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‘Urgency’ Seen In Rising N.H. Health Costs

But Care Providers, Insurers Can’t Agree Who’s to Blame

Concord — New Hampshire is one of the most expensive places in the U.S. to buy health insurance, and on Thursday, state regulators heard testimony about what is driving the cost of coverage and what can be done about it.

Health care researchers, advocacy groups and representatives from four of the state’s insurance carriers appeared before New Hampshire Insurance Department officials during a public hearing on why New Hampshire has the second-highest premiums in the nation and third-highest deductibles.

The reasons offered were complex and varied, and included a lack of competition among hospitals, rising costs to provide care and the paltry reimbursements from the state’s Medicaid system. While there was no consensus on the primary factor driving New Hampshire’s expensive insurance market, all agreed that it was an urgent problem that required immediate attention.

“As you heard today, New Hampshire has high health care prices, we have high health care premiums, we have high deductibles and we have an urgency to act,” said Jeanne Ryer, director of the N.H. Citizens Health Initiative, a nonprofit coalition developing a plan to improve the state’s health care system.

The prices that hospitals and other health care providers charge for services are growing faster than demand would warrant, insurers said. Growth in utilization rates slowed during the recession, in part because patients were bearing more of the burden for their own health care spending as employers shifted to high deductible plans to keep premiums down.

Many analysts expected patients to seek more care when the economy improved, because “what goes down, does come back up,” said Lisa Guertin, president of Anthem Blue Cross Blue Shield of New Hampshire. But that hasn’t happened so far.

“This did surprise us a bit, as it did many industry analysts,” Guertin said.

And yet the unit cost in New Hampshire — how much insurers pay for services — rose at a higher rate than utilization, between 4 and 7 percent in 2012 and early 2013, insurers said.

There was a consensus among insurance carriers and care providers that costs for patients were too high, according to a report by UMass Medical School and Freedman HealthCare, a Massachusetts-based health care consultant. However, the groups were divided on the reasons why, according to a presentation based on the report at the outset of Thursday’s hearing.

Health care providers said low Medicaid reimbursements were driving the rise in costs, as it forces providers to shift the burden for covering services onto private insurers to make up losses from the Medicaid program, the report said.

Meanwhile, several insurance carriers said consolidation among hospitals and other health care providers was to blame.

Providers also felt the insurance market lacked competition, the report said, while most insurance companies felt the market was competitive enough.

Provisions of the 2010 Affordable Care Act also were targeted for blame. Thus far, complying with “Obamacare” has had “modest impacts” on rising costs of insurance, said William Swacker, of Cigna Health Care of New England. But starting next year, insurance plans must include 10 “essential health benefits” and there is a mandate to expand certain types of care for women. Contraceptives are covered in full, for example, and benefits will also include provisions like sterilization of breast pumps.

Among the four carriers, Anthem will be affected the most by the health care reform law. It is the only insurer that is offering coverage next year through the state’s new insurance marketplace, an online store for health coverage. Individuals and small businesses will buy coverage through the marketplace.

Premium increases in the individual market are expected to be substantial, driven by a combination of expanded benefits, offering coverage to individuals who were previously uninsured, and including people covered in “high risk pools,” Guertin said.

“Overall, the ACA does create some upward pressure on our required premiums in the form of benefit enhancements, risk pool deterioration as well as the new taxes and fees,” Guertin said.

Insurers are experimenting with new models to help control those increases. In the plans offered on the marketplace, Anthem restricted its network of providers to just 16 of New Hampshire’s 26 hospitals. This allowed Anthem to negotiate lower prices by offering hospitals a larger volume of patients. But the “narrow network” has raised concerns among some hospital officials who believe it will harm access to care and could overwhelm the in-network providers with too many patients.

Several of the insurance carriers have set up “accountable care” arrangements with hospitals, in which hospitals are rewarded with financial incentives for lowering the cost of care while maintaining or improving quality. Dartmouth-Hitchcock is among the hospitals exploring accountable care models with private insurers. A goal of such payment models is to move away from a system in which doctors are paid according to the volume of services they provide rather than improving the health of the patient.

“The fee-for-service world that we’ve been operating in is not helping our cost challenges and I think that we’re all anxious to get to a point where we have different payment methodologies in place,” Guertin said.

Tu Nguyen, of Harvard Pilgrim Health Care, mentioned a similar initiative that his company announced this month called “Elevate Health.” The partnership with Dartmouth-Hitchcock also includes Elliot Health System and four other hospital systems, and aims to lower premiums by 10 percent through better coordination of care.

Patients will be assigned a care coordinator who will act as an advocate, connecting with patients outside of appointments and serving as a link to providers. The providers will also share best practices and information, including claims data.

But these kind of innovations would not be enough to bring down health care spending to reasonable levels, insurers said. More would have to be done to educate patients about costs and engage them in their own care, and it would require a long-term effort. There are no quick fixes to the problem of rising health care costs, said Patrick Gillespie, of Cigna.

“This is like turning a battleship nationwide,” Gillespie said. “And I don’t know that there is any quick fix.”

Chris Fleisher can be reached at 603-727-3229 or cfleisher@vnews.com.