Don’t overreach on health cuts

The rate of growth of health care costs in Massachusetts has begun to slow. The year-end reports of the state’s Division of Health Care Finance and Policy show that the annual growth in hospital expenses declined from over 8 percent in 2007 and 2008 to 3.5 percent in 2010, and that the growth in insurance premiums has declined from 6.7 percent in 2006 and 2007, to 4.0 percent for 2008 and 2009.

Private-sector reforms are taking hold. The Blue Cross Alternative Quality Contract, a payment method that rewards physicians for maintaining patient health, now covers nearly 450,000 people. Most of the major health insurance companies now offer limited and tiered network products, where people can save money on premiums by agreeing in advance to use lower-cost providers. The conversion of the Caritas system to the Steward network has put a powerful lower-cost provider into a viable position in much of the state. And Mass. General has shown that the toughest medical cases can be managed more cost effectively, with better health outcomes, through deeper engagement with patients.

Last summer, the Legislature enacted a law that embraced several cost reforms, but they have yet to be fully implemented. The law requires the creation of up to six health care purchasing cooperatives, which would give small businesses the bargaining power that comes with numbers. This reform has progressed to the regulation stage, but no co-ops yet exist. More recently, the governor signed a municipal health care reform bill that will have a significant impact on costs for workers who make up 10 percent of the privately insured population in Massachusetts.