 As the U.S. Congress has moved closer toward passing landmark legislation for national health care reform, attention has shifted to the reform’s long-term financial cost. To get a glimpse of what the future might hold for the national budget, many eyes have turned to Massachusetts. RAND Corporation Health Care Economist Christine Ebner has prepared a report providing an overview of the state's health care experiment entitled Pilgrims Progress: How Massachusetts Could Lead the Way in Controlling Health Care Costs.
In 2006, Massachusetts passed its own groundbreaking legislation ensuring near-universal health insurance coverage for residents of the state. By 2008, only 2.6 percent of Massachusetts' residents were uninsured, considerably below the national average of 15 percent. However, continued increases in the cost of health care services now threaten the long-term viability of the state initiative, having ominous implications for the national effort unless costs can be contained.
(See also AOH, July 22, 2009, "Near-Universal Care: What Are the Lessons?")
State spending and revenue issues will continue to 2010 and mandated health care costs on the states may complicate financial affairs in some states. According to the new RAND paper, "In the absence of changes to the Massachusetts policy, health care spending in the state is projected to nearly double to $123 billion in 2020, increasing at a faster pace than the state’s gross domestic product (GDP)."
RAND noted that if health care spending is restricted to the rate of state's GDP growth, then health spending in the state would amount "to $107 billion by 2020, representing a cumulative savings of 8 percent between 2010 and 2020 and keeping health spending from consuming an ever-increasing portion of the state’s economy."
As in the rest of the country, finding a way to reduce spending on health care is a major focus for private and public policymakers in Massachusetts. Federal policymakers are looking to the Massachusetts' experience for insights about the possible outcomes of national health reform.
No Silver Bullets
RAND noted that the Massachusetts Division of Health Care Finance and Policy asked RAND Health researchers to develop a menu of cost-containment options. From an initial set of 75 broad approaches to cost containment, they modeled the impact of a subset of 12 options for which there was some evidence of savings potential and some available data for making projections.
The report noted: "The researchers developed high and low estimates of the cumulative cost savings associated with these options over ten years. For an additional nine options, researchers conducted an extensive literature review but did not attempt to project savings, generally because the evidence was uncertain or the options held limited promise for reducing health spending in Massachusetts."
RAND Health is the largest nonprofit research center on health care in the United States.
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