As the Massachusetts House of Representatives debates a bill that some are touting as a way to rein in health care costs, one conservative-leaning think tank has raised concerns over its projected savings.
State representatives began their debate Tuesday on a bill that House leaders have said will save the state’s economy more than $160 billion over the next 15 years.
The bill is designed to even out disparities in the costs of hospital services by requiring hospitals that charge more than 20 percent above the state median price for a service to pay a 10 percent surcharge into a fund to help support hospitals serving the poor and most vulnerable.
Among many things, it also would reduce premiums for patients who show they’re committed to maintaining their health and overhaul medical malpractice laws by letting doctors apologize without fearing a lawsuit. It also sets guidelines for the size of “accountable care organizations” – health care networks that take a coordinated approach to medicine. There are already five such organizations in Massachusetts.
Joshua Archambault, the director of Health Care Policy at the Pioneer Institute in Boston, said much of the bill’s expected savings is contingent upon other factors.
According to his analysis, only 40 percent of Massachusetts residents would be directly affected by the bill, as they are fully covered by traditional private insurance companies. Meanwhile, 60 percent of residents would not be affected because they receive coverage through Medicare, self-insured companies, are federal employees or are already on MassHealth, the state’s Medicaid program.
He said while the bill aims to lower health care costs by an average of around $10 billion a year, publicly available data suggests health care costs for patients who would be affected by the legislation average around $13 billion a year. That means that either those patients would need to nearly eliminate their health care costs, or more self-insured companies would need to join the state’s plan or another one affected by the legislation, in order for the plan to work, he said.
Because of this, he called the House’s proposal a “faith-based initiative,” adding that he believes bill increases spending through provisions like the one-time hospital surcharge for the distressed hospital fund, which he said would cost consumers millions of dollars.
“This is sold as a cost-containment bill, but really it just adds a bunch of money,” he said.
“They’re spending a ton of money on all of these programs and hoping that they return in savings.”
Additionally, Archambault raised concerns over the Senate’s bill, which passed the chamber last month and aims to trim projected health care costs by $150 billion over 15 years. He said both chambers’ proposals share the “common characteristic of not being a cost containment bill.”
Brian Rosman, a research director for the Massachusetts non-profit advocacy group Health Care for All, however, said his organization believes both bills provide enormous opportunities to improve care and lower projected costs.
He said improved care and lowered costs could be achieved through proposals that focus on preventative care and community-based public health.
“If we invest up-front in care, the savings more than make up for the back-end costs,” Rosman said.
State lawmakers have been looking for ways to slow spiraling health care costs since 2006, when then-Gov. Mitt Romney signed Massachusetts’ landmark health care law, which dramatically expanded access to health coverage.
Since then, however, soaring premiums and other health care costs have threatened to undermine the law’s long-term fiscal stability.
Rep. Steven Walsh, D-Lynn, said health care costs in Massachusetts have been rising from 6.7 percent to 8 percent annually, with the state spending $66 billion on health care last year.
Walsh, the chair of the Joint Committee on Health Care Financing, said the current health care market in Massachusetts is not working and pushed his colleagues to favor the legislation, which focuses on workforce development, transparency and consumer education.
“We can be proud of (the bill) because we will be the first state in the country to finally manage the cost and quality conundrum that has had to counterbalance what we do with access,” he said.
It is unclear when the House will vote on the bill.
Also seen in Bloomberg Businessweek, Boston.com and RealClearPolitics