Pay may be hot issue, but other factors push harder on health costs

The Boston Globe, March 14, 2011

Blue Cross Blue Shield of Massachusetts has captured the public's attention, although not the way it would have liked, as reports of millions paid to the insurer's former CEO and hefty stipends paid to board members sparked outrage. The outcry grew big enough to force Blue Cross board members to vote to suspend their own payments and to lead the insurer to make promises to curb excessive payouts to executives. There's just one problem: Those steps will do little to fix soaring healthcare costs. US health care spending hit $2.5 trillion in 2009, increasing by about $600 billion from 2004, according to the Centers for Medicare and Medicaid Services. Nearly two-thirds of the increase was driven by rising costs in three areas: hospitals, which accounted for 33% of the increase; doctors, which accounted for 19%; and prescription drugs, which accounted for 10%. Administrative costs, which would include payments to board members, accounted for about 5% of overall healthcare cost increases.

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