Healthcare Business News

Per-person healthcare spending highest in Mass.; Minn. sees decline

By Andis Robeznieks
Posted: December 27, 2013 - 12:15 pm ET

Massachusetts leads the nation in the percentage of residents with health insurance. It also spends more on healthcare per person than any other state. In Minnesota, meanwhile, health spending actually declined.

A preliminary report on 2013 cost trends (PDF) in Massachusetts—called for by a new law intended to rein in those costs—concludes that the state's high-spending ways are largely driven by consumers choosing care in higher cost settings and higher prices paid by the state's commercial payers.

The 2012 legislation targeting healthcare costs seeks to save the state some $200 billion over the next 15 years by setting spending targets, investing in public and preventive health, and pushing providers to new payment models.

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Massachusetts, whose healthcare reform program was used as a template for the Patient Protection and Affordable Care Act, had the highest per capita health spending in the U.S. in 2009. According to the commission's report, the state spent $9,278 per person on healthcare in 2009, which was 36% higher than the national average of $6,815, and 11.2% more than the next-highest state, New York, which spent $8,341.

Healthcare spending accounted for 16.6% of the state economy in 2012, down from 16.8% in 2009. That's compared with 15.1% of the U.S. economy in 2012, down from 15.2% in 2009.

In Minnesota, healthcare spending accounted for an estimated 13.6% of the state of Minnesota's economy in 2011, according to a new report from the Minnesota Department of Health's health economics program.

Minnesota spent $38.2 billion on healthcare in 2011, which represented growth of 2%. Minnesota's private healthcare spending declined by 0.3% in 2011, while public spending grew 4.7%.

The report's authors declined to speculate whether the spending slow down was the result of healthcare reform or the lingering effects of the recession.

“To the extent that the economic downturn remains a significant factor in lower growth, a mature economic recovery with a longer period of empirical evidence will help determine whether the deceleration in spending was due to the economic disruption of the recession or structural changes in the Minnesota healthcare market,” the report stated. “Until then, economists on both sides of the argument continue to debate whether the healthcare delivery system has experienced desired structural changes that promise longer-term moderation in spending growth.”

The report did note, however, that many reform initiatives have taken hold in Minnesota, including population health, health information technology implementation and movement away from fee for service.

“Investments in population health through the State Health Improvement Program will continue into fiscal years 2014 and 2015 and beyond, targeting those risk factors that most greatly contribute to chronic disease,” the report noted. “Payment reform continues to transition Minnesota's healthcare system from transaction-based models to models of accountability by all actors, with accountable care models expanding in both the public and commercial sectors.”

Follow Andis Robeznieks on Twitter: @MHARobeznieks

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