Massachusetts Cost Containment

Due to continued rising health care costs in Massachusetts under their "universal" plan, the May 7, 2009 Boston Globe reports that the government plans "another bold healthcare experiment":

State seeks to revamp way doctors, hospitals are paid

...Commission [Special Commission on the Health Care Payment System] members said they will urge Governor Deval Patrick and the Legislature to replace the current system, in which insurers typically pay doctors and hospitals a negotiated fee for each individual procedure or visit, with a set payment for each patient that covers all that person's care for an entire year.

Massachusetts would be the first state to broadly adopt such a system, which would essentially put doctors and hospitals on a budget in an effort to restrain health spending.

A single, yearly fee is intended to discourage doctors and hospitals from providing unneeded tests and treatments, so patients could find it harder to get procedures of questionable benefit. And because doctors and hospitals would have to work together more closely to manage the budget, the hope is they will better coordinate care for patients, which could improve quality.

But Scott Keays correctly noted that this is nothing new in this May 10, 2009 LTE to the Boston Globe:

Patients' care would be compromised

Adopting a system to pay doctors and hospitals a single, yearly fee for each patient is neither bold nor experimental. It's just another variation of capitation: a system that would lead to the government rationing and ultimately compromising patient care.

Before making another costly healthcare mistake, Beacon Hill lawmakers should ask themselves how they would react if their doctor said, "We've already spent your annual healthcare allowance, and anything else we could do to treat your condition would put us deeper in the red." My guess is that it would only take one really sick lawmaker (or governor) to realize the error of their ways.

Scott Keays
Allston

Keays is completely correct. This sort of capitation creates a financial incentive for hospitals and physicians to provide the minimum care necessary. So if you come to your doctor with abdominal pain and he has a choice between a more expensive surgery which will cure your condition or less expensive medications that will be less effective, he may choose to delay surgery for as long as possible to avoid losing money on your case.

Can patients trust medical advice in such circumstances, knowing that their doctors are rewarded financially for undertreatment and penalized for recommending more expensive treatments?

Patients hated this sort of indirect rationing during the heydey of HMOs. They won't like it any better when the government does it.