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….

4 replies
  1. Senator Richard T. Moore
    Senator Richard T. Moore says:

    The Pioneer Institute Dis-Infographic

    1. Pioneer compared the number of pages of the original landmark Massachusetts Health Care Reform law ( Chapter 58 which focused on expanding access to health care) to the new landmark Massachusetts Health Care Cost Containment law (Chapter 244 which focuses on health care cost containment and payment reform).

    FACT: 1) The comparison is not worthy of a responsible research organization since the comparison has no meaning. One could compare two bills on a similar general topic, such as health care, and find different lengths – is the longer bill or the shorter bill of more value? Counting pages is irrelevant! The number of pages is meaningless from the standpoint of comparing value. 2) The comparison of number of pages by Pioneer is also erroneous as well as useless, since formatting has changed since 2006. Using the same formatting as used with the 349 pages of Chapter 244 of the Acts of 2012, Chapter 58 of the Acts of 2012 would actually be 148 pages, not 86. The comparison is at best simplistic and sophomoric if not, shoddy, research.

    2. Pioneer compared the number of days taken by the Legislature to act upon each bill claiming that Chapter 58 was considered over a period of 362 days vs. Chapter 244 being considered over 88 days.

    FACT: A fair comparison of the time that elapsed for legislative review of what became Chapter 244 began when the Governor filed House Bill No. 1849 on February 17, 2011 and signed into law on August 6, 2012. That’s a total of 536 days, not 88 as Pioneer implied. While the final bill is significantly improved over the initial bill, there are elements of the initial bill that remain in the final product.

    3. Pioneer claims that “new bureaucracy” in Chapter 244 of the Acts of 2012, amounted to 25 entities defined as boards, councils, task forces, and commissions involving 266 new appointees.

    FACT: The term “new bureaucracy” is an obvious exaggeration since the two major entities charged with cost containment and payment reform are, in reality, reorganizations of existing entities. The Health Policy Commission is an upgraded Health Care Quality and Cost Council, and the Center for Health Information and Analysis is an independent version of the existing Division of Health Care Finance and Policy (DHCFP). The Commission will employ a paid executive director and a small staff, including some employees transferred from DHCFP; while the Quality and Cost Council initially had a paid director and staff from the Executive Office of Health and Human Services. The Center is expected to have virtually the same staff as the Division employs today. In some cases, the salaries may be enhanced to attract the best qualified leadership, however. The Commission members will, as is customary for important policy boards, receive expense reimbursement when working as commissioners, however, they are all unpaid. All other boards, task forces, and commissions are volunteers serving in advisory capacities and will not be paid. In fact, task forces and most commissions are of short duration, and expire upon submission of their reports on specified dates of completion.

    4. Pioneer claims that the 2012 law involves 293 uses of the words “regulation” or “promulgate” and 1,890 uses of the word, “shall” suggesting that this implies and ordering of government action.

    FACT: Employing a word search and suggesting that it is “research” is, in itself another sophomoric exercise, and implying that each of those instances requires new government action is simply false! Many of those uses of “shall” are in definitions of terms that do not require action, but rather specify meaning or are used to ensure that different sections of the bill work together. In many other cases, the words are found in existing law that remains the same, but relates to a new name for an existing agency. Obviously, some of the uses of “shall” or requirements to promulgate regulation are new because the concept of bringing health care costs into line with inflation and moving health care payment methods into new methodologies that reward value to patients rather than volume of services provided will require new government action which is appropriate if Massachusetts is to bring health care costs into line. The “analysis” completely ignores the fact that the Center is, essentially, a rewrite of the current DHCFP statute and, as such, is simply reinserting existing law and does not represent “new” government action or requirements. Technical sections that make no substantive change in law account for a very large portion of the bill as a consequence of these reorganizations.

    5. Pioneer cites as an unattributed fact that “76% of doctors think global payments will reduce the number of physicians in Massachusetts.”

    FACT: The Massachusetts Medical Society, which compiled the report cited the fact that the report has limitations. “The survey has a number of limitations. The survey response rate was low (7,862 total surveys sent, and 572 responses received) this increasing the susceptibility of the findings to a response bias, i.e., the possibility that survey responders differed systematically from non-responders. Moreover, a few items in the survey had a large number of missing responses, e.g. questions about current payment experiences. The results are based on physician self reported perceptions. According to one large insurer in Massachusetts, two thirds of the physicians in the Commonwealth will participate in their global payment contract program by this year, 2012.

