the findings of Connecticut’s first-ever healthcare cost growth benchmark report underscore the need to enact legislative reforms that will make healthcare more affordable for Connecticut residents and employers.
The Connecticut Healthcare Cost Growth Benchmark Report for 2021, which will be released by the Connecticut Office of Health Strategy later this week, finds that healthcare spending in the state increased by 6% between 2020 and 2021, surpassing the state’s benchmark target of 3.4%.
The benchmark initiative was established by an executive order Governor Lamont signed in 2020, which was later codified into state law in Public Act 22-118. It serves as a way to keep the healthcare system accountable for providing affordable healthcare to the residents of Connecticut. The initiative monitors healthcare spending at four levels: the state overall; health insurance market (i.e., Medicare, Medicaid, and commercial); individual insurance carrier; and advanced network (i.e., provider entities). Connecticut is one of nine states in the nation to establish a healthcare cost growth benchmark.
“The findings of this report reinforce the need for more sweeping action to ensure equitable access to affordable healthcare to all residents of Connecticut,” Governor Lamont said. “This report shines a light on healthcare costs that will enable us to hold accountable those parties responsible for excessive increases. Additionally, it will inform the development of solutions to address the problem. This session, I’ve proposed comprehensive legislation that tackles this complex problem from multiple angles, and I am urging the General Assembly to take action on this critical issue.”
According to the report, Connecticut 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. The rebound from decreased spending in 2020 due to the COVID-19 pandemic contributed to the year over year increases in 2021.
The benchmark report will also show that Connecticut overall 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.
“This target was set to better align household income, the state economy, and healthcare costs,” Dr. Deidre Gifford, executive director of the Office of Health Strategy, said. “The fact that healthcare increases are outpacing income and economic growth means that affordable healthcare is out of reach for many Connecticut residents.”
The Office of Health Strategy is charged with working with the Healthcare Benchmark Initiative Steering Committee and other key stakeholders to create cost growth mitigation strategies and solutions in response to the report. The agency plans to hold a hearing this spring to review the report’s finding and hear from stakeholders as it begins to chart a path toward more affordable healthcare.
Governor Lamont urges legislative action to reduce healthcare costs
This legislative session, Governor Lamont submitted comprehensive proposals to the General Assembly that focus on reducing healthcare costs for residents, with a particular emphasis on enhancing competition, eliminating unnecessary charges, reducing rising prices, and increasing affordability for residents and employers.
- Eliminates hospital facility fees charged at free-standing offices and clinics.
- Implements stronger regulatory enforcement tools at the Connecticut Office of Health Strategy to assure compliance with certificate of need requirements and related conditions of approval, such as cost controls, patient access, and detailed reporting. This will curb health care costs by preventing duplicative services in specific areas, while ensuring availability and access to critical services in all parts of the state.
- Commits Connecticut to joining a multistate bulk purchasing consortium to negotiate prescription drug discounts that all of the state’s residents will be able to access through a discount card at their pharmacy.
- Requires the Connecticut Office of Health Strategy to annually publish a list of prescription drugs that are experiencing major price spikes to inform consumers and prescribers about which drug prices are going up and by how much.
- Reins in aggressive marketing practices by pharmaceutical representatives to ensure prescribers get clear and accurate information about the drugs they prescribe and generic alternatives. Pharmaceutical representatives will be required to complete a training, register with the state, and disclose relevant information about drug costs and efficacy across different races and ethnicity, if known.
- Strengthens protections to ensure that discounted prescription drugs purchased through the federal 340B program benefit the low-income consumers and communities the program was designed to help.
- Prevents price gouging when patients get care from a provider who is not in their network. Specifically, the governor is proposing to limit out-of-network costs for inpatient and outpatient hospital services to 100% of the Medicare rate for the same service in the same geographic area.
- Outlaws the use of anti-competitive contracting practices that have been used by health systems to impede competition and increase prices. This will provide health insurers with additional bargaining power to make it easier to negotiate affordable prices for consumers. These include:
- Anti-tiering clauses: Requiring a health plan to extend a preferred value tier status to all facilities or provider in a health system, even if certain providers do not meet cost or quality standards for that tier.
- Anti-steering clauses: Prohibiting insurers from using incentives to steer patients to higher value providers.
- All-or-nothing clauses: Requiring health plans to accept all providers in a healthcare system or none of them.
- Gag clauses: Preventing parties from disclosing relevant information, including price or terms of an agreement to a third party.