The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Debating Medical Cost Controls in Massachusetts

Posted by Alan on April 14, 2008

The folks in Massachusetts are engaged in a lively debate over health care reform. Seems their widely touted reform plan, complete with Connector and individual mandate, is running into some unintended consequences. Among them, higher costs than anticipated and a lack of primary care physicians. The good news is the wide-ranging debate has moved beyond the politics and mechanics of the Massachusetts health plan to encompass controlling health care costs.

Consider the dialogue occurring on the Commonhealth blog (published by 90.9 WBUR, Boston’s NPR station), between Dr. David Himmelstein, Co-Founder of Physicians for a National Health Program, and Eric Shultz, President of Fallon Community Health Plan. Dr. Himmelstein kicked things off with a post claiming “With spiraling costs threatening to derail Massachusetts’ health reform, politicians and health policy wonks are rounding up the usual cost-control suspects. Unfortunately, the tired ideas they’re trotting out have virtually no chance of success.”

Dr. Himmelstein then runs through why computerization, prevention, disease management, and cost sharing won’t restrain medical costs. He believes the only way to reduce costs is to eliminate the “middle men” in the system — what you and I call the insurance industry — and to limit the profusion of expensive high technology facilities. Leaving aside a moment the public policy of a government-run system, Dr. Himmelstein fails to explain how eliminating insurance companies, insurance agents and purchasing pools curtails the rate of medical cost increase. Once they’re gone, they’re gone. Eliminating private bureaucracies and delivery systems simply shifts is a one-shot savings, not a long term solution — and that doesn’t include the offset created by the need to create a government bureaucracy and delivery system in its place.

Dr. Himmelstein’s call for fewer CAT scanners and other technologies might be more substantive, although his approach to controlling them is chilling. “So long as we leave health planning to the market, the expensive medical arms race will continue.” The implication being that only the government can control costs. Dr. Himmelstein fails to provide any examples where that has worked. I wonder why?

In any event, Mr. Shultz responded in a post with a warning that “Discussions about who pays — whether it’s a single-payer or otherwise — are, fundamentally, discussions about cost-shifting. But cost-shifting does little to get at the relentless underlying drivers of health care costs. And what’s driving up health insurance costs are skyrocketing medical costs, which consume roughly 87 cents of every health insurance dollar.” While allowing that Dr. Himmelstein’s identifying the need for limits on expensive high tech facilities is “well taken,” Mr. Shultz rejects the single payer approach. Citing a Rand study, he notes that “only half of all health care dollars are spent on appropriate medical care.” 

This reality can only be addressed, according to Mr. Shultz, by first requiring that “all players within the health care system have quality and cost information, combined with innovative health insurance plans.” Mr. Shultz goes on to refute Dr. Himmelstein’s dismissal of disease management and smoking cessation programs as ineffective, instead calling for continued focus on prevention and disease management efforts “to ensure the most optimal results are achieved.”

There’s more to the Fallon post. The reality is that controlling medical care costs is a far from easy task. It requires saying “no” to patients demanding inappropriate or ineffective care, “no” to facilities and other providers seeking a market advantage by deploying the latest technologies, “no” to health plans who are less than clear on what’s covered — and what’s not — in their plan designs, and a whole lot more.

What’s significant is that the struggles facing Massachusetts’ health care reform plan is sparking a fulsome debate on what’s needed to restrain health care costs. That may be an unanticipated outcome of the reform effort, but it’s useful and welcome nonetheless.


4 Responses to “Debating Medical Cost Controls in Massachusetts”

  1. The data are normally twisted quarterly by the department of Health care Finance and Policy of the State of Massachusetts in a description called Key Trends. It has been done from 2006 through February 2010.

  2. Tanya Taina said

    Most who can afford $150 for health insurance already have insurance. Crist’s plan does not cover the tens of thousands of Floridians who work minimum wage, are homeless, or who cannot otherwise afford it, such as distressed property owners. I’d move to Japan, where the mortality rate is lower, and the health care better and far cheaper than in the U.S., but I can’t afford it. What will Crist do to HELP THOSE WHO NEED health insurance?

  3. Health care reform is not complecated. The middle man made it complecated. Everybody should aware of health care reforms. If someone need he should direct call insurance industry.

  4. Accordingly the blog some people find it difficult the health care reform. As a matter of fact it is difficult but vital important for life. Actually the middle man made it difficult. If someone need he should direct call insurance industry.

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