Saturday, March 12, 2011

Jawboning Health Care Costs in Massachusetts

For the moment, Massachusetts is the jawboning center of the U.S. health system.

We in the U.S. are can-do activists. If there's a problem overseas, we're ready to invade. But with regard to health care costs we've been stunningly passive. We've wrung our national hands and simply watched as costs have gone up and further up.

The impotent spectator stance is coming to an end in Massachusetts. By U.S. standards, Massachusetts is going like gangbusters on health insurance access, with 98 percent of the population insured. But costs have continued out of control.

On February 17, 2011, Massachusetts Governor Deval Patrick filed "An Act Improving the Quality of Health Care and Controlling Costs by Reforming Health Systems and Payments." The proposed legislation puts the Commissioner of Insurance into the middle of the cost spiral by threatening to impose price controls. The Commissioner would be empowered to declare the acceptable rate of cost increase, and the insurer is prohibited from contracting with a provider at a rate exceeding the allowable amount.

What's important in this legislative concept is that instead of bashing insurers for the health cost trend the Governor is now directing insurers to drive hard bargains. This repositions the insurer from being the enemy of the public to being the agent of the public.

In Massachusetts, where the three major insurers are locally based not for profit organizations, repositioning insurers from enemy to agent makes sense.

In addition to jawboning by public officials, Massachusetts media have fastened on health care costs as a public issue. The Boston Globe publicized the payment differentials received by hospitals that had strong brand identity even when quality measures did not warrant the premium. And in recent weeks, when Blue Cross revealed the size of the golden parachute given to its former CEO and the level of payment to its board members, the story was front page news. (See this post on the topic.) In response, the Blue Cross board voted to suspend its stipends, and both Harvard Pilgrim and Tufts Health Plan, the other two major insurers in the state will address the topic at their next board meetings.

Health care costs will only come into line when patients, providers, payers, politicians, and the wider public (note the five Ps) come to see cost containment as an ethical imperative on behalf of society, not a moral crime committed by proponents of death panels. Massachusetts is a promising venue for this kind of learning and collaboration. The state is proud of what it has achieved in access to health insurance. But continued cost escalation will kill those achievements. And it's finally dawning on the public and its leaders that health care is only one of many socially valuable expenditures. However valuable health care may be, it's strangling other public objectives that provide even more value.

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