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With Rate-Setting Proposal, MA Leads Pricing Race to the Bottom

Philip Betbeze, for HealthLeaders Media, November 18, 2011

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 senior leadership editor with HealthLeaders Media.
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1 comments on "With Rate-Setting Proposal, MA Leads Pricing Race to the Bottom"


Doug (11/28/2011 at 11:42 AM)
short and brief: Since Healthplans dont understand hospital billing, Hospitals dont understand hospital billing, the Patient doesnt understand hospital billing, then why are we suppose to pay the bill assuming ofcourse the higher bill means "better" quality