Wednesday, August 1, 2012

Massachusetts nibbles at the cost bullet

On the last day of the legislative session, the Massachusetts Senate unanimously approved a 350 page health reform bill. The House approved it by 132-20. Governor Patrick has said that he will sign it. (The bill itself is not yet available on line - I've read about it but not yet seen it.)

Like the Affordable Care Act, the Massachsetts bill includes a wide range of policy steps - creating an oversight agency, promoting transparency about costs, supporting wellness programs, encouraging global budgets and an end to fee-for-service, and more. But the key component is the line in the sand about overall health care costs: between 2013 - 2017 cost increases should not exceed the growth of the state economy. For 2018 - 2022 cost increases should be at least 0.5% below the state economy growth.

So what happens if costs exceed the target?

Since total health care cost is the sum of thousands of independent charges (by hospitals, medical offices, equipment vendors, and more) and payments (by insurers, patients, government, and more), there's no one to hold accountable and no real enforcement mechanism.

Representative Steven Levy's twitter comment on the cost containment commitment was (1) "lol" and (2) "only concrete thing in it is more bureaucracy and fees." He's not right, but he's not completely wrong.

Even without a true accountability structure or enforcement mechanism, the cost commitment matters. The situation reminds me of all the times my wife and I said to our sons some form of - "we expect you to do XYZ." By the time they were teen agers they were smart enough to ask - "what happens if I don't do XYZ?" We tried to avoid too much sabre rattling and generally said something like "we expect XYZ to happen - if it doesn't we'll deal with it then..."

Of course XYZ didn't always happen. Sometimes there were consequences. Sometimes there were apologies and resolutions to do better. Occasionally our sons would persuade us that XYZ was the wrong expecation - it should have been ABC. But we always took it seriously if XYZ didn't happen.

Managing a state with 6.5 million residents and $80 billion in health expenditures is rather more complex than managing a four person family, but I expect the same process I experienced as a parent to happen in Massachusetts.

Until now we've not had explicit expectations for health costs. Now we do. Measuring how we're doing in relation to a commitment is different than wringing hands over "unsupportable cost increases." Our legislators and Governor have made a promise. It's not clear how they, and we the citizens, will accomplish it. But we can't avoid paying attention to it, working on it, learning from what happens, and taking next steps.

The law sets a process in motion. It's not a silver bullet. It's more like tying a string around  a finger to ensure vigilant attention. But that's more than our state, or any state in the U.S. has done before.


dennis byron said...

the bill as sent out of committee is here and has been since Monday nite ( I don't believe any changes were made on Tuesday.

Where do you get the $80 billion in spending figure?

The sponsors of the bill are not saying much about how much spending there is today in Massachusetts because when they do, it's hard to explain how they could save $150/$160/$200 billion over 15 years. They claim around $60 billion a year in spending but use a source that apparently includes long term care (the bill as you will see after you read it, does nothing about long term care).

The former state Department of Heathcare Finance and Policy said -- in 2011 -- 2009 spending was under $40 billion for the sorts of things covered by the bill (maybe that's why it's the former DHCFP?)

So to save $200 billion, which they have apparently told the Washington Post will be done by saving practically nothing over the next few years and saving $40 billion a year in 2019-2022 (see, you have to estimate that the state will cut in 2019 almost the total 2009 spending.

Really, you can't believe that? You can't believe it is good public policy to even pretend you might be able to do that? Especially when 33% of us in Massachusetts are already capitated so you can't save it from us. And when 20% of us are on Medicare so you can't save it from us. There is some overlap in those two numbers but when you net the two, and look at the projected 2019-2022 savings, you find the rest of you have to spend a negative amount on your health care.

Jim Sabin said...

Hi Dennis -

Thank you for your (as always) thoughtful comment. And thank you for the links to the legislature bill and the Washington Post blog.

I got the $80 billion expenditure figure from a MA website I couldn't find today - but I used the same table that the Washington Post reprinted.

I share your view that the legislation itself does nothing about cost containment. Insofar as it has power over time it will come from (a) having put the legislative and executive branches, and the state's reputation itself, out on a limb and (b) reluctance to make the state a national joke, leading to (c) extensive jawboning, AG action, hospital and medical group self management, heightened public understanding about the dangers of overtreatment, and more.

Over the years I asked colleagues in different specialties who I respected as excellent physicians - "if you were the czar of your discipline, and all your colleagues had to practice the way you thought was the right way, how much could be saved without any loss of quality?" No one ever said less than 25%, and some specialists said as much as 50% and that quality would actually be better.

That's where the savings could come from. I believe that the legislation can help our body politic develop the will-power to do the right thing.