Americans spend more per capita on health care than almost anyone else in the world. A new report released on Monday reveals the latest trends in Rhode Island’s health care spending. Health Insurance Commissioner Cory King talked with The Public’s Radio Health reporter Lynn Arditi about the findings.
This transcript has been edited for clarity and length.
LYNN ARDITI: In this report, you talk about Rhode Island meeting its benchmark for health care spending. What is so important about this benchmark that’s set for healthcare spending? What does it mean to the average Rhode Islander?
CORY KING: Rhode Island is one of eight states in the nation that has established a cost-growth benchmark. And the reason for that is historically, health care spending has grown faster than the economy and incomes. And when that happens, it squeezes the budgets of households. And the idea of a cost-growth target or benchmark is to create an expectation for the market. So it’s the policy measure to promote affordability in the health care system.
ARDITI: In Rhode Island in 2022, we looked pretty good because our healthcare spending was not exceeding the rate of economic growth. So how does Rhode Island’s growth rate and healthcare spending compare with the growth rate of healthcare spending in the rest of the country?
KING: In 2022, Rhode Island’s per capita health expenditure growth rate was lower than Massachusetts and Connecticut. But our commercial market growth rate was in between the two states. [See details in this report.] And the difference between the states and total health expenditure growth was driven largely by Medicare, where Rhode Island’s growth rate for Medicare Services was lower
ARDITI: To remind people, Medicare is the government health insurance for people who are seniors 65 and over. So how does Rhode Island’s spending in the Medicare market for seniors — how does that compare with Massachusetts and Connecticut or the nation as a whole?
KING: We grew at a lower rate for Medicare in 2022. 2022 data is not finalized, but we have some projections. So there was an expectation that national health expenditures per capita would grow 3.9% in 2022, that growth is expected to accelerate over the next decade. And it’s expected to accelerate beyond the increase in economic activity or incomes. And that gets us back to this conundrum of health care spending growing faster than the economy and growing faster than people’s incomes.
ARDITI: So what are the biggest risk factors that will typically impact a state’s health care spending? What do we have to worry about going forward?
KING: So the factors that influence healthcare spending are complex, but we boil it down to a few: How many services people are using, so how often they go to the doctor, how often they go to the hospital? What types of services [are they] using? An inpatient admission is much more expensive than an outpatient surgery on average. And we also look at price growth. So, how much do we charge per service? And it’s managing each of those factors that were driving at.
ARDITI: So we know that we have a provider shortage in Rhode Island and in the country. We are short on doctors, nurses and physician assistants. How might that impact our health care costs in the state?
KING: So if we don’t have a sufficient supply of community based providers, like primary care, more people will use emergency department services, more people will end up in the hospital and will spend more money. And that’s why one of the recommendations of the [Office of the Health Insurance Commissioner] report is to commit additional resources to community based providers in a way of spending money to save money.
ARDITI: As you probably know, studies have generally found that market consolidation, like hospital mergers lead to higher health care spending. And now we have a proposed takeover of two community hospitals by the Centurion foundation. What are you looking at to determine whether these types of hospital consolidations or takeovers might impact our health care costs? What are the risk factors here?
KING: So market consolidation is an incredibly important factor driving health care costs. That’s documented. And that’s one of the reasons why the Attorney General denied the merger of Lifespan and care in New England. In terms of the acquisition of Roger Williams Medical Center and Our Lady of Fatima, it does not appear to me that that’s going to cause consolidation. There is a broader issue around vertical integration of hospitals buying physician practices. That’s an area where the state does not have oversight presently. And there’s some evidence that that type of vertical consolidation can likewise increase health care costs.
