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May 17, 2012 | 10:07 AM | By

Patrick: Use Anti-Trust Laws To Fix High Hospital Prices

WBUR’s Martha Bebinger reports:

I’ve been waiting to hear from Governor Patrick on one of the most controversial health care cost control issues on Beacon Hill: what to do about hospitals that charge three, four or five times more for an MRI (and hundreds of other services) with little or no difference in quality.

Two reports from Attorney General Martha Coakley and at least two from the Governor’s administration (the latest here) say that inflated prices based on the market clout of major teaching hospitals are a major factor driving health care costs in Massachusetts.

Governor Deval Patrick addresses members of the Greater Boston Chamber of Commerce Photo courtesy of the Chamber

Now we have some insight into the Governor’s position on this dicey problem. During a Greater Boston Chamber of Commerce breakfast Tuesday, the Governor was asked whether he wants a provision in the final health care costs bills from the House and Senate that would deal with what’s often called “price disparities” among hospitals? The Governor framed the problem as one of “market clout” and said dealing with the market clout of top Boston hospitals is in the hands of AG Coakley.

The AG, said Patrick, “has tools today to address these imbalances and we have to look to her office to use those tools.”

I called Patrick’s office to clarify. What “tools?” An aide says the Governor was referring, loosely, to the AG’s ability to file anti-trust charges against hospitals. Continue reading →

FILED UNDER: Medicine/Science, Money, Politics, cost, deval patrick, health reform 2012, hospitals, Martha Coakley, reform 2012
May 8, 2012 | 11:23 AM | By

Study: Consumers With ‘Skin In The Game’ May Have Lower Health Costs But Risks Remain

(quaziefoto/flickr)

At some point we will all be paying a greater share of our health costs. This is inevitable even for those of us who now blithely float from one provider to the next essentially unaware of what our medical care costs because beyond our insurance premiums, we don’t pay for most of it. When we have more ‘skin in the game’ as health economists like to say, we may finally become more engaged.

A new study by the RAND Corporation bears this out. It concludes that when consumers have the kind of health insurance that requires more out-of pocket payments, they do, indeed, become more mindful of their care. And this more conscious approach to picking and choosing medicines, tests, specialists and treatment could save billions annually, the report, published in the May edition of the journal Health Affairs notes. But these so-called “consumer-directed” health plans, notably high-deductible plans and personal health accounts, do have risks because people may forego important prevention and treatment measures in order to cut costs.

“The study found that among families enrolled in consumer-directed health plans, about two-thirds of the savings were the result of fewer encounters with health care providers. The remaining third was caused by lower spending per encounter, suggesting patients were making different choices about tests and treatments. Families in consumer-directed plans used fewer brand-name drugs, had fewer visits to specialists and had fewer elective hospital admissions than families in traditional plans,” the news release says. Continue reading →

FILED UNDER: Insurance, Medicine/Science, Personal Health, cost, high deductible health plan, prevention
May 4, 2012 | 2:34 PM | By

A New Approach To Cutting MA’s Health Costs: Throw Spaghetti

(401k/flickr)

By Rachel Zimmerman and Carey Goldberg

When Massachusetts passed sweeping health insurance reform in 2006, a crucial piece was missing from the landmark legislation: how to control rising medical costs.

Today, state lawmakers unveiled an ambitious new proposal to do just that, including new ways to pay doctors and hospitals, a specific cap on health-care spending tethered to economic growth and a tax on the state’s most expensive hospitals if they can’t justify their prices.

MIT economics professor Jonathan Gruber, an architect of the state’s 2006 health law and an advisor to President Barack Obama on the national Affordable Care Act calls the new House proposal “aggressive, broad and visionary.”

“This is an incredibly hard problem,” said Gruber, speaking on WBUR’s Radio Boston today. “What I like about this…is that it’s really taking the spaghetti approach to cost control; let’s throw a bunch of things against the wall and see what sticks. They’re doing a bunch of different things all of which might work.”

So, what does it mean for patients?

Rep. Steve Walsh, the House chair of the joint Committee on Health Care Financing, said the plan would save $160 billion over 15 years. As far as savings for patients, Walsh said: “The first thing I’d tell [a patient] is five years from now, her family plan is going to be $2,000 cheaper than it is today.” Walsh said businesses would also find their health costs cut significantly.

