State Weighs Goals For Cutting Health Care Costs

If you decide you want to lose weight, or save money to buy a house, you start by setting a goal. Will you aim for 10 pounds or 20? How much do you need for a down payment?

Now, as state lawmakers prepare a bill that will limit health care cost increases, they have to decide by how much. Two major groups in Massachusetts are urging the legislature to set an aggressive goal.

WBUR's Martha Bebinger joined WBUR's Morning Edition to explain the debate.

Bob Oakes: We're starting to see the major players in Health Care put their stake in the ground on this question: What is the state's cost cutting goal? Who have we heard from so far?

Martha Bebinger: Last week we heard House Speaker Robert DeLeo say that although health care costs have been rising much faster than the state economy overall, he thinks bringing health care more in line with state economic growth is reasonable.

But today we have two groups, Associated Industries of Massachusetts and the Greater Boston Interfaith Organization saying that’s not enough. They say the state’s health care spending goal should be gross state product (GSP), that’s the way we measure economic growth, GSP-2 points. We know at least group of hospitals and insurers wants a less aggressive goal, GSP +1.

What does that mean in dollars?

In three years, the difference between GSP+1, the goal some hospitals and insurers support, and GSP-2, the goal that the state's largest employer group and one consumer groups wants, is $7 billion. In 2020, the difference between those two goals is $21 billion. We have charts that show the yearly differences through 2020, prepared by Diana Eastman, a research associate at the Harvard School of Public Health, on CommonHealth.

The goal set by these two groups is very aggressive, why? And is the goal realistic?

On the first question, why so aggressive, Paul Hattis, a physician, who co-chairs the GBIO health care task force, says his group wants to a goal that will shake things up:

To get the attention of the doctors and hospitals, to really say that this time around it’s not just about sliding through a challenging political time but really about behavior and cultural change.

On the second question, is this goal realistic, Hattis and Rick Lord, the president and CEO at Associated Industries of Massachusetts, both say there is a lot of room to cut health care costs. Here's Rick Lord:

Almost 30 percent of current spending is either wasteful, inefficient or spent on care in very expensive settings that could be delivered elsewhere. There's a lot of evidence that our goal is attainable.

Both groups say it would be reasonable for the state to adopt a less aggressive goal at some point, once health care costs are no longer hurting families, businesses and local governments.

As a counterpoint, the Massachusetts Hospital Association says that capping health care two points below growth for the rest of the state's economy is "a really bad idea" that would trigger massive layoffs and some hospital closures. What do hospitals say about the claim that there's a lot of money that goes to waste in health care?

Getting rid of waste will mean cutting jobs. And Lynn Nicholas, president and CEO at the Massachusetts Hospital Association, objects to how some people talk about waste in health care:

Business people think of waste as something like closing off parts of an assembly line. The waste in health care is marbled in like fat in a steak and it has to be teased out very carefully so that you don’t destroy what’s left.

What does this mean for us as patients. If the state cuts health care costs, won’t that mean that we get less care?

It depends on who you ask. Don Berwick, the former president and CEO at the Institute for Healthcare Improvement says the state can cut costs while protecting patients.

I do not believe that is it necessary or wise to reduce costs by hurting patients. This is done simply by routing out waste in practice that pervades a lot of the American health care system.

Berwick says that in the short term, while the focus is on reducing waste, it is reasonable to think that health care costs could grow at a slower rate than the state's economy as a whole. But Brandeis University professor of national health policy, Stuart Altman, says just getting health care in line with GSP would be a major achievement. Altman is "concerned about both what it (GSP-1 or -2) would do to the delivery system, and to the quality of care, to patients, and what it would do to the economy of Massachusetts, it’s just too drastic a cut."

State lawmakers will try to balance these concerns as they decide what goal to set, and then how to enforce it in legislation that is expected out in the next month or two.

Will the goal that Massachusetts sets have any significance nationally?

Yes, Massachusetts is under the microscope as it tackles health care costs. Paul Ginsburg, president of the Center for Studying Health System Change, says the goal Massachusetts sets for controlling health care costs is not as important as "what they do if the goal isn't met. That will be the most instructive thing" for the country.