Will Massachusetts Cap Healthcare Prices?

Date: March 15, 2017


The largest insurer in the state, Harvard Pilgrim Health Care, reported a $91.3 million operating loss for last year, ballooning up even further from its $78.8 million operating loss in 2015, reported the Boston Business Journal. Even more staggering is the fact that this operating loss was incurred despite an almost 15 percent revenue increase. By way of explanation, Harvard Pilgrim cited more claims, high pharmacy costs, and programs contained within the Affordable Care Act (ACA).

Meanwhile, Gov. Baker has proposed that the state should institute caps on the growth of prices paid to hospitals, doctors, and laboratories for the next three years. WBUR 90.9 FM Radio reported that, under Baker’s plan, healthcare providers would be divided into three categories (expensive, moderate rates, and lowest-paid), insurers would continue negotiating hospital and physician group contracts, and the Massachusetts Division of Insurance would be able to reject contracts if insurers don’t follow the price caps. Tier 1 providers, the lowest-paid, would face no price cap; Tier 2, the moderately paid, could receive a 1 percent annual increase; and Tier 3, the most expensive, would be ineligible for any increase.

Speaker Robert DeLeo has expressed opposition to this plan, citing the potential for job loss, but sky-high healthcare costs—some of the most expensive in the nation—are already costing the Commonwealth jobs. Small businesses need relief.

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