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A Big Step Forward: The Massachusetts Healthcare Market's Efforts to Slow Costs Are Working

Today's story in the Boston Globe that Massachusetts insurance costs have dropped from number 1 in the US to number 9 is very good news. Hospitals throughout the Commonwealth, however, are not particularly surprised. Hospitals only account for approximately 39% of our per capita healthcare expenditures, but they are already bending the cost curve, reducing expense increases in 2009 and 2010. In other words, hospitals are helping to move the market in the right direction.

But healthcare costs aren't solely the problem of providers – we all have a responsibility to help reduce costs and premiums. Our state government must also hold itself accountable for improving price variation by paying adequately for care provided through Medicaid and other public sources, and by ending government cost shift to providers and private insurance premiums. We must be careful not to "over-correct" and end up with a situation that is actually detrimental to the healthcare community and the patients we serve.

Government definitely has a role in prompting change in the healthcare market, but that role shouldn't be to determine what rates are given to those who provide care. Recent Massachusetts laws, including M.G.L. Chapters 58, 288 and 305 are examples of constructive government involvement.

We know that price variations in healthcare exist. They exist not only in Massachusetts, but also in highly regulated environments such as Medicare and the state of Maryland, which has mandated government control over provider prices for years. The reasons for variation are complex, and more study is required to understand why particular variations exist and to determine what - if anything - needs to be done about those differences. To act before we understand the significance of variations and what to do about them is placing the cart before the horse.

I sat on the Governor's Special Commission on Provider Price Reform, which recommended that an expert panel be convened to research the many factors for variation and then determine how to reduce any unacceptable variation in provider prices. On behalf of the state’s hospitals, I voted to support this effort. In fact, MHA supported five of the six Special Commission recommendations. But I voted against the recommendation to regulate provider prices from the get-go, for the reasons I’ve mentioned here, as well as in my detailed statement to the Special Commission.

Today's report from The Commonwealth Fund found Massachusetts healthcare premiums are no longer the most expensive in the nation, and that is a great start – It's also evidence that the market's efforts to slow the cost of healthcare increases are working, and that government intervention in price regulation would be premature. But the report also highlights that there is still plenty left to do to slow and reduce healthcare cost increases. Massachusetts hospitals are contributing to the cost-control effort, and will do even more moving forward. Collaborating with all healthcare stakeholders including government, insurers, businesses and their employees, I am confident we can succeed.


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