Meet the man Massachusetts thinks can crack its health spending problem

November 5, 2012

Something really important happened in Massachusetts today — something that has nothing to do with the final throes of the Brown-Warren Senate race.

Massachusetts passed a law months ago that put a global cap on how much its state would spend on health care — not just Medicaid, but all spending on doctors and hospitals by all patients. That law takes effect today. That makes Massachusetts the only state in the country that, as of this morning, limits how much its residents will pay on medical services.

The goal of the Massachusetts law is to get health-care costs to grow no faster than the rest of the economy, between 2013 and 2017. After that, the law dictates that health care spending will grow 0.5 percent slower than the rest of the economy. This is after years of health spending outpacing the rest of Massachusetts' economy.

The big, looming question is: How do you get there? How do you limit health-care spending in a way that doesn't hurt patients, but does root out unnecessary or expensive care? 

To answer that question, the state of Massachusetts has turned to Stuart Altman, a Brandeis professor who has spent decades working on controlling health-care costs. Massachusetts Gov. Deval Patrick recently appointed Altman the chair of the   Health Policy Commission Board, which will oversee the cost containment work. 

"It's going to be our responsibility to see how things are going, how fast health spending is growing" Altman says. "We're going to have to take a look at where the pressures are for higher spending."

That, Altman says, means not just looking at the insurers' rate increases, but also the prices hospitals and doctors charge, which could drive up premiums.

"When most people think about health-care spending, they immediately focus on the payers [the insurance companies]," he says. "In the case of this legislation, we also need to look at the providers, and see how they're changing their models for how they get paid. When we see that they have signed a new contract, and demanding rates increases that would substantially exceed the cap, it's our responsibility to look and see if those are appropriate."

Its unclear what, exactly, happens if a rate increase is deemed inappropriate. The board that Altman chairs does have the power to contact the provider or hospital, and draw up a plan for how they'll reduce health care costs. They cannot, however, do much more than that, such as set rates they deem more appropriate.

That fact has lead to some questions about whether the Massachusetts effort has enough "teeth" to actually drive down spending. 

Altman acknowledges those criticisms. At the same time, he thinks Massachusetts is still way ahead of other states when it comes to work to drive down health spending. 

"The commission was set up to a watchdog and see to what extent the work the private sector is doing is working," he says. "If after two or three years from now, it's working, that's great. If not, the commission can come back to the legislature and say, 'This isn't working, we need more power.' I think that was the right way to structure this."

I asked Altman whether he thought the law would work: Would Massachusetts succeed at controlling health-care costs in a way that no other state had? The health wonks in the state are pretty divided on this issue. 

"There is a degree of skepticism," Altman says. "At the same time, I'm impressed by the kind of change that is happening here."

He points to a new payment system piloted by Blue Cross Blue Shield of Massachusetts  which rewards doctors for quality rather than quantity of services, and has shown to slow cost growth. Hospitals were trying out new payment systems before the law came into effect.

"There's a lot going on," Altman says. "I'm just happy to have a ringside seat."

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