• What’s next for Massachusetts?

    I wish I could answer that question. Whatever is going on in the opaque (to me) political struggle to shape the future health care payment system in the state, at least AG Martha Coakley has said something very smart. In today’s Boston Globe, Matt Murphy reports,

    Attorney General Martha Coakley cautioned yesterday against a “full-scale push forward’’ on payment reform to address spiraling health care costs without addressing the underlying issue of market clout. Coakley said the market factor has led to a disparity in pricing among providers without a clear link to quality of care.

    The rest of the article doesn’t reveal enough details for me to know exactly what Coakley is thinking. My most optimistic guess is that she has recognized that public payment reforms that don’t alter the market dynamics that drive private prices (or even encourage further provider consolidation, as ACOs could) can’t be a long term solution. Maybe she’s read my paper on this (PDF), or the equivalent (I’m not the first to point out these issues).

    So, what’s next for Massachusetts? What’s a possible solution? The most promising idea I’ve heard, in the sense that I can believe it could work, is all-payer rate setting. It’s a political heavy lift, but so is everything in health policy beyond the trivial.

    • NPR had an interesting story this morning which highlights this problem in Sacramento. One dominant health system (Sutter) covers most the the hospitals and doctors in Sacramento and as a result charges about 40% more than the other providers and enjoys a 17% return on investment. (Difficult to know exactly since all medical pricing is “confidential, proprietary” information.)
      All over the country, hospitals are buying medical practices and consolidating. This reduces competition and increases prices.
      “All payer rate-setting” (ala Medicare) would be a good solution to this problem. For that matter, “Medicare for all” would have been a much better solution than the ACA. Unfortunately, the health industry profits came first.