Based on what I saw out of Massachusetts last week, the future of healthcare looks increasingly like a race to the bottom on pricing. It comes from a short story in the Boston Herald, and if you blinked, you probably missed it. It was a local story, describing how state officials would be empowered to reject certain rates charged by hospitals for medical services. That is, if the recommendations of a blue ribbon panel of "healthcare stakeholders, lawmakers, and experts," as described in the story, are accepted.
I'll leave it to you to decide whether or not you agree with the paper's description of the panel, but I have my doubts as to how many healthcare stakeholders and experts backed this plan if, for example, they work in a hospital, or ever expect to be treated in one. In fact, the only person on the 10-person panel to vote against the measure was Lynn Nicholas, president of the Massachusetts Hospital Association.
The plan, at least, works both ways in theory: If providers of healthcare services charge a price that exceeds the market norm, and the insurer refuses to pay as a result, providers would be required to defend their prices before a panel of state healthcare finance officials.
That panel would be empowered to force an insurer to accept a hospital's price or to force the hospital to accept a lower price, according to the newspaper. Given the pressure on governments and just about everyone else from high healthcare costs, which of the two outcomes do you think is likely to occur in most cases? It sounds like an idea that should work, but then again—and I concede that this is probably an unfair comparison—so does communism.
Granted, the story goes on to mention that the panel sees this action as a "near-term" solution to address "unjustified" provider price variation, whatever that means. I don't know about you, but I read "near-term" as code for "desperate" and "unjustified" as "expensive" in a state that is spending—for a variety of unpredictable and very predictable reasons—vastly more on its universal healthcare plan than it ever imagined.
Excuse me for extrapolating Massachusetts' grand experiment with what we're undergoing more slowly on a national scale, but the structural similarities between the two lead one to believe that many of the same problems eventually will crop up nationally.
Bluntly, this plan sounds suspiciously like rate-setting. We tried, as a nation, a very crude form of healthcare rate-setting in the Nixon administration, when healthcare wages and prices were frozen. That failed miserably.
But despite protestations to the contrary, how can anyone see this Massachusetts proposal as anything but rate-setting? It seems unlikely that hospitals would be on the winning side in most of the decisions put before the panel, so it's in their interests never to have to appear before the committee. That puts an unseen ceiling on healthcare costs that is far from competition-driven.
The serious question I ask about all this as it goes on in Massachusetts is whether we want healthcare to be provided by the low bidder as determined not by economics, but by the vote of a committee.
In reading the story earlier this week, I was reminded of a quote from astronaut Alan Shepherd: "It's a very sobering feeling to be up in space and realize that one's safety factor was determined by the lowest bidder on a government contract."
Again, it's an imperfect analogy, but it occurred to me that if Massachusetts is a Petri dish under which many of the provisions of healthcare reform are being tested, one day, we all might legitimately co-opt Shepherd's quip by replacing "up in space" with "in a hospital bed."
Philip Betbeze is the senior leadership editor at HealthLeaders.