House Speaker Robert DeLeo added: “With this bill, I think everyone’s gotten a little something they want and everyone’s gotten a little something they don’t want. So that’s what this legislation is all about, but at the end of the day, most importantly what it’s going to provide is some real health care cost containment. That’s what the bill is all about.”

One of the greatest challenges, he said, was to contain costs while not undermining a key industry in the state, with 1 in 7 jobs here linked to health care. Clearly some folks will be disappointed that the plan didn’t go far enough. Gov. Deval Patrick introduced legislation in February 2011 that would have allowed greater government oversight of contracts between insurers and health care providers and moved more medical groups into global payment systems that put doctors and medical groups on a budget.

But DeLeo also made the point that once again, the state is in the forefront of health reform. “I look at this as Massachusetts being a leader once again in terms of what’s going on in the health care field in the country.”

Here are some details of the House bill, officially the Health Care Quality Improvement and Cost Reduction Act of 2012, presented today by lawmakers. The state Senate is expected to introduce its own version of the plan next week.

1. Oversight: A new, quasi-governmental agency called the Division of Health Care Cost and Quality would oversee the transition to the new payment and delivery system with a board including consumer, government and industry representatives.

2. Cost-Cutting: To curb the increase in medical spending, the plan establishes a cap for health-care spending linked to the local economy, the Gross State Product, minus one-half a percent.

3. Leveling The Field: The state could impose a 10 percent “luxury tax” on pricey hospitals that charge more than 20 percent of the state median price for a given service without being able to justify that higher price. (Two earlier reports by Attorney General Martha Coakley found that certain hospitals exploited their market clout and charged higher prices without offering better quality care.) Hospitals would pay this penalty into a “distressed hospital” fund for institutions that serve a high proportion of poor and vulnerable patients. Continue reading →

FILED UNDER: Medicine/Science, Personal Health, Politics, cost, hospitals, mass. health reform, payments reform, reform 2012
May 3, 2012 | 3:27 PM | By

Breaking Report: House To Release Health Payment Reform Bill Friday

This just in from Michael Norton at State House News Service:

Stepping in front of a planned announcement from state senators, House leaders late Thursday said they’ll unveil a long-awaited health care payment reform and cost control bill on Friday.

According to House Speaker Robert DeLeo’s office, the bill will be unveiled during a 2:30 p.m. press conference in Nurses Hall with Health Care Financing Committee Co-chairman Rep. Steven Walsh (D-Lynn) and other members of the committee.

Senate President Therese Murray said last week the Senate planned to debate its version of Gov. Deval Patrick’s payment reform bill, filed in February 2011, in mid- May, after the bill emerged from the Senate Ways and Means Committee. This week, Murray said the Senate bill would be released next week.

Rumors began circulating on Beacon Hill Wednesday that a House health care bill might emerge on Friday, before the Senate bill. Until Thursday afternoon, House aides either declined to respond or declined comment when asked to confirm those plans or whether committee members were voting on bill. Continue reading →

FILED UNDER: Insurance, Politics, cost, mass. health reform
May 3, 2012 | 9:16 AM | By

The Wonk Olympics: Sweeping New Health Cost-Cutting Plan Coming

In this April 12, 2006, file photo, then-Gov. Mitt Romney is seen with lawmakers and staffers after signing the state's universal health law at Faneuil Hall in Boston. (AP File)

In health policy circles, it’s as big as the Olympics, with major players, major maneuvering and all eyes watching. It’s a sweeping new plan to control health care costs through radical changes in how doctors are paid and other measures that will be soon be unveiled by state lawmakers in the next chapter of health reform, reports WBUR’s Martha Bebinger. Here’s a bit of her preview:

The House and Senate are expected to build on movements that are already under way: global payments, electronic health records and the increased focus on primary care. The House point person on health care, Steven Walsh, has outlined his proposals in meetings with dozens of groups.

Legislators are considering some controversial moves.

The Senate has talked about taxing insurance company profits. One House leader has a proposal to close the gap in payments to rich and poor hospitals. There’s a vigorous debate about how aggressive the state should be in trying to hold down health care costs. Continue reading →

FILED UNDER: Insurance, Medicine/Science, Politics, cost, global payments, mass. health reform
May 1, 2012 | 8:21 AM | By

Nation Eyes Bay State As Cost-Cutting Health Reform Plan Emerges

(jimmywayne/flickr)

Here’s more evidence that as Massachusetts goes, so goes the nation. The Washington Post reports on details of the soon-to-be-released, highly anticipated Health Reform 2.0 bill, aka, the cost-control plan. Put succinctly by Brian Rosman, of Health Care For All:

“There’s a bit of Bay State pride tied up in this,” said Brian Rosman, research director for the Boston-based advocacy group Health Care for All. “We were the first to figure out universal coverage. Now we want to be the first to crack health-care costs.”

