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March 17, 2010

Massachusetts health care cost trends hearings yield data, stir heated debate

MAHospSpendPP The Massachusetts Division of Health Care Finance and Policy and the Attorney General's Office are holding three days of hearings this week on health care cost trends.  You may wish to get up to speed by taking a look at the HealthBlawger's earlier review of preliminary reports on Massachusetts health care cost trends and positioning by key participants.  There is a comprehensive collection of preliminary reports and testimony on the Commonwealth's website.

Tuesday's Boston Globe reported that Harvard Pilgrim Health Care (one of the Big Three not-for-profit insurers here) released hospital payment data confirming what the AG's office had previously reported (and what has been widely surmised or known for years) -- namely, that certain hospitals get paid substantially more for the same services and results as are provided by other hospitals, based on their market power -- whether that is based on "brand-name" status of certain downtown teaching hospitals, or local geographic market power of relatively isolated providers.  The AG's final report (press release with link to report) confirms this bottom line.

Update 3/19/10: See Paul Levy's post on the hearings at Running a Hospital.

Local iconoclasts Alan Sager and Deborah Socolar, Directors of the Health Reform Program at the Boston University School of Public Health presented their health care cost trends report as well, and see the Commonwealth as heading over a cliff.  (The graphic reproduced above is drawn from this report.)  The Massachusetts Hospital Association questioned the conclusions they've drawn from the data presented.

The former CEO of Harvard Pilgrim, Charlie Baker, is Gov. Patrick's GOP challenger; as I've noted before, Patrick is seeking to re-regulate rates (while Charlie was instrumental in their deregulation).  Tim Cahill, running as an independent, has attacked the Massachusetts health reform law; the Globe, in an editorial, castigated him for his invective, calling it "irresponsible demagoguery" in the face of some rather serious problems:  

  • Health costs in 2006 equaled 17 percent of the nation’s median family income. A manageable 7 percent in 1987, they will rise to up to 45 percent by 2016 under present trends.
  • Medicare costs in 2008 equaled 3.2 percent of gross domestic product. They will rise to 4.5 percent by 2020 and 7.3 percent by 2035, based on current trends.

These nightmarish projections at yesterday’s UMass hearing came from Len Nichols, health care economist at George Mason University. “We can’t afford business as usual,’’ he warned.

Let's hope that the Commonwealth can have the space to effectively work out cost control -- the second leg of the proverbial three-legged stool of health care reform.  

In any event, health wonks around these parts will be glued to their screens Thursday and Friday, as these hearings are being livestreamed.  Folks elsewhere in the country may also find this instructive, given the close relationship between the Massachusetts approach and the approach to health insurance reform found in the Congressional bills now under consideration.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting


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