Federal Health Care Reform Lacks Meaningful Cost Control

Richard C. Lord, President and CEO, Associated Industries of Massachusetts, says all of the federal health reform bills are fatally flawed by not adequately addressing cost containment:

One of the biggest disappointments for the business community concerning the health care debate currently taking place in Washington is the near total lack of attention to cost containment. We all know that in Massachusetts we deliberately chose to address access first, and in that regard, we have been very successful — over 97% of our residents have health insurance, with over 400,000 becoming newly insured since the law passed in 2006. But not addressing the cost of health care now presents enormous challenges for both our state health care reform efforts as well as for consumers and businesses who are struggling to afford ever increasing premiums. So I was hopeful that federal reform would at least begin to tackle the cost problem.

Unfortunately, the pending federal bills barely address costs, and indeed are financed by huge cuts in Medicare payment rates (shifting costs to private insurers) or new taxes on health plans, pharmaceutical companies and other providers, which will be passed on to consumers in the form of higher premiums.

Maybe Massachusetts will have to lead the way on the cost issue after all, just as we did with access. I am heartened by the near total consensus here that we need to move away from our current “fee for service” payment system, which rewards providers for volume, toward global payments that would providing greater incentives for efficiency and quality care. Obviously there would be significant advantages to a national approach to reshaping our health care payment system: apart from competitiveness and consistency issues, federal action would avoid Medicaid and ERISA constraints. But if Washington lacks the political determination to confront this issue head on, I am hopeful that Massachusetts will once again lead the way on cost containment – without which all of our great accomplishments will not be sustainable.

This program aired on October 25, 2009. The audio for this program is not available.


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