“We’re seeing a shift to more expensive prescription drugs, a shift to more expensive imaging modalities, and a shift to more expensive treatment settings for routine screening colonoscopies,” Auerbach said. “We’ve been reporting on rising rates of caesarean sections in low-risk births, and finally, some very expensive surgeries are increasing rapidly.”
The average cost for a colonoscopy is about $2,600 in a hospital outpatient setting, $1,600 in an outpatient surgery center, and $980 in an office. According to his presentation, GLP-1 drugs drove an increase in prescription spending from 2020 to 2024, as well as an increase in intake for drugs costing more than $1,000.
The number of commercial patients admitted to hospitals and classified in the highest severity level nearly doubled from 2016 to 2025, which also led to increased spending. However, this trend is the result of “encoding behavior” rather than a surge in patient acuity, Auerbach’s presentation said.
As health care regulators, lawmakers and business leaders gathered to consider possible changes to the benchmarks (enacted by a 2012 law that critics say fail to keep spending at affordable levels), Auerbach highlighted deep-rooted health care delivery challenges that are ultimately weighing on patients’ wallets.
A report by the Center for Health Information Analysis released last month found that total medical spending per person increased by 5.7% from 2023 to 2024, although the baseline was set at 3.6%. Affordability issues are worsening, with more Gulf Coast residents choosing to delay treatment due to cost concerns.
State Rep. John Roan, co-chair of the Joint Committee on Health Care Financing, said the state is “at the breaking point of not being able to fully pay for health care.”
“We are all in this together, and unless we fix this problem, it will have very dire consequences for our health care market and our ability to provide affordable and accessible health care,” Roan told hearing attendees.
Health and Social Care Secretary Kiami Mahania has admitted that as a “former CEO of a healthcare organization”, she tried to balance a tight budget by accepting “higher remuneration”. He led Lynn Community Health Center for six years and previously served as chief medical officer at North Shore Community Health.
“The motivation was to look at what I was doing to get the highest possible profit margin so I could continue to pay my employees,” Mahaniya said. “So it’s not always some kind of nefarious price gouging. In some cases, it’s just survival, right?”
Auerbach described this dynamic as a “system pricing flaw” that could be difficult for health systems to “resist” as they weigh which treatment options are more profitable. This outlook explains why hospitals close labor and delivery rooms because they are “in the red,” Mahania said.
State Sen. Cindy Friedman, the Senate’s health care director, said policymakers need to understand where health care dollars are going as Massachusetts prepares for federal funding cuts under the One Big Beautiful Bill Act.
“Are we investing in the health care services and workforce that our residents need and deserve, or are our dollars being hidden in a system where they are used for profit rather than care, or are they being invested in the entities that cost the most but provide the least services?” Friedman asked at the beginning of the hearing.
Liz Leahy, senior vice president of advocacy and engagement at the Massachusetts Association of Health Plans, said government spending is not driving up health care costs. She instead pointed to the cost of care, including hospital outpatient settings and drug expenditures.
“Oncology chemotherapy drugs are one of the fastest growing costs, currently totaling more than $3 billion annually,” Leahy said. “And these costs reflect both drug prices set by pharmaceutical companies and point-of-care prices set by health care providers. And neither of those price components is meaningfully constrained today.”
Leahy said hospitals, health care providers and drug manufacturers need to work together and take responsibility. Insurance Commissioner Michael Caljou noted that the insurance company is “in the middle of” price negotiations with other major companies.
“We’ve seen rapid consolidation of the health care system,” Leahy responded. “I’m not going to debate whether that’s good or bad, but I will say that it has significantly reduced the bargaining power of health plans across the country and here in Massachusetts.”
John Hurst, president of the Massachusetts Retailers Association, said Wednesday will be the biggest insurance renewal day of the year for small businesses. A recent member survey found that the average increase in insurance premiums was 13.6%.
Hurst said “something is wrong” with the state’s standards and private health insurance mandate, and said state elected officials plan to celebrate the state’s 20th anniversary this month.
“As we have said for years, small employers need equity and help managing their health care and insurance costs,” Hart said in written testimony, noting that small group employers are moving away from the fully insured market and toward self-insured or partially self-funded plans. He said the trend is an attempt to “reduce the cost of the mandate for nearly 60 states.”
“Estimates put state mandates and assessments at 17 to 24 percent of premiums for fully insured small businesses,” Hurst added. “For a $47,000 family policy, which unfortunately is a very real number this year, that equates to $8,000 to $11,000 in state mandates.”
The HPC Board of Directors is scheduled to vote on setting the threshold on April 16th. If a decision is made to change the target, another public hearing may be held at the Joint Committee on Health Care Financing.
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