DeLeo Assigns Numeric Goal to State Health Care Cost Control Efforts

March 7, 2012
State House News Service

By Kyle Cheney

STATE HOUSE - BOSTON, MARCH 6, 2012 - A House proposal to refashion the state’s health care delivery system will attempt to limit the annual growth in Massachusetts’s health care costs to 3.7 percent, a fraction of its current rate and one that is in line with the yearly increase in the state’s economic growth, House Speaker Robert DeLeo said Tuesday.

That goal, unveiled by DeLeo in a speech to the Greater Boston Chamber of Commerce, offers the first metric lawmakers are eyeing as they seek to reduce the burden of health costs on businesses, families and government.

But DeLeo offered few other specifics on a proposal that has been anticipated for years, one that Gov. Deval Patrick has demanded urgent action on since last spring. DeLeo said the long delay in releasing a bill was indicative of the vast array of stakeholders, potentially monumental ramifications for the state’s largest economic sector, and the tens of billions of dollars at stake.

“Health care is one of the most complicated issues for us to take up. It’s a major industry here in Massachusetts. It’s the major employer that we have here in Massachusetts,” he told reporters after his speech. “This takes a lot of time. I think it’s most important that we take our time, we try to get it right, as close as we can, the first time out of the box as opposed to putting out a piece of legislation a lot more quickly and having to make changes as we go along.”

Standing with Rep. Steven Walsh (D-Lynn), the House Health Care Financing Committee chairman, DeLeo said reducing the state’s current rate of annual health care cost growth, between 6.7 and 8 percent, to 3.7 percent is “realistic.”

DeLeo said he expects the House’s proposal to balance the need for government intervention in the health care market with enabling the market to work on its own to control health care costs.

“There are those on one side who want no government intervention at all. There are those on the other side who want strict government involvement as a watchdog in this process,” he said. “I imagine that maybe somewhere in between is where we’ll be. Maybe not the strictest of watchdogs but there will be some government involvement in watching the process.”

Lawmakers and the Patrick administration have contemplated overhauling the state’s health care system for years to deemphasize the current “fee-for-service” model, one in which health care providers get paid based on the number of procedures and tests they perform, rather than the health outcomes of patients. Rising cost, predicted in 2006 as the biggest threat to a universal health care access law signed by Gov. Mitt Romney, have been repeatedly cited for consuming state resources and slowing economic growth.

Gov. Patrick has proposed that as part of the solution, doctors and specialists should be incentivized to work together and keep spending on patients within set budgets, known as global payments that are apportioned based on the anticipated cost of care for individual patients.

Critics of the global payment system argue that it will do little to bring down health costs unless structural changes are also made to limit the market power of powerful providers, some of which charge widely disparate rates for the same procedures, without any different in quality. Hospitals, on the other hand, contend that they often must charge different rates in part because government underfunds reimbursements for hundreds of thousands of Medicare and Medicaid patients.

Legislation to address the matter is being developed by the Committee on Health Care Financing, chaired by Rep. Walsh and Sen. Richard Moore (D-Uxbridge). The anticipated release of a bill has been a moving target, with the governor demanding action before the House and Senate deal with their budgets this spring and legislative leaders declining to work under any specific deadlines. On Tuesday morning, Moore said he anticipates the committee releasing a bill by early- to mid-April.

Lora Pellegrini, president of the Massachusetts Association of Health Plans, said the speaker’s goal to limit health care cost growth “makes a lot of sense” and added that she expects to explore the proposal further when more details become available.

“I think that folks ought to be able to afford insurance,” she said.