Lawmakers are targeting the rising cost of health care as a key issue they plan to tackle this upcoming legislative session, after hearing from hospital executives, representatives of insurance and pharmaceutical companies and other industry officials Thursday.
“It’s no secret that health care is unaffordable and that the health care industry is not meeting the needs of Connecticut’s families and small businesses,” said Sen. Matthew Lesser, D-Middletown, a co-chair of the Insurance and Real Estate Committee. “Customers are expected to pay more and more for the same essential health services.
“It’s leaving parents and seniors to further stretch household budgets and to wait on seeking care, which raises the risk of worse health complications down the road. … Without reining in costs, we are blocking families across Connecticut from achieving a better quality of life and the ability of businesses to grow.”
Thursday’s hearing, which covered hospital expenses, the underlying costs of insurance and other issues, was prompted by double-digit rate increases sought and approved this year for many fully insured health plans, including those on the state’s insurance exchange, Access Health CT.
Insurance carriers in July asked for an average rate hike of 20% on 2023 individual health plans, an increase far higher than any requested or approved in recent years. The state signed off on a 13% average hike.
Insurers also asked for a 15% average increase on small group plans; the state approved 8%. Residents, small business owners and health care advocates criticized the requests.
The carriers attributed the increases to rising demand for medical services and the swelling cost of prescription drugs, among other trends. They have also pointed to an increase in morbidity and expected severity of claims because of delays in care during the pandemic.
Neil Kelsey, vice president and chief actuary for ConnectiCare, said Thursday that 84 cents of every dollar the company receives for monthly premiums goes toward members’ pharmacy and medical service costs.
“Hospital spending — both inpatient and outpatient — and retail pharmacy are the largest drivers of the health cost increases over recent years,” he said. “And prescription drugs have grown disproportionately.”
Thirteen cents of every dollar received for premiums covers internal expenses, such as taxes, assessments and fees, he said, and the remaining 3 cents are counted as surplus.
Higher utilization of medical services is driven by “lifestyle and behavior,” Kelsey said. “Unhealthy habits lead to illness 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 — really is at the root of medical cost. So this really comes down to human behavior as a factor in premium setting.
“The conversation today is all about sick care, and how do you lower the cost when someone is sick. We maintain that if you can work with someone on lifestyle and all the social support, you can actually keep people out of the system and keep them on a good path of health as a way to control medical costs.”
Unhealthy behaviors, coupled with social determinants of health — transportation, housing, access to nutritious food and dietary information, personal safety and employment — should be looked at when addressing health care costs, said Patrick Charmel, president and CEO of Griffin Hospital.
“Many communities are under-resourced, and you have a growing number of Connecticut residents who are either in poverty or who are working poor,” he said. “I actually have a hospital that’s in the lower Naugatuck River Valley; the two towns we sit in between — 50% of the people who live in those towns don’t earn enough to meet their basic living needs. Are they going to live healthy lifestyles in safe homes, eat nutritious food and afford their medications? No.
“We spend less on social services as a proportion of total health care spending … than any other industrialized country in the world. And if you’re saying that has more influence on the health of the population than what we do in medical care, we’ve got to change that. The problem is, where is that money going to 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’ve taken a step back on just putting forward legislation [to] really understand the costs that go into care,” she said. “I think it’s worth the time to dive into that, and you have my commitment going forward that that will be a priority in the next year. When we pass legislation, we want to pass something that’s effective and that does make the proper change.”
Gov. Ned Lamont did not offer specifics on what policy changes he might propose in the coming session, but he asked for support in tackling the escalating cost of care.
“I call on every party to join together to address this problem — hospitals, physicians, pharmaceutical manufacturers and benefit managers, insurance carriers and large and small employers all have indispensable roles to play in tackling the high costs of health care,” he said. “The status quo cannot and must not continue if we are to ensure high-quality, affordable health outcomes for every resident of Connecticut.”