Lawmakers target rising health care costs as a key issue they plan to address in the next legislative session, after hearing Thursday from hospital executives, representatives of insurance and pharmaceutical companies and other industry officials.
“It’s no secret that health care is unaffordable and the health care industry is failing Connecticut families and small businesses,” said Sen. Matthew Lesser, D-Middletown, Co-Chair of the Insurance and Real Estate Committee. “Clients are expected to pay more and more for the same essential health services.
“This forces parents and the elderly to further stretch household budgets and wait to seek treatment, increasing the risk of worsening health complications in the future. … Without cutting costs, we are preventing Connecticut families from achieving a better quality of life and the ability of businesses to grow.
Thursday’s hearing, which covered hospitalization costs, underlying insurance costs and other issues, was prompted by double-digit rate increases requested and approved this year for many health plans. fully insured healthcare, including those from the state insurance exchange, Access Health CT.
In July, insurance companies called for an average 20% price hike on individual health plans in 2023, far more than any increase requested or approved in recent years. The state approved an average increase of 13%.
Insurers have also asked for an average increase of 15% on small group plans; state approved 8%. Residents, small business owners and health care advocates have criticized the demands.
Carriers attributed the increases to growing demand for medical services and the rising cost of prescription drugs, among other trends. They also pointed to an increase in morbidity and expected claims severity due to coverage delays during the pandemic.
Neil Kelsey, ConnectiCare’s vice president and chief actuary, said Thursday that 84 cents of every dollar the company receives for monthly premiums goes toward members’ pharmacy and medical service costs.
“Hospital expenditures – both inpatient and outpatient – and retail pharmacy are the main drivers of rising healthcare costs in recent years,” he said. “And prescription drugs have increased disproportionately.”
Thirteen cents of every dollar received for bonuses covers internal expenses, such as taxes, assessments and fees, he said, and the remaining 3 cents is considered a surplus.
Higher use of medical services is driven by “lifestyle and behavior,” Kelsey said. “Unhealthy habits lead to disease and result in medical services.”
Roberta Wachtelhausen, interim president of ConnectiCare, echoed Kelsey’s remarks.
“A very, very large percentage of health care costs are driven by lifestyle behaviors,” she said. “Lifestyle – especially the American lifestyle, the high percentage of obesity in this country – is really driving medical costs. So it really comes down to human behavior as a factor in setting the premiums .
“Today’s conversation is about caring for the sick and how to cut costs when someone is sick. We argue that if you can work with someone on lifestyle and all the social support, you can actually keep people out of the system and on a good health track as a way to control medical costs.
Unhealthy behaviors, associated with the social determinants of health – transportation, housing, access to nutritious food and dietary information, personal safety and employment – must be taken into account when considering health care costs, said Patrick Charmel, President and CEO of Griffin Hospital.
“Many communities are under-resourced, and you have a growing number of Connecticutans who are either in poverty or working in poverty,” he said. “I actually have a hospital that’s in the lower Naugatuck River Valley; the two cities we sit between — 50% of the people who live in these cities do not earn enough to meet their basic living needs. Will they live healthy lives in safe homes, eat nutritious food, and pay for their medicine? No.
“We spend less on social services as a proportion of total health expenditure… than any other industrialized country in the world. And if you say it has more influence on the health of the population than what we do in the field of medical care, we have to change that. The problem is where will this money come from?
Rep. Kerry Wood, D-Rocky Hill, co-chair of the insurance committee, said members of her committee have already begun talking with industry officials to understand the drivers of medical costs.
“We have taken a step back on the simple proposal of legislation [to] really understand the costs of care,” she said. “I think it’s worth delving into this, and you have my commitment going forward that it will be a priority next year. When we pass legislation, we want to pass something that is effective and that make the appropriate change.
Gov. Ned Lamont didn’t give details on what policy changes he might propose in the next session, but he asked for help in tackling the escalating cost of care.
“I call on all parties to come together to solve this problem – hospitals, doctors, pharmaceutical manufacturers and benefits managers, insurance companies and large and small employers all have a role. essential to play in the fight against high health care costs,” he said. “The status quo cannot and must not continue if we are to ensure affordable, high-quality health outcomes for every Connecticut resident.”
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