Regardless of what the Supreme Court decides on Obamacare, reining in health-care costs is key to Massachusetts’ fiscal sustainability, the state’s budget czar said today.
“Health-care cost growth in Massachusetts has been outpacing everything else,” Jay Gonzalez, the Patrick administration’s secretary of administration and finance, told Greater Boston Chamber of Commerce members. “This is true for families, businesses and government. Health care has been eating up more and more of everyone’s dollar.”
In 2000, health care consumed 23 percent of the state’s budget, Gonzalez said; today, it consumes 41 percent. As a result, the state now spends less on everything else, including local aid and higher education.
“This trend is completely unsustainable,” he said. “If allowed to persist, there will come a point where the only thing state government does is provide health insurance.”
But the growth in state health-care costs is not due to health care reform, Gonzalez said, citing the Massachusetts Taxpayers’ Association, which estimated that the incremental cost of health care reform to the state has been about only 1 percent of the total budget.
“Regardless of what the Supreme Court decides, let me be clear — in Massachusetts, health care reform is here to stay,” said Gonzalez, who chairs the board of the Health Connector Authority responsible for implementing state health care reform.
“We — and by ‘we,’ I mean all of us — led the nation on this issue and served as a model for providing tens of millions of Americans access to affordable, quality health insurance,” he said. “I hope the Supreme Court doesn’t prevent that from happening. Regardless of how the issue gets resolved on the national stage, however, it is resolved here.”
But while the 2006 health care reform was successful at providing near universal coverage, Gonzaleaz said, it didn’t control costs.
The state has reduced its health-care costs for the current and next fiscal years by about $1.5 billion, he said.
Through an active re-enrollment and targeted incentives, the Group Insurance Commission enrolled a third of state employees in limited network plans, saving the state more than $20 million and those employees hundreds of dollars, Gonzalez said.
The Health Connector Authority also reduced per-member premiums by 10 percent over the last two years, saving more than $100 million, he said.
The state also has helped municipalities reduce their health care costs through landmark legislation last year to establish an expedited process for municipalities and their employee unions to modernize benefit plan designs to achieve savings, Gonzalez said. Nearly 100 communities have leveraged the law to achieve more than $100 million in premium savings in the first year.
Gonzalez said a special commission will issue a report in November on how to address the state’s unfunded retiree health care liability.
He also said the administration will be publishing a strategic plan on how to address youth violence this week.
He added that Gov. Deval Patrick has appointed an all-star Council of Innovation Advisors composed of the best and brightest from academia and business and government to help find innovative solutions to changing government and the governor will soon be appointing a government innovation officer.