Cutting Healthcare Costs in Massachusetts

Cutting Healthcare Costs in Massachusetts

Massachusetts, which has universal healthcare, is in a dilemma; healthcare costs are skyrocketing, threatening to bankrupt the state. Massachusetts spends 33% more per person than the national average for healthcare, up from 23% in 1980; this translates into approximately $9000 per person. Government and industry officials agree that if costs aren’t controlled the plan will be unsustainable over the next 5 to 10 years.

In an effort to reign in skyrocketing healthcare costs, Massachusetts House Majority Leader Mariano will file legislation file legislation that will force insurers to cut payments to the most expensive hospitals and doctors, a bold proposal that is likely to meet opposition from many providers. Under the proposal, savings would be used to increase payments to the lowest-paid hospitals and doctors, and to reduce health insurance premiums.

An investigative report in the Boston Globe in 2009 found that “elite” hospitals were paid much more for care than the same care at other hospitals after secret negotiations. Private insurance data obtained by the Globe’s Spotlight Team showed that the Brigham and Women’s Hospital, Massachusetts General Hospital and the Boston Children’s Hospital were paid, on average,15% to 60% more than their rivals by insurance companies such as Blue Cross Blue Shield and Harvard Pilgrim Health Care (http://www.boston.com/business/healthcare/articles/2008/11/16/a_healthcare_system_badly_out_of_balance/).

For example, the cost of treating pneumonia at the Winchester Hospital was $5309 compared to more than $9000 at the Brigham. Altogether, these higher rates added up to at least $800 million more revenue for the Brigham and the General. If you’re thinking, like most Americans, more expensive care equals better care, you’d be wrong. Granted that it is the high-end procedures, like coronary by-pass surgery, that make the Brigham and General famous, but if you take the bulk of the cases performed at hospitals, the bread and butter, less glamorous medicine (like treating pnuemonia or heart failure, which represents 85% of the cases) the two “elite” hospitals perform, on whole, pretty much in the middle of the pack.

In fact, a quarter of all American hospitals outperform the Mass General on treating heart failure! The care at a community hospital is oftentimes safer and better because you are treated by experienced staff rather than interns and residents like you see at a teaching hospital.

Despite these performance data (which are available at hospitalcompare.hhs.gov/hospital/mortalitytool/index.asp or qualitycheck.org), people insist on going to these hospitals where they are over charged. For some reason, Americans believe if it’s more expensive it must be better. As you can see from this investigation, that’s wrong.

Massachusetts took the big leap and was first to provide health insurance to all it’s residents. Now, it must do something about the costs. Cost control might be the only way, besides a single payer system, to achieve this.

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