In this report, the authors evaluate the effects of Massachusetts’s health care cost growth benchmark—established in 2012 to constrain health care spending—on hospital revenues, hospital prices, and health insurance premiums. Although the cost growth benchmark was exceeded in most years since 2013, the policy may have slowed spending growth compared with what would have occurred otherwise.

The Effect of the Massachusetts Health Care Cost Growth Benchmark on Hospital Revenues and Other Spending Outcomes

Associations with Hospital Revenue, Hospital Prices, and Insurance Premiums

Elizabeth Chase, Christine Eibner, Rose Kerber, Jodi L. Liu

ResearchPublished May 27, 2026

In this report, the authors evaluate the effects of Massachusetts’s health care cost growth benchmark—established in 2012 to constrain health care spending—on hospital revenues, health care prices, and health insurance premiums. The cost growth benchmark, enforced by the Massachusetts Health Policy

Commission, sets annual spending growth targets and includes accountability measures for providers and payers. Although the cost growth benchmark was exceeded in most years since 2013, the policy may have slowed spending growth compared with what would have occurred otherwise.

The study uses four statistical approaches to estimate the benchmark’s effects, comparing Massachusetts hospitals and counties with various groups of hospitals and counties in other states and employing pre- and post-policy data. Results were mixed and method-dependent: Some approaches suggested that the cost growth benchmark reduced inpatient and outpatient hospital revenue and prices, while the authors found no significant effects in other approaches. There was no evidence that the benchmark affected health insurance premiums.

The analysis was limited by confounding factors, especially the near-simultaneous implementation of the Affordable Care Act, and by differences among Massachusetts and comparison states. The authors caution that findings are exploratory and not causal. Overall, the evidence that the Massachusetts health care cost growth benchmark reduced hospital revenue and prices was weak and inconsistent. The authors suggest that stronger enforcement or complementary policies may be needed to more effectively control health care spending growth.

Key Takeaways

  • In 2012, Massachusetts established a health care cost growth benchmark to constrain spending, with annual targets and potential penalties for providers and payers exceeding the benchmark. Enforcement has been rare.
  • In most years, state spending growth exceeded the benchmark, raising questions about the policy’s effectiveness.
  • Statistical analyses using four different methods yielded inconsistent results regarding the cost growth benchmark’s intended effects.
  • Some approaches found statistically significant or marginally significant reductions in inpatient and outpatient hospital revenue per discharge, but results varied depending on the comparison group and methodology.
  • One analytic approach suggested that the benchmark may have reduced inpatient and outpatient hospital prices, but these findings are based on limited, nonrepresentative data and should be interpreted with caution.
  • No statistically significant effects were found on individual or small-group insurance premiums.
  • The near-simultaneous rollout of the Affordable Care Act in 2014 with the Massachusetts health care cost growth benchmark in 2013 confounded results, making it difficult to isolate the cost growth benchmark’s effects.
  • Evidence for the benchmark’s effectiveness was weak and inconsistent.

Recommendation

  • Policymakers should consider stronger enforcement, complementary policies (e.g., value-based payments, price caps), or alternative strategies with more-robust evidence to constrain health care spending growth.

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Chase, Elizabeth, Christine Eibner, Rose Kerber, and Jodi L. Liu, The Effect of the Massachusetts Health Care Cost Growth Benchmark on Hospital Revenues and Other Spending Outcomes: Associations with Hospital Revenue, Hospital Prices, and Insurance Premiums. Santa Monica, CA: RAND Corporation, 2026. https://www.rand.org/pubs/research_reports/RRA4662-1.html.
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This research was sponsored by Arnold Ventures and conducted independently by the RAND research team. This work was conducted in the Financing and Organization Program of RAND Health.

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