Costenheimer 

Focus Area:
Sustainable Health Care Costs State Health Policy Leadership
Topic:
Peterson-Milbank Program for Sustainable Health Care Costs

This summer could well be remembered for two things — record heat and “Barbenheimer.” The first phenomenon may be a harbinger of what’s to come while the latter is a mash-up of two contemporaneous but seemingly unrelated stories.   

“Barbenheimer” refers to the simultaneous release of two blockbuster movies: “Oppenheimer,” the biopic of atomic bomb researcher Robert Oppenheimer, and “Barbie,” the high-gloss movie starring America’s favorite doll. Some film fanatics proudly touted having spent five-plus hours in the theaters the last weekend in July seeing both.  

As it happens, health policy fans can enjoy a similar treat by watching the five-hour recording of Connecticut’s first health care cost growth benchmark hearing. For me, the summer hearing integrates themes from both movies. Let’s call it “Costenheimer.” 

The hardworking staff of the Connecticut Office of Health Strategy (OHS), led by Deidre Gifford, MD, have taken on a task worthy of Oppenheimer. Instead of thwarting Axis powers, they are analyzing the drivers of Connecticut’s health care cost growth and setting expectations for a future annual rate of growth of 2.9% or less.  

The stakes are high. A 2022 Altarum survey of state residents found that almost half (46%) reported delaying or going without health care in the previous year because of affordability concerns. One-third struggled to pay medical bills, and more than 1 in 10 reported going without food, housing, or heat as a result. At the hearing, a woman discussed a $3,000 bill for 90-day supply of a medication she needed to minimize the impact of a debilitating stroke that left her unable to work. 

“Why was my price so high?” she queried. “How does the same manufacturer offer discount cards that reduce the costs of a 30-day supply to $60?” 

OHS consultant Michael Bailit laid out the numbers. From 2020 to 2021, per capita health care spending overall in Connecticut grew by 6.4%, well above the 3.5% goal for that period. While Medicare and Medicaid per capita spending came under target, per capita spending increases in the commercial payer market were a budget-buster at 18.8%. While higher commercial growth rates were expected after the pandemic suppressed utilization in 2020, Connecticut’s increases far exceeded those in other cost-growth-benchmark states for the same period.   

Source: Connecticut Office of Health Strategy. Healthcare cost growth benchmark and primary care spending target initiatives — 2020 and 2021 performance. March 31, 2023. 

Within the commercial sector, increases in hospital outpatient spending were the main driver of cost increases, followed by spending on hospital inpatient services and physician services. Outpatient costs were driven by big increases in utilization, likely because people were seeking services that they had deferred during the pandemic lockdown.  

Connecticut’s statute states that OHS shall identify organizations that are significant contributors to the state’s health care spending trends, and those groups shall appear at the public hearing. OHS constructed a hearing agenda to fulfill that mandate, with sessions on pharmaceutical costs, hospital costs, and health insurer costs.  

It is at this point in the hearing, viewers might feel they had moved from “Oppenheimer” to “Barbie.”  

There are two worlds in “Barbie”: Barbieland and the real world. Barbie must venture from a fantasy world with few limits and not much suffering to the real world to learn some hard truths. At times in this hearing, it seemed the “significant contributors” to Connecticut’s health care spending were just commencing this journey.  

For the pharmaceutical session, AbbVie and Bristol-Myers Squibb (BMS) were invited to appear. Analysis of Connecticut’s spending data for 2021 had revealed average price increases of over 7% for two versions of AbbVie’s drug Humira and 8% for BMS’s drug Eliquis. The BMS representative gamely took questions from Anna Kaltenboeck of the ATI Advisory Group but pointed the finger elsewhere, including at pharmacy benefit managers and research and development. They asserted that pharmaceutical rebates reduced these price increases, but also said that the rebate information was confidential. 

AbbVie simply rebuffed OHS and state law and refused to appear. Given the current environment — with drug companies already feeling the heat from the new Inflation Reduction Act provisions affecting Medicare drug prices and new prescription drug pricing laws in New Jersey, America’s pharma heartland— arrogance may not be a wise business practice.  

The two invited hospitals showed up for the hearing, but it was clear that they were not used to being held publicly responsible for their costs. Frederick Isasi of Families USA asked them directly if they agreed it “was a bad thing that your costs were rising faster than inflation” and that “affordability should be part of your mission.” Representatives from Yale New Haven and the Hospital of Central Connecticut did not answer his question directly. Instead, they asserted without evidence that the acuity of their patients’ medical conditions had risen dramatically in just one year and questioned, also without evidence, the validity of OHS’s data.  

To their credit, the invited health insurers Aetna, Anthem, and Cigna also participated. When queried by David Seltz of the Massachusetts Health Policy Commission, they said that the cost growth target did not hurt negotiations with large providers and might have helped. Each also acknowledged contracting with a pharmacy benefits manager in which they had an ownership stake, raising the possibility that the corporate parent may in some cases benefit from increased pharmacy expenses. Yet when asked what more public policy could do to promote health care affordability, they murmured bromides about not stifling innovation. 

While Robert Oppenheimer came to question the Cold War that proceeded from his investigations and was stripped of his research credentials as a result, he was later vindicated. And — spoiler alert — Barbie returns to Barbieland with a new awareness of its problems. Barbieland is one-sided and boring. She has to broaden her perspective and embrace the conflicts and compromises of reality. 

So it will be with the efforts of Connecticut and the seven other states, representing one in five Americans, with health care cost growth targets. Those who pay the bills — employers, individuals, and governments — must continue to do the hard, underappreciated work of understanding what is driving costs while holding participants in the system accountable so that all residents can afford health care.  

Meanwhile, health care providers and insurers must broaden their perspectives and consider the consequences of their actions: almost half of Connecticut residents delay needed medical care because of costs.  

All participants in the health care system must accept responsibility and contribute to a viable solution, instead of failing to show up, blaming the data, or passing the buck.   

This is the challenge for all of us. It is not spitting an atom, but whether and how we make health care affordable can also lead to life-changing consequences.