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Connecticut spent $3 billion more on healthcare in 2021, according to report

Connecticut residents saw their annual spending for healthcare rise more than 6 percent between 2019 and 2021, far surpassing the state’s goal of limiting healthcare cost increases to 3.4 percent, according to the first state healthcare benchmark report.

Gov. Ned Lamont issued an executive order to produce the report in 2020, followed by legislation making the report a matter of state statute in 2022. The Connecticut Healthcare Cost Growth Benchmark measures the overall state, the health insurance market, individual insurance carriers and provider entities.

The results showed that Connecticut’s healthcare costs increased by more than other states like Massachusetts and Rhode Island which also benchmark for healthcare costs and was largely driven by commercial health insurance spending, which grew by 18.8 percent in 2021.

Although overall healthcare spending decreased in 2020 during the pandemic, when many hospitals and healthcare facilities decreased normal operations and elective procedures to make room for COVID patients, 2021 saw a rebound in spending.

“The findings of this report reinforce the need for more sweeping action to ensure equitable access to affordable healthcare to all residents of Connecticut,” Lamont said in a press release. “This report shines a light on healthcare costs that will enable us to hold accountable those parties responsible for excessive increases.”

“The fact that healthcare increases are outpacing income and economic growth means affordable healthcare is out of reach for many Connecticut residents,” said Dr. Deidre Gifford, executive director for the Office of Health Strategy, which is releasing the report this week.

Lamont said the report highlights the need for the legislature to pass his proposed reforms including eliminating hospital facility fees charged a free-standing offices and clinics, joining multi-state purchasing agreements for prescription drugs, and outlawing “anti-competitive contracting practices” such as health care plans steering patients toward certain facilities and providers.

In September of 2022, the Connecticut Insurance Department approved rate increases for individual and small group health plans, with an average increase of 12.9 percent for individuals and 7.9 percent for small groups, which were blamed on rising medical and prescription costs. Democrats and Republicans alike lambasted the approvals. 

While the state regulates and must approve rate increases for individual and small group plans, large group health plans are regulated by the federal government.

The benchmarking executive order and subsequent legislation took a page from Massachusetts and Connecticut Republicans who had been pushing for benchmarking as a way to lower costs. Senators Kevin Kelly, R-Stratford, and Tony Hwang, R-Fairfield, also said the report “underscores the need to enact legislative reforms” and pushed their health care plan.

The Republicans’ A Better Way to Affordable Health Care plan includes benchmarking all healthcare cost drivers, make hospital billing transparent, implementing a reinsurance program they say could save $7,000 per year on premiums and allow small businesses to join association health plans, a proposal that was recently passed out of the Insurance and Real Estate Committee following a long debate with Sen. Matthew Lesser, D-Middletown.

“Family budgets are breaking and people are living paycheck to paycheck as they have difficulty making hard choices on things like health insurance,” Kelly and Hwang said in a press release. “Our plan achieves these affordability goals through transparency, through competition, and by enabling the marketplace to work better for the consumer and our small businesses.”

Senate Democrats, on the other hand, laid out a series of proposals earlier in the legislative session called A Healthier CT, including expanding Medicaid coverage, joining with other states to purchase prescription drugs and reforming insurance practices like prior authorizations and step therapy, which they say delays healthcare and needlessly increases costs.

Lamont’s health care proposals, divided into two bills, were recently passed out of their respective committees, and were supported by the CT Association of Health Plans, but some parts were opposed by the Connecticut Hospital Association who said that both bills would be financially devastating for hospitals, which are already facing financial hardships left over from the pandemic.

“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,” Lamont said.

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Marc E. Fitch, Senior Investigative Reporter

Marc E. Fitch

Marc worked as an investigative reporter for Yankee Institute and was a 2014 Robert Novak Journalism Fellow. He previously worked in the field of mental health is the author of several books and novels, along with numerous freelance reporting jobs and publications. Marc has a Master of Fine Arts degree from Western Connecticut State University.

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