In A New Era Of Payment Reform, Early Lessons From Mass.

In an extensive, thoughtful new analysis in the journal Health Affairs, a troika of policy experts — Robert E. Mechanic, Stuart H. Altman and John E. McDonough — review Massachusetts’ new cost-containment law, including how we got there and the challenges that remain. For wonks, much of the material will be familiar, but it’s great to see it all laid out in one place, with sweeping, for-the-record breadth.

(Ken Lund/flickr)

(For the truly hardcore, the entire September issue of Health Affairs is devoted to payment reform. One highlight: Martha Bebinger’s excellent account entitled, “Personal Responsibility: How Mitt Romney Embraced The Individual Mandate In Massachusetts Health Reform.”)

The lasting sense you get from this historical picture of health reform in the state is that while Mass. remains a national model when it comes to providing access to care and big thinking on policy, the delicate balance of upholding quality while scaling back cost is still being figured out. The authors conclude:

There are many uncertainties about Massachusetts’ efforts to slow health spending growth and the consequences if these efforts succeed or fail. For example, the potential impact on the state’s teaching and research institutions, which are more expensive than their community counterparts, is unclear. These institutions attract substantial federal and private medical research funding, provide high-quality care, and contribute to local economies through direct employment and related activity in the life sciences. Compelling them to direct their innovation and creativity toward the production of more efficient delivery models, and the elimination of waste should yield positive benefits. However, starving them into decline would be a severe loss for the state.

Another uncertainty is how consumers will respond when annual spending is constrained to growth of only 3–4 percent over a sustained period. The 1990s was the only time in the last fifty years when the country experienced long-term moderation in health spending growth. That period ended with a consumer and provider backlash against gatekeepers, limited networks, and service restrictions.

Consumers felt coerced into the programs of the 1990s because many employers did not offer their workers choices—only a single, tightly managed plan. As these restrictions subsided, health insurance costs once again began to grow rapidly, with national average premiums for family coverage now exceeding $15,000 a year.16 Whether consumers will accept constraints more readily at current price points, even if they have choices covering a range of spending and benefit options, is unknown. Also uncertain is whether consumers will react more positively to new programs that reapply the 1990s strategies in ways designed to be more provider- and consumer-friendly.

When the 2006 coverage reform law was signed by Gov. Mitt Romney, many doubted that state policy makers would have the stomach to tackle future spending growth. But after three consecutive new laws and a strong private-sector response, there is no doubt that Massachusetts has begun to make important and difficult choices. Massachusetts’s continuing experiences with these new policies will provide lessons about what is possible and what is not as the nation takes steps to contain health care costs.

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