Ilovebenefits’s Blog

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Lowering Costs in Massachusetts?

This from Greg Scandlen:
So now in Massachusetts they are pushing for a global system of capitated fees that will rachet down over time. An editorial in the Boston Globe supports this effort saying, “But for such a global system to hold down costs, that annual amount has to go on a diet, with each year’s increase ratcheted downward.” Now, it escapes me how a state government feels it has the authority to dictate how a private insurer pays a private provider for a private service. But this is Massachusetts, after all, and Attorney General Martha Coakley is one of the biggest proponents of doing this.
Massachusetts hired the Rand Corporation to estimate the cost savings that might come from different approaches. The result is a curious mix of wishful thinking and selective perception. The study says it started with “an initial set of 75 broad approaches to cost containment,” from which it culled a subset of 12 options “for which there was some evidence of savings potential and some available data for making projections.”
Curiously omitted from the analysis is any form of consumer driven health, despite evidence aplenty of dramatic cost savings (see last week’s newsletter for a report from Cigna of a 26% reduction in costs over four years of experience.) Rather, Rand looks solely at the flavor-of-the-week fads such as “bundled payments.” This despite there existing absolutely zero experience with bundled payments in real-world conditions or any evidence that it saves anything.
Rand is not deterred by any lack of evidence and estimates that bundled payments would save between 0.1% and 5.9% over a ten-year period. Now that is quite a range, but Rand covers itself by saying, “the estimates of savings from all 12 options are very tentative, because none has a proven history of reducing spending.”
Let’s repeat – none of the 12 options has a proven history of reducing spending. Rand goes on, “the amount of the reduction is highly uncertain, as indicated by the spread between the high and low savings estimates in the figure.”
But Rand does not let the lack of data get in the way of its optimism. It says, “If health care spending could be held to the rate of growth in the state’s GDP, then health spending in the state would be only $107 billion by 2020, representing a cumulative savings of 8 percent between 2010 and 2020.”  Why, yes indeedy. And as my mother used to say, “If wishes were horses, beggars would ride.”
And you wonder why American public policy is in such a mess?
Boston Globe
Rand Write-up


February 18, 2010 - Posted by | Cost, healthcare, insurance | , ,

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