Health Affairs Article Covers 2021 Health Care Spending Growth in Five States with Cost Growth Targets

Focus Area:
Sustainable Health Care Costs
Peterson-Milbank Program for Sustainable Health Care Costs Spending Growth Target Performance

In early 2023, Connecticut, Delaware, Massachusetts, Oregon, and Rhode Island publicly reported on commercial, Medicaid, and Medicare state-level health spending growth in 2021 compared with their state growth targets. In a new Health Affairs Forefront article, January Angeles of Bailit Health examines these trends and discusses how market trends will likely affect spending growth in 2022. Bailit Health provides technical assistance to four of these five states through the Peterson-Milbank Program for Sustainable Health Care Costs.

All states had higher health care spending in 2021, which was expected after spending dropped in 2020 due to disruptions associated with Covid-19. Rhode Island was the only state to meet its spending growth target, while Oregon, Connecticut, Delaware, and Massachusetts exceeded their targets. All states reported that spending growth in the commercial insurance market fueled overall spending growth. Outpatient hospital services were the fastest or second fastest growing claims-based spending in all states. All states also reported an increase in spending growth in other professional services, including non-physician behavioral health practitioners.

According to Angeles, increases in the cost of delivering care are not fully reflected in the 2021 data, and inflation, rising labor costs, and rate increases for providers will contribute to spending growth in 2022. Angeles also highlights the need to continue to engage in cost growth target work to gain transparency into the drivers of spending trends and ultimately make health care more affordable.