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Massachusetts gets ready to tame health care costs

Posted Apr 12 2013 2:48pm

While much of the country braces for full implementation of the Affordable Care Act next year — wondering whether premiums will jump dramatically, providers will be overwhelmed, and insurance exchanges will be ready and working– Massachusetts is well beyond that, moving now into the realm of cost containment and quality improvement.

As Kaiser Health News reports, only 2 percent of Massachusetts residents lack coverage compared with 16 percent nationally. Costs per person are the highest in the country, just as they were before Massachusetts implemented universal coverage in 2006.

There’s plenty of reason to be optimistic on costs, however:

  • Health plans are offering innovative payment models that reward quality and cost containment. As a result premiums for commercial coverage have flattened. My business actually experienced a slight decrease in premiums from Blue Cross this year for the first time ever (after more than 10 years in business)
  • Providers are focused on cost restraint. Academic providers like Partners and Beth Israel have become more cost conscious while new community-based providers such as Steward Health Care are arising to fill the need for affordable, quality care
  • State government is playing a reasonably constructive role by encouraging pricing transparency and targeting a cap for the industry’s growth rate without making it too dramatic or ironclad
  • Quality and cost data are being supplied by organizations such as Massachusetts Health Quality Partners and Castlight Health through distribution partners including Harvard Pilgrim and Consumer Reports

On the one hand, the Massachusetts example should be encouraging to other states that are about to experience Massachusetts-like rules on universal coverage, minimum medical loss ratios, and disallowance of medical underwriting. It shows that it’s possible to achieve these standards and then start to take on costs.

But Massachusetts had already made strides toward health care reform before 2006 and had a relatively low rate of uninsured. The state’s knowledge based economy is also better able than others’ to afford the costs of health care reform. Employers can much more easily afford to pay for health insurance for high skill, high wage workers than for those with low skills and low wages. Massachusetts has a long-standing culture and tax base that supports education, which is a key driver of a high-wage economy.

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