The Post report touches on various aspect of the wide-ranging cost-cutting plan, expected to be out later this month:

The payment-reform law that Massachusetts will soon debate could create new incentives for doctors, hospitals and providers to participate in a payment system that looks a lot like the Alternative Quality Contract.

In February 2011, Gov. Deval L. Patrick (D) introduced legislation that would have moved all Massachusetts health-care providers to value-based payments (arrangements like the Alternative Quality Contract) by June 2015. A new government entity, created by the bill, would facilitate that change, setting various benchmarks and timelines… Continue reading →

FILED UNDER: Insurance, Medicine/Science, Politics, cost, mass. health reform, payment reform
April 26, 2012 | 10:20 AM | By

Mass. Taxpayers Foundation Responds To Critics On Health Reform Spending

(401k/Flickr)

By Michael J. Widmer
Guest Contributor

A new Massachusetts Taxpayers Foundation (MTF) study finds that in fiscal 2011, the state’s share of spending attributable to the 2006 health reform law was $453 million, or 1.4% of the $32 billion budget. And, when you look at the first five years of state spending for health reform, the annual increase, year-to-year, averaged about $91 million. In short, health reform hasn’t been a “budget-buster” as some critics have claimed. Pretty good news, right? Well, the Pioneer Institute‘s Josh Archambault and Amy Lischko aren’t so sure. While they largely accept the way MTF calculated the cost of health reform, they’ve applied some creative accounting to challenge the report’s conclusions.

A little background might be helpful: With our focus on the state budget, tax policy, and the Massachusetts economy, MTF’s engagement in health reform goes back many years. Prior to enactment of the 2006 law, we concluded that the state would have to increase spending by about $100 million a year to achieve the goal of nearly universal health insurance coverage. In 2008, with implementation well underway, some critics of the law began predicting “massive cost overruns” – up to $2 billion over ten years – with “back-breaking costs to the taxpayers.” So, in 2009, and again this year, MTF decided to take a look at the numbers and report on what was really going on. Specifically, we wanted to know how the health reform law was affecting state spending over time. Where has spending gone up because of the law and why; where has it gone down; what has been the net change year-over-year; and is it manageable in the context of the overall state spending?

Now, with the rate of uninsured in Massachusetts dipping below 2%, we have some answers. The amount Massachusetts spends to help low-income, uninsured residents gain access to needed health care has increased from $1.04 billion before the law was enacted to $1.95 billion after five years of reform. Since the federal government picks up approximately half the cost, the state’s share of the increase was $453 million. In separate blogs, Archambault and Lischko have raised a series of questions about how the spending figures should be interpreted. Continue reading →

FILED UNDER: Insurance, Politics, cost, mass. health reform
April 26, 2012 | 7:34 AM | By

Health Payment Reform Can Bring Big Savings For Employers, Report Finds

Projected impact of growth scenarios on total employer savings on employer-sponsored health insurance. From "Benefits of Slower Health Care Cost Growth for Massachusetts Employees and Employers" by Jonathan Gruber and Ian Perry. (Courtesy)

Projected impact of growth scenarios on total employer savings on employer-sponsored health insurance. From "Benefits of Slower Health Care Cost Growth for Massachusetts Employees and Employers" by Jonathan Gruber and Ian Perry. (Courtesy)

WBUR’s Martha Bebinger reports that under new health payment reform (read cost-containment) plans currently underway in the state legislature, employers could save between $8 and $35 billion over nine years, according to a new analysis by MIT economist Jonathan Gruber.

That translates into direct financial benefits for workers, writes Bebinger:

Gruber says there’s a direct trade off between health care costs and wages. When premiums go up, wages don’t rise as quickly.

“What we’re saying here, by that same logic, is if we can control health care costs workers get more,” Gruber said.

In what Gruber calls a modest proposal, health care costs would increase 5 percent per year, just one point less than the expected 6 percent increase. The savings for employers would be $8 billion over nine years.

