New Massachusetts Health Care Bill to Address Costs

July 27, 2012 -- The White House says it drew inspiration from Massachusetts reforms signed into law by Mitt Romney when crafting Obamacare, which is supposed to curtail health care spending over the long haul.

There's one problem: three years after expanding coverage in Massachusetts, the state is still grappling with how to pay for the reforms. The problem is so grave that the state legislature is working on new bill specifically aimed at curtailing health care spending.

Paying for health care is not a problem unique to Massachusetts. But if expanding coverage is supposed to drive down costs in the long term, as advocates of health reform have suggested, it's an after-effect not yet felt in Massachusetts. Since the law was passed in 2006, per-capita spending on health care in the state has increased to 15 percent higher than the national average and health insurance premiums have skyrocketed to one of the highest in the nation, according to a study by the nonpartisan Kaiser Family Foundation.

"The hope initially was that by providing timely preventative care there would be a natural reduction in overall cost," said Marco Huesch, a professor at the USC Schaeffer Health Policy Center. "That is a little bit of a make-believe argument."

Supporters of the old and new reforms argue that the 2006 law Romneycare did not cause the spike premiums and that rates were rising before the law took effect - although most do now admit that the law didn't do much to prevent the rise.

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Still, the 2006 Massachusetts health care law is responsible for reducing the number of uninsured. In 2010, the uninsured rate was 6.3 percent in the state, compared with the national average at the time of 18.4 percent, according to the Kaiser Family Foundation.

The new approach will directly regulate payments to hospitals and doctors - the new rules limiting the amount of money a health provider can receive for treating an illness.

"Honestly I think it's very bold. In my mind it is exactly what Massachusetts needs," said Kavita Patel, a former director of Intergovernmental Affairs for the Obama White House during the effort to pass national health care reform.

In fact, many of the new payment formulas are similar to that of experimental programs (Accountable Care Organizations) instituted as part of Obamacare.

But there are some who think that the new reforms will fall flat. The new payment structures will require providers to follow complex payment formulas that may or may not result in cheaper health care. Also, if doctors and hospitals are forced to work within the constraints of a single reduced payment, there is always a chance that the hospital/doctor will cut corners to complete the treatment on budget - a concern that supporters of the bill dismissed as unlikely because of safeguards in the bill.

"They're doing it because they are desperate for any solution that will contain costs," said Dr. Alan Sanger, professor of Health Policy and Management at Boston University.

Sanger is for changing the system but believes that the current proposals don't go far enough. He argues that the only way to truly tackle costs is to place a cap on how much money can be spent on medical care and having doctors accept a salary instead of paying them through reimbursement.

Placing limits on medical spending is a hot political issue. During the battle to pass Obamacare, many in the Tea Party accused President Obama of planning to set up death panels, a charge that was not true, but an outburst that serves to remind us how contentious people are when it comes to rationing health care.

Severe cuts to medical spending aren't likely to happen any time soon. In fact, much of Massachusetts' economy is so dependent on the health care sector that any reduction in spending would likely harm the state.

Budget watchers expect some sort of austerity measure to pass Congress sometime after the election during the lame duck session. Any serious budget cuts will include government funded health care, which would affect health care providers which rely on the government for a large segment of their income.