Rising MA Health Costs: The 'Market Distortion' Factor

Following up on new state numbers on the drivers of health costs in Massachusetts, WBUR's Martha Bebinger reports this morning:

A new state report out this morning is shedding some light on the vexing question: What exactly is driving up health care costs in Massachusetts?

The report says the answer depends, in part, on who is paying the bill. In government health plans — Medicare and Medicaid — rising costs in recent years were largely based on how much care patients received. In commercial health plans, high prices were the driving factor.  Massachusetts Association of Health Plans president Lora Pellegrini says the report proves the need to address prices at high-cost hospitals before the state worries about how to pay for health care.

"We absolutely need to fix these market distortions first, to lay a solid foundation for payment reform or else we'll just be memorializing high payments in a new system," she said.

The Incidental Economist also weighs in on a similar theme here; Kevin Outterson writes:

I predict some will claim this proves RomneyCare was mistaken. The report is best understood as additional evidence of provider market power in Massachusetts. We should be talking about how to address this market competition problem.