Massachusetts aims for another health care first: A global spending cap

July 31, 2012

Massachusetts was the first state in the nation to create a universal coverage system. The Bay State may today hit another milestone, becoming the first state to set a firm cap on its health care spending.

Massachusetts has been at work on a health care cost control bill for a good part of this year. The final version came out last night. The bill - you can read all 340 pages of it here - would cap health care costs to grow at the same rate as the rest of the state's economy from 2013 to 2017. After that, the growth rate would fall even lower: Health care cost increases would be limited to 0.5 percent less than Massachusetts' overall economic growth.

The Massachusetts bill is expected to save nearly $200 billion in health care spending over the next decade.

The legislation is also expected to pass, and do so quickly: With Massachusetts' legislative session wrapping up at the end of July, it has to make it to Gov. Deval Patrick's (D) desk by the end of today.

If it does indeed move forward, Massachusetts will have a hard target for health care spending. It will be the first state to have ever done that. And there will be a big question left: Can it actually work?

I spent a week in Massachusetts earlier this summer, and the general take I got from health policy experts there was this: It's a good start, but it might not deliver the immediate successes that the state's coverage law did.

When Massachusetts tackled health insurance coverage, it had a number of factors leaning in its favor. The state’s uninsurance rate was among the lowest in the nation. On health care costs, the numbers don't clearly add up in the Bay State's favor. For decades now, the state has had some of the highest health-care costs and insurance premiums in the nation.

“We had the best preconditions for tackling coverage,” Sarah Iselin, president of the Blue Cross Blue Shield Foundation of Massachusetts, told me in May. “But we also have some of the biggest obstacles to containing costs, largely because we’re already spending so much.”

A lot of the skepticism comes from questions about how the spending cap will be enforced. A state law that dictates the level of health care spending does not necessarily change the spending behaviors of doctors, hospitals and patients.

The law does create a new state board, that will collect health spending data and set new targets for Massachusetts' hospitals. It can require those hospitals that don't hit those targets to come up with a plan to lower their costs. But it cannot, as WBUR's Martha Bebinger reports, penalize hospitals that fail to meet the targets.

“Our biggest concern is whether there are enough teeth to keep overall costs under control,” the Rev. Burns Stanfield, president of the Greater Boston Interfaith Organization, tells her.

We don't know whether a state can succeed at hitting a hard spending cap, largely because we've never seen any state try it. Massachusetts has proved a successful health policy guinea pig before. We're about to see if the state can do it again.

 

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Michelle Williams · July 31, 2012