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HPC preview: 2024 Cost Trends report flags rising pharmacy prices, widening price variation and worsening affordability
Summary
Research staff previewed the 2024 Cost Trends report, showing commercial spending growth outpacing benchmarks (driven mainly by drug prices and hospital outpatient services), rising family premiums, growing medical debt and worsening affordability—particularly among lower-income and non-white residents. The report also highlights variation in treatment intensity and site-of-care price differentials.
The Health Policy Commission's research team on Tuesday previewed the 2024 Cost Trends report, telling commissioners that recent spending trends in Massachusetts have been driven more by price increases—especially for branded prescription drugs—than by higher utilization.
Research director David Hourback said commercial health spending grew about 5.2% annually in the 2019–2022 period versus roughly 3.8% nationally, and that pharmacy spending and hospital outpatient prices were the largest contributors. “The prescription drug price increase is much higher,” he said, noting a 69% average increase for branded prescriptions from 2017 to 2022 and that 5% of prescriptions in 2022 were priced above $6,300.
The preview also underscored affordability strains: staff compared 2021 and 2023 household-survey data and reported that the share of residents forgoing needed care rose substantially (from about 600,000 to about 900,000 people), with a larger burden among lower-income and non-white residents. Staff flagged that in 2023 Massachusetts’ average family premium for employer coverage was about $26,000 and that combined premium plus out-of-pocket spending yields a typical family health-cost burden above $29,000 annually.
Analyses presented in the chart packs emphasize wide commercial price variation for comparable hospital stays (roughly 2:1 differences in prices across hospitals for an average-complexity inpatient stay), higher prices for hospital outpatient departments relative to independent labs and offices for common services, and growing concentration of care in a small number of systems. Staff also described an “intensity of care” chapter that examines choices between more-resource-intensive and less-intensive treatments; one example presented was rising C-section rates with notable hospital-level and racial variation.
Commissioners asked for further detail on equity measures, population characteristics that explain provider-level spending variation, and how the COVID-era volatility was smoothed for trend analysis. Staff said the final written report (to be circulated for commissioner comment) will include deeper breakdowns by patient population, including charts showing provider-population characteristics and adjusted spending measures.
What’s next: The HPC will circulate the full written Cost Trends report for commissioner review ahead of the annual Cost Trends hearing scheduled for Nov. 14; the board will refine policy recommendations (including a possible focused platform addressing market dysfunction revealed by the Steward transactions).
Sources: Presentation and Q&A by HPC research staff (David Hourback and team).
