Dreyfus sounds alarm about health care costs

Says providers believe state benchmark no longer relevant

ANDREW DREYFUS, who is winding up his 12 years as president and CEO of Blue Cross Blue Shield of Massachusetts, says health care costs in the state are on the verge of exploding.

Some of the increase is justified, with health care providers grappling with inflation, labor shortages, and supply chain challenges. But Dreyfus warns that the state’s voluntary health care cost benchmark won’t be of much use in reining in the situation.

“I think that’s really at risk now,” he said on The Codcast with John McDonough of Harvard’s T.H. Chan School of Public Health and Paul A. Hattis of the Lown Institute. “Hospitals that used to negotiate with us with an eye toward the benchmark and to not exceeding it have been very explicit with us that it’s not relevant today. Many of them have been asking for increases that are four to five times the size of the benchmark.”

Dreyfus predicts health insurance premiums will grow at double-digit rates, employers will balk at paying, and government will be pressured to intervene with price controls or some other regulatory response, most likely initiated by the Health Policy Commission.

Don’t forget, Dreyfus adds, COVID is not going away, and Gov.-elect Maura Healey will have to pay a lot of attention to it. “We’re just one difficult variant away from being in a really challenging situation,” he said.

Dreyfus says health equity is another pressing issue. He said Blue Cross has spent considerable time over the last several years reviewing health disparities within its own system and plans to announce within the next few weeks a test of incorporating equity into the payment model it uses with health providers.

Hattis and McDonough pressed Dreyfus on health care consolidation and the insurance executive responded with concern, both about new acquisitions and expansions. He said the evidence is strong that consolidation leads to higher prices and not better quality.

“We should be really wary of any further consolidations without really strict oversight,” he said, noting the importance of the price protections incorporated into the merger that produced Beth Israel Lahey Health. He also said the disjointed regulatory structure for health care expansions requires better coordination between the Department of Public Health, the Health Policy Commission, the Division of Insurance, and the attorney general’s office.

“The status quo is not acceptable,” he said, noting that innovation in health care oversight will have to bubble up at the state level given the political gridlock in Washington, DC. (One political shift he noted in the recent election was the absence of any significant debate about the Affordable Care Act. “It’s a reminder that reforms take a long time to take root,” he said.)

Dreyfus said the health insurance marketplace is also shifting, with for-profit companies gaining greater market share. McDonough pressed Dreyfus on whether Blue Cross Blue Shield would consider becoming a for-profit company, and Dreyfus said that would not be in the cards. “We really believe in our not-for-profit mission,” he said.

But he said massive for-profit companies have many advantages, chief among them the scale to use one line of business to cross-subsidize another. “We believe not-for-profit health plans like Blue Cross, Point 32, and Fallon are good for the community,” he said. “I worry about losing that special quality we have in Massachusetts.”

Dreyfus is stepping down at the end of the year and will be replaced by Sarah Iselin, the executive vice president and chief operating officer at Blue Shield of California.