Will Government-Directed Healthcare in Mass. Really Contain Costs?

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Governor Patrick signed a new healthcare law today aimed at cost containment, and the rhetoric soared assuring all that Massachusetts has “cracked the code on healthcare costs.” Unfortunately, with no debate on the underlying bill in the House of Representatives and only little debate in the State Senate, the 349-page statute, which was released just 14 hours before the legislative final vote, is little understood and brimming with unintended consequences.

To mark the occasion, Pioneer released the follow infographic:

Cost Containment Infographic

Real cost-containment is only possible when we encourage patients to reward low-cost, high-quality providers with their business.  We’ve said it over and over again throughout this process.

Instead, the law being signed today re-imagines and repackages so many failed top-down approaches from the past. The acronyms may have changed, but this bill looks a lot like past approaches that trusted government, not patients, to drive big, systematic changes in how we purchase healthcare. For some reason our state policymakers expect completely different results this time around.

Rather than provide financial incentives for individual patients to take charge of their own medical care, this legislation rearranges the system based on accountable care organizations (ACOs) and governmentally-imposed changes in payment methods.  Real-life evidence that these approaches contain costs is mixed at best; as a result, the law misses the mark by a long shot and will not lead to long-term, sustainable containment of health care costs.

The government will impose caps in healthcare cost increases, which will lead to further consolidation in the market– exacerbating one of the causes of the predicament we are in today. The law will also lock in place current inequalities of provider reimbursement levels, as everyone will grow at the same rate, but not everyone is starting from the same place. Then just to add salt to the wound, the government is ensuring that healthcare will cost us all a lot more, by adding hundreds of millions of dollars to the system through new surcharges, fees, and penalties.  Make no mistake about it, these costs will be passed onto consumers.

Pioneer Institute will continue to work to promote proven methods that contain the costs of healthcare and improve healthcare outcomes for all. We will move ahead on proposals that expand patient-centered insurance coverage and fundamentally alter the Medicaid program. In meantime we will be setting up an evaluation system to see if this latest state experiment works. It will build on the work we have done in the past on the 2006 reform. More to come….