Senate: Be Bold and Solve the Health Cost Crisis

Posted by Rick Lord on May 14, 2012 2:39:00 PM

The Massachusetts Senate faces a once-in-a-generation opportunity tomorrow to solve a health care cost crisis that is bleeding the life out of the Bay State economy for both employers and workers.

Health Care CostsOur message to the Senate – Be bold. Don’t miss the opportunity. Don’t be afraid to make health spending fall significantly below the rate of overall economic growth.

Outside the confines of Beacon Hill, a consensus is emerging among the employers and citizens who actually pay the medical bills that total health spending must fall as much as two percentage points below economic growth if the Massachusetts economy is to survive.

The consensus among groups as diverse as AIM, the largest employer association in Massachusetts; the Greater Boston Interfaith Organization (GBIO), a community-based health care consumer group, and several  respected academics is that a chronically inefficient health care industry is diverting resources from the 87 percent of the economy unconnected to health care.

Dr. Donald Berwick, the former president of the Institute for Healthcare Improvement and the former administrator of the federal Centers for Medicare and Medicaid Services, maintained in an article published today that one-third of all health-care spending is wasted.  The waste includes “overtreatment that helps no patient at all (like treating viral infections with antibiotics), errors and injuries from unsafe care, failures in coordination (such as sending people home from hospitals without supports), needless administrative complexity, failures of price competition, and fraud.

“Alarms are sounding. Massachusetts hospitals and other providers are warning that too stringent a target will harm care — and harm the state’s economy when unemployment is already high,” Dr. Berwick writes in an Op-Ed in The Boston Globe.

“Undoubtedly, this transition will be wrenching. But no healthy industry can maintain jobs that depend on continuing services that add no value. Health care costs are hurting the economy now, because they keep employers and consumers from spending on other priorities.”

Dr. Berwick notes that the ambitious health cost control proposals from AIM, GBIO and the House of Representatives “are on the right track.”

“Health care can and should begin to return money to other uses, starting now,” he said.

The Senate will debate a health cost bill that would establish less ambitious objectives, setting set a limit of 0.5 percent above economic growth until 2016, and then equal to it thereafter. House leaders have proposed limiting the growth of health care costs to the growth rate of the economy starting now, and then to 0.5 percentage points lower than the overall economic growth rate starting in 2016.

Dr. Berwick’s public comments come three days after Attorney General Martha Coakley, told the AIM Annual Meeting that her office remains committed to addressing a health care market rife with price disparities that have little to do with medical outcomes.

“And while I know there is a lot of discussion about payment and delivery system reform - at the same time, I believe that we must also address the market dysfunction that my office has highlighted in our reports,” Coakley said Friday.

MIT economist Jonathan Gruber found in a study released on April 26 that lowering the annual growth of health insurance premiums to 2 percent in Massachusetts would increase the take-home pay of every Bay State worker by $9,200 over the next eight years. Gruber said it is far from certain that slowing the growth of health care costs will produce widespread layoffs in the health care system.

Kristen Lepore, Vice President of Government Affairs at AIM, agrees with Berwick that soaring health care premiums are burdening the rest of the Massachusetts economy. Far from causing catastrophic layoffs, Lepore said, limiting the growth of health spending will create a system that delivers health care efficiently and returns money that can be used for business expansion, education, roads, bridges and putting more money into the pockets of consumers.

“We have every confidence that Massachusetts can maintain a world-class health care system that people can actually afford,” Lepore said.

AIM hopes the growing consensus around meaningful cost control will resemble the broad coalition that assembled when the commonwealth passed what remains the only state-level health care reform law in 2006 in an effort to expand access to medical care and bring everyone into the health insurance system. The 2006 reform gained support from business groups, including AIM, as well as hospitals, doctors, unions and consumer groups.

Topics: Massachusetts senate, Health Care Costs, Issues

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