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Massachusetts digs in on health-care cost control

at 10:35 AM ET, 03/19/2012


Massachusetts Gov. Deval Patrick (D). (Chip Somodevilla - Getty Images)
If you want to know what the future of health policy looks like, it’s worth keeping an eye on two Massachusetts story lines unfolding right now, both of which could say a lot about our ability — or lack thereof — to get health-care costs under control.

The first has to do with an increasingly heated debate over the state’s health spending budget. In an opening gambit, two major Massachusetts groups have suggested the state aim to have its health-care costs grow 2 percent slower than the rest of its economy.

Other groups have suggested getting health-care costs to grow 1 percent faster than the rest of the state would be a significant accomplishment. The difference between the two is about $7 billion, which has some worried that the state is getting too aggressive on cutting health-care costs. Stuart Altman, who has advised President Obama and former President Nixon on health policy, tells WBUR that he’s “concerned about both what it would do to the delivery system and to the quality of care, to patients, and what it would do to the economy of Massachusetts. It’s just too drastic a cut.” Gov. Deval Patrick (D), for his part, has called for cost control legislation this year.

The second story to watch comes from the private sector, where health insurer Harvard Pilgrim has made a significant gamble. The plan thinks it can get patients to accept fewer choices for their health care if they’re charged less for it. It launched a new health plan that will price about 10 percent below the rest of the market, if subscribers accept that they can see a smaller set of doctors and hospitals. This comes on the heels of Steward Hospital launching a similar insurance plan late last year, which also relied on limiting its health-care networks as a means of limiting health costs. Both suggest that the private industry in Massachusetts sees a demand for lower premiums, with a willingness to trade off some health-care access to get there.

Health Pilgrim also thinks that, by exclusively contracting with some of the Boston area hospitals that charge lower prices, it can get the more pricey hospitals to also lower their medical fees. “It’s a blunt instrument,’’ Eric H. Schultz, chief executive of Harvard Pilgrim, told the Boston Globe. “But it’s getting to the point where cost is a barrier to some services, and for some patients.’’

Taken together, these stories seem to suggest there’s serious, downward pressure on the state’s health-care costs. Some of it is coming from a public debate over Massachusetts’s health-care budget; some of it is coming out of the business decisions that health plans and hospitals are making. All of it likely means we’re in for an interesting discussion about how meaningful cost control can be achieved in health care, and what even counts as the appropriate amount of savings.

 
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