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November 20, 2013

Massachusetts Works to Curb Rising Healthcare Costs

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President Obama’s Affordable Care Act modeled itself partly after healthcare reform in the state of Massachusetts. Although the changes have led to nearly universal coverage in Massachusetts, they didn’t address costs. Now, several years after the implementation of these reforms, insurance premiums have continued to rise in Massachusetts, climbing almost 10 percent from 2009 to 2011.

Healthcare is more expensive in Massachusetts than any other state in the country, mostly because it’s relatively wealthy; people can afford more, doctors have more resources and and tend to do more procedures because they are paid a fee for every service they render.

And yet the spending isn’t necessarily improving the health of Massachusetts citizens.

“There’s no great relationship between spending more and doing better,” said Harvard University health economist David Cutler. “And the reason is that most of the variation in spending is associated with conditions where there’s a lot of gray area about exactly how much to treat people. About a third of medical spending is not associated with improved outcomes.”

To reign in costs, the state passed a law to tie spending growth to economic growth, 3.6 percent this year. And if this doesn’t work?

“We have a mandate from the people of Massachusetts to intervene if the market can’t control costs on its own,” said Aron Boros of the Massachusetts Center for Health Information and Analysis.

Insurers are also looking at different ways to pay for care. Instead of paying for each medical procedure performed, Blue Cross/Blue Shield of Massachusetts, the state’s largest insurer, will now pay doctor networks a flat amount per patient, then pay additional revenue if the doctor performs well.

This plan slowed spending by 2 percent its first year and better than 3 percent the second, all while improving outcomes.

While there’s much work to be done, health care providers and insurers say they will meet the state’s spending growth benchmarks.


Warm up questions

1. How do doctors make decisions about what to do for their patients?

2. How do insurance companies make decisions about what they will approve to cover cost-wise?

3. Is it ethical not to provide your patient with every treatment possible? What if they can’t afford it?

Discussion questions

1. What are the risks and benefits of these cost-saving strategies?

2. If a family member was sick would you want to go to a hospital that works under the health care model featured in the story or a more traditional hospital? Why or why not?

3. What are other ways that we can reduce the cost of health care on an individual level?

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