Under a more aggressive approach, health care costs would still rise, but only 2 percent per year. Employers would save almost $35 billion or about $1,000 per worker, per year. Continue reading →

FILED UNDER: Insurance, Money, Politics, cost, hospitals, insurance, payment reform
April 19, 2012 | 4:04 PM | By

Communities Find Health Cost Savings Through New Law

(Metropolitan Area Planning Council and The Boston Foundation)

A new survey finds that about three-quarters of cities and towns in the region are beginning to save millions of dollars in health insurance costs after a 2011 law that made it easier for communities to change health plans or join with the Group Insurance Commission. According to the new report from the Metropolitan Area Planning Council and The Boston Foundation, 78 of 101 communities have implemented such reforms, or are planning to.

“The new reform law, passed with support of municipal, labor and business leaders and enacted in July 2011 will easily exceed projected savings of $100 million during its first year,” the report says.

Here are some reforms that have led to savings, according to the study:

  • In 2011, Salem adopted the new health insurance reform law and then reached an agreement with its unions to enter the GIC. The agreement is expected to save the city approximately $1.3 million in its first year.
  • In 2011, Somerville adopted Section 21 but ultimately came to an agreement to join the GIC through Section 19 coalition bargaining. The city is expected to save $9 million in the first year of the agreement.
  • In 2011, prompted by the impending passage of the new law, Revere reached a plan design agreement with first-year savings of approximately $1.5 million.

Continue reading →

FILED UNDER: Insurance, Money, Politics, cost, GIC
April 19, 2012 | 8:13 AM | By

Five Myths About Massachusetts Health Reform (By A Former Romney Executive)

Updated at 4:11 PM, April 20th, 2012

Amy Lischko, Ph.D.

Amy Lischko, Ph.D.

Amy M. Lischko
Guest Blogger

Myth Number 1: Uninsured rates in Massachusetts are 2% compared to nation’s 16%

This is like comparing apples to oranges since the 16% is from the federal current population survey and the 2% from the state’s own survey. The two surveys use different methodologies making comparisons impossible. I do not understand why people keep using MA numbers from the state survey and comparing them to the federal US numbers. Isn’t the true and legitimate comparison impressive enough? And, although I’m a fan of the state’s survey, I question the 2% number when I see the health safety net numbers on the rise.

But, for those keeping score: In 2010, US = 16.3% and MA = 5.6%…down from 2006 reported rates of 9.6%.

Myth Number 2: There has been no evidence of crowd-out in Massachusetts

According to a report from the Robert Wood Johnson Foundation, crowd-out has been defined in multiple ways but the most common definition: “compares the reduction in the share of the population with private coverage to the increase in the share of the population with public coverage due to the expansion.” Citing self-reported increases in employer offer rates is interesting, convenient, and certainly serves political interests but it is not evidence of the absence of crowd-out. We have yet to see any definitive studies conducted on this issue that fully assess the cause(s) of the observed increase in public and decrease in private coverage in Massachusetts since the reform. (Various reports from Division of Health Care Finance & Policy report the numbers differently but all reports note that public coverage has grown more than private coverage.) Whether more employers are offering or not is NOT part of this calculation.

Myth Number 3: The individual mandate is responsible for lowering premiums in the individual market

By far, the single most important factor contributing to the decline in premium rates in the individual market following the reform was its merger with the small group market. Some economists like to talk about the importance of the mandate in increasing the number of healthy lives brought into the risk pool but this has had little impact on the lowering of premium rates in the individual market. Around the margins the individual mandate may have brought in some healthy lives, however, they were spread out over the different markets (CommCare, CommChoice, Young Adult and small group), and the impact of those lives vs. the merging of the markets had to be pretty small.

Myth Number 4: The 2006 reform was never about costs

Of course it was about costs! The whole idea behind Governor Mitt Romney’s exchange was to bring more transparency of health care costs and quality, more choice, and more affordable products to small businesses and individuals. I recall talking about this to national audiences around the time the reform was passed with a slide titled, “Health Care Reform: Coverage and Cost Containment.” That these elements of reform were not emphasized by the Patrick administration during the reform’s implementation does not surprise me. However, to talk about the reform as if it was never intended to address costs is simply convenient revisionist history.

Myth Number 5: The additional state cost per year of the reform has averaged $91 million a year
Huh? Continue reading →

FILED UNDER: Insurance, Money, Politics, cost, mass. health reform