The Connecticut Office of Health Strategy (OHS) released a report indicating the state’s effort to limit the growth of healthcare costs for Connecticut residents through the Cost Growth Benchmark program hasn’t worked, with healthcare costs growing by more than double the benchmark.
The Cost Growth Benchmark program was established by Gov. Ned Lamont via executive order and then established by the General Assembly in 2022 as part of the budget. The program sets “benchmarks” for healthcare cost growth and requires healthcare providers and entities to participate in a public hearing to discuss and justify healthcare costs.
But the idea that setting benchmarks would constrain healthcare cost growth has not worked out, according to OHS’s report. Although OHS set a growth benchmark of 2.9 percent for 2023, the actual growth blew past the figure, growing by 7.8 percent.
“Connecticut’s 2023 healthcare spending exceeded the benchmark for the third consecutive year, signaling continuing challenges in containing spending growth at a rate that is affordable to residents and businesses,” the report states. “Despite having a benchmark established by statute, Connecticut healthcare cost growth has continued to outpace this measure of affordability. Current strategies to contain cost growth do not appear to be working, or working sufficiently, to bring down the growth in spending.”
OHS goes on to note that 2023’s increase was the highest since the program’s inception and that statewide spending grew “significantly” by $38 billion, with Medicare accounting for the largest component of increased spending, growing by 13.7 percent, followed by commercial insurance which grew by 6.2 percent, and then Medicaid at 2.2 percent.
The largest factor of the increase came from “non-claims spending,” largely concentrated in Medicare and the Medicare Advantage program. Non-claims spending are payments made to “providers that are not tied to a specific service.”
The Connecticut General Assembly has been debating how to potentially reduce healthcare costs and insurance costs in Connecticut for a decade with little progress made between competing ideas, including implementing a public option plan, allowing small businesses and individuals to sign onto Connecticut’s state employee health plan, and allowing businesses to form association health care plans.
However, the Connecticut Hospital Association is also calling for the state to increase its Medicare and Medicaid reimbursement rates, arguing the low rates are made up for by commercial insurance rates thus driving up the costs for consumers. The hospitals have been at odds with OHS and Gov. Ned Lamont’s administration over how the agency is calculating the Medicaid reimbursement rates and the governor’s plan to increase the tax on hospitals without increasing reimbursement rates.
Lamont established the Office of Health Strategy in 2019 to help keep healthcare costs under control, however the agency, which is funded in large part by a fee leveraged against insurance plans that are passed onto consumers, has seen both an increase in healthcare costs and the agency’s budget, which rose from $2.8 million to $13.7 million.
According to the report, the Cost Growth Benchmark program has increased cost transparency and has highlighted “structural issues” in the state healthcare system, including rising hospital spending, but the overall hoped-for effect has not been realized.
“Like our unaffordable electricity bills and taxes, health care costs contribute significantly to the cost of living crisis in Connecticut,” Sen. Tony Hwang, R-Fairfield, Sen. Stephen Harding, R-Brookfield, and Sen. Jeff Gordon, R-Woodstock, said in a press release. “Connecticut Senate Republicans continue to speak directly with small business owners and working families. They tell us that our state is going in the wrong direction. Their burdens are getting heavier, not lighter.”
The report cited national health expenditure data from 2020, finding that Connecticut had the “9th highest per capita healthcare spending in the nation,” while those with commercial insurance had the 5th highest spending and those with Medicare the 9th highest rates.
“These data underscore the growing challenge Connecticut faces in meeting its cost growth benchmark and keeping healthcare costs at an affordable level for CT residents,” the report states. “Though it came close in 2022, Connecticut has failed to meet its cost growth benchmark at the state level each year since it was established.”
**This story was updated with the press release issued by Senate Republicans**
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If state employees are counted in on this investigation ,then forget it, the plan will never work.