Costs of Care in Massachusetts, 2002-2006

The Commonwealth of Massachusetts recently published aggregate data on the cost of caring for HMO commercial patients (employer insurance, mostly under age 65) in 2002-2006.    A few observations follow - all cost increases are per year for the 4-year period unless otherwise noted.

1) Costs up about 55% over 4 years (Compound annual growth rate of 11%)
2) Outpatient hospital  costs increased much more per year (15.9%) compared to inpatient hospital costs (9.2%). Of course, both are far more than the rate of inflation
3) Technical costs per member per month in radiology (18.4%) and laboratory (19.6%) increased much more than professional costs (radiology 12.2%, laboratory/pathology 10.7%)
4) Inpatient stays got a bit longer, even though admission rates were down a bit and severity did not seem to increase
5) High cost imaging (CT, MRI, PET) increased an average of 16% annually - split between increased cost per unit (9.3%) and number of services (6.1%)
6) Office visit mix changed substantially  - over a quarter more high level (level 4) office visits, and far fewer level 2 and 3 visits
7) Generic drugs increased from 50.5% of prescriptions in 2002 to 65.4% in 2006.  Brand costs per unit were up substantially(13.9%) annualy, and generic costs per unit were up 9.5%.  
8) Emergency department visits were only up 2%, while costs per member per month went up 13%

These are tough numbers -- there isn't a single place to look for enormous savings that won't be painful.   This data complements that published regularly by Kaiser Family Foundation/HRET -which focuses on health insurance premiums, which don't always parallel actual health care costs.