What Is A Global Spending Target?
Some wishful thinking a new commission in Massachusetts will be doing each year, according to JAMA (http://jama.jamanetwork.com/article.aspx?articleid=1352960).
However, health care in Massachusetts is also staggeringly expensive, even for the United States. In 2009, health spending per capita in Massachusetts was $9278, considerably more than the national average of $6815 and more than per-capita spending in any other state.
In July 2012, after years of consideration, Massachusetts enacted wide-ranging health care reform legislation that aims to control costs and improve quality.
A signature feature of the act, signed into law by Deval Patrick, the state's Democratic governor, on August 6, 2012, is the creation of an annual global spending target for total health care expenditures, which is tied to the growth rate of the state's economy. Massachusetts is the first state to set statewide benchmarks to control health care costs, albeit with limited enforcement mechanisms and targets that may slow the rate of increase of health spending, but not decrease it.
The new legislation builds on the far-reaching health insurance reforms that Massachusetts enacted in 2006, including the mandate on state residents to carry a minimum level of insurance or to pay a tax penalty.
The reforms became the model for key aspects of the US Patient Protection and Affordable Care Act of 2010.
The act creates a Health Policy Commission to implement the new law and a Center for Health Information and Analysis to collect and analyze data on health care costs and quality. The commission is charged with establishing by April 15 of every year “a health care cost growth benchmark for the average growth in total health care expenditures . . . for the next calendar year.” Total health care expenditures are defined as “all health care expenditures in the commonwealth from public and private sources,” including “all categories of medical expenses and all non-claims related payments to providers . . . all patient cost-sharing amounts, such as, deductibles and copayments,” and “the net cost of private health insurance.” The “growth rate of potential gross state product” is defined as the “long-run average growth rate of the commonwealth's economy, excluding fluctuations due to the business cycle.”
For 2013, the health care cost growth benchmark is set at 3.6%. For 2014 to 2017, the benchmark is set at the growth rate of potential gross state product, and for 2018 to 2022, it is set at the growth rate of gross state product minus 0.5%, with some provisions for adjustment.
The state will not dictate how the annual benchmark is met. The act encourages greater use of global payment arrangements and risk-based contracts, for example, by requiring the Medicaid program, the state's employee health care program, and other state-funded health care programs to transition to new payment methods.
The Health Policy Commission is to “establish procedures to assist health care entities to improve efficiency and reduce cost growth.”
The commission may encourage, cajole, and, if needed, shame them into doing their part to control costs. Starting in 2016, the commission may require some to file and implement a “performance improvement plan” because they have exceeded the cost growth benchmark and have not adequately explained potential mitigating factors. Such an entity will be identified on the commission's website until its plan is successfully completed. The commission's options to enforce compliance are limited, however. Under extreme circumstances, the commission may impose civil penalties of up to $500 000 but only “as a last resort.”
There will be no way to know if this plan for Massachusetts is working until it has been in effect for at least several years. Until then, skepticism about the amount of projected savings is appropriate. Notably, the plan does not offer incentives for organizations to save more money than is required to meet the annual cost growth benchmark.
With a global spending target, health care in Massachusetts is still likely to be very expensive as compared with the United States and all other member countries of the Organisation for Economic Co-operation and Development. Health care may just not be quite as expensive as it could be without a spending target.
Massachusetts failed to contain costs when it passed the 'comprehensive' reforms in 2006, signed by then-Governor Romney. (It follows that the Affordable Care Act will not contain health care costs, either.) Now, a half dozen years later, the Commonwealth is searching about for some method to restrain the rising cost of health care. So, they created a new commission which has the duty to do some wishful thinking about containing the cost of health care each year, but has no authority to actually dictate anything about how that benchmark is met. Thus, a global spending target is wishful thinking on the part of the state of Massachusetts, which is to be followed up by encouraging, cajoling, and shaming, but not actually doing anything.
Is this how Americans have tackled serious health problems in the past? When there was a need to stop polio, did we create a commission, do some wishful thinking, and then cajole, encourage, and shame? No, we spent the necessary money to study the problem, identify a viable vaccine, and then we required everyone to use the vaccine.
When are we ever going to apply some of that good old American common sense and get the job of health system reform done?
Dr. Joe Jarvis