More Good News from Massachusetts

Today’s Managing Health Care Costs Indicator is $453 Million

The blogosphere has focused a lot of attention on Massachusetts, where almost everyone (97+%) has health insurance as a result of health care reform that looks almost exactly like the Affordable Care Act.  Our costs in this state are exceptionally high – although they are rising more slowly than costs in other states.

A study released last week by the Massachusetts Taxpayer Foundation  – a nonpartisan group that advocates for good government (including promoting prudence in spending) – shows that it cost the state an additional $453 million, or  an incremental $91 million on the average for each of the last five years to extend coverage to another 7.6% of the population.   The total cost was a bit over $900 million –the additional amount was spent by the federal government for Medicaid and waivers,  employers who increased the portion of the population insured during this time period despite the recession, and individuals who purchased insurance and who would have otherwise gone “naked.”

It’s not perfect for states to go this alone.  Massachusetts hospitals on the New Hampshire border are already seeing higher rates of bad debt due to the difficulty of obtaining affordable insurance to the north.

And the total dollars being spent are not inconsequential.    However, incremental spending to support expanded coverage is equivalent to 1.4% of the total state budget. Seems like a good deal.

We’re Number One

Today’s Managing Health Care Costs Indicator is One

Click on image to enlarge.   Source 

 The eyes of the nation have been focused on Massachusetts, as the Affordable Care Act is modeled on health care reform in Massachusetts.  When it comes to cost, We’re Number One!

The Blue Cross Blue Shield of Massachusetts Foundation just published a great 50-slide deck of graphics comparing  health care cost and utilization in Massachusetts with the rest of the country.  Massachusetts has the highest cost of health care in the country, and the largest number of physicians per capita.   Our physicians are more likely to be specialists than in the rest of the country.   Our hospitals are more than twice as likely to be academic medical centers.   Our health insurance designs are among the richest around, with low average deductibles.

Most of the increased cost of care since Massachusetts’s health care reform has been cost per unit, not increased utilization.   The rate of cost increase in Massachusetts has been lower than the rest of the country since we passed our health care reform, although of course we started at a much higher base.

Implications of Massachusetts experience for the post-ACA American health care system:

·      Increasing access doesn’t lead to an instant onslaught of new utilization

·      Health care is regional –and structural issues (not health care reform) make health care in Massachusetts spectacularly expensive

·      We need to keep our eyes on price – not just utilization – if we want to control the rate of health care inflation

*  Health care inflation crowds out other important societal priorities (see graphic at the bottom of this post.   That's why health care reform, and control of health care costs are so important. 

The  Blue Cross Blue Shield Foundation conclusions:

• Massachusetts spends more on health care than any other state.
• Higher costs were not caused or markedly accelerated by health reform, as Massachusetts has been a high spending state for years.
• The underlying difference in spending between Massachusetts and the U.S. overall is rooted in the state’s demographics, insurance coverage, and health care market structure, which includes disproportionately many specialists and teaching hospitals and some very large and powerful hospital systems.
• Though the amount of most services used increases every year, the majority of the growth in health spending comes from increased prices.
• There is enormous variation in total health care spending across the state, stemming from variations in both price and utilization.
• However, neither higher prices nor higher utilization of services is associated with higher quality or better health outcomes, suggesting that there is a significant amount of waste in the Massachusetts health care system. It also suggests that costs can be lowered without decreasing overall quality or health outcomes.

Source: Blue Cross Blue Shield of Massachusetts Foundation

Click image to enlarge. Source