  2. Joshua Archambault
    Joshua Archambault says:

    Thanks for the comments, and I am not sure where to begin as you have a lot here.

    I think I will start with the response I sent to some Senate staff that had concerns about the infographic as well. It addresses some but not all of your comments. I hope we can discuss this in person as well.

    My e-mail edited slightly for the context of this post:

    Given the limited format of an infographic, I know you understand I was unable to include all the caveats necessary for some of the figures. I’m sure you had the same problem when writing the final press release for the bill, with the many undefined or open-ended provisions in the legislation.

    Let me give some additional detail on several of your points.

    1. I used an old PDF version of the legislation from 2006 and a PDF version this time around for the page numbers. Not sure how the formatting would work out in a word document.

    2. You’re absolutely right about the governor’s legislation being filed first this time around, but as someone who has worked in the building and talked to a number of Legislators during this process, we all know the Governor’s language is not much of a guide most of the time. The General Court controls what makes it out of the process and I do think it’s fair to compare what happened in the House and Senate this time versus last time (2006).

    3. Your core point on CHIA is right, but the law does add many additional responsibilities to their plate. It moves some to other agencies as well I know, but we all would have a better idea of changes in staffing needed for new responsibilities if there was a cost estimate for this law versus the status quo. I think you know that for the past month-plus I have been asking for cost estimates: the best I got was a bad Globe article in which the Governor’s office seems to have made up a number. I did not include any sort of estimate for cost or personnel required (new or existing) for CHIA or HPC. That’s, frankly, more importance to me than how many “shalls” there are in the bill, but I have yet to see any creditable estimates from inside or outside the building for this bill, so I could not include that. So I guess I can ask again– is there an estimate for HPC and how much over the current DHCFP budget will it cost to run CHIA? Finally, what is the total estimated cost (for the state, but also for providers, and insurers) to run all new programs in this bill including program and administrative costs, salaries and benefits?

    4. Strictly speaking, you have a point on the use of “shall,” but let’s step back here and think about it. I didn’t include “must” (8) and “will” (36). And even if you eliminate, say, 300 of the “shalls,” the law is asking agencies, commissions, etc., etc., to do a heck of a lot. Sometimes it comes through “shalls” and “wills” and “musts” (mandates to act), but the law also uses a lot of “mays,” (341) which provide the agencies some latitude, but the “mays” also result in government action – and I didn’t include those. We could parse this several ways, but to be honest I think my point still stands.

    5. Quibble as much as you want with the MMS survey, but these are the folks that ACOs and capitated payments rely on to save money. They take on the risk. If they are not on board we have a serious problem on our hands. That survey showed the concern on both the cost and quality front.

    As I’ve expressed before, I’d welcome the chance to sit down and discuss the many questions I have about this law. Overall, I think our message (even if simplified somewhat) can add value in an environment where the news cycle revolves around sound bites about savings of $2,000 per family or $200 Billion overall, new appointees to boards, etc.


  3. Barbara Anderson
    Barbara Anderson says:

    Wow, great discussion. I eagerly await Sen. Moore’s response — as well as anticipating the “law of unintended results” kicking in on this legislation.

    I too find myself sensitive to the word “shall” when it applies to the private sector, especially when it is backed up by taxing power and penalties.

  4. Deane Waldman
    Deane Waldman says:

    Josh et al:

    I would use caps to shout this except they are irritating to the reader.

    1. No one is reducing or containing costs. No one is even addressing true costs.

    2. True costs are virtually unknown in health care–the service, and absolutely unknown/hidden for healthcare–the system.

    3. Everything is being done to/on spending, short-term spending at that.

    4. No one, repeat no one, is talking about what we should be talking about: long-term cost/benefit analysis with hard (quantitative) data. Cutting costs is not a “benefit,” a desired outcome from healthcare. Good health and long life are the benefits/outcomes We The Patients want and NOBODY is measuring them.

    5. Without measuring the outcomes we want, how can the system reward, i.e., encourage, the outcomes we want? [Rhetorical question]

    6. Finally, as long as we accept the premise that so-called “cost” cutting is the most important or in fact only outcome desired from healthcare (the system), and worse, we let the government do that (see what the NHS is doing), We The Patients, along with us providers, will be the big losers.

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