A Marketplace of Haves and Have Nots–Massachusetts Healthcare System Plagued with Cost Inequalities

The state Attorney General is in the preliminary stage of a systematic review of the Massachusetts healthcare system and has already made some startling discoveries about healthcare costs. Martha Coakley’s office found significant cost variations among hospitals and physicians based on factors other than quality of care.  Although the investigation is still ongoing, Attorney General Coakley has expressed concern about affordable and accessible healthcare if the identified systematic failures are not addressed and has urged policymakers to implement cost containtment measures.

As part of the investigation, the Attorney General’s office reviewed documents from insurance companies and healthcare providers representing the bulk of the healthcare market in the state to examine healthcare costs and costs drivers. Specifically, the Attorney General examined insurance contract prices between insurance providers and hospitals between 2004 and 2008. The concern is that although Massachusetts has improved access to the healthcare market–97 percent of the population has healthcare coverage–this improvement could be compromised by cost increases.  Attorney General Coakley warned if left unchecked, price disparities in the market could create a  provider marketplace dominated by expensive “haves” as lower priced “have-nots” are forced to close down or consolidate with higher priced providers. 

The initial findings of the investigation showed that:

• In the same geographic area and across similar levels of service, prices paid by insurance carriers to hospitals and physician groups varied, at the extreme in excess of 200%.
• Price variations are not correlated with quality of care, complexity of the illness or population being served, extent of patients on Medicare or Medicaid, or whether the provider is an academic or research facility.
• Price variations are correlated with the relative market position of the hospital or physician group as compared to hospitals within a geographic region or within a group of academic medical centers.
• Price variations on a per-member, per-month basis are not correlated with the method of payment (e.g. globally or fee-for-service).
• Price increases cause most of the healthcare cost increases in the state.
• Contracting practices distort the commercial healthcare market and reinforce disparities in pricing.
• The report noted that health care costs are increasing much faster than wages.

The investigation is expected to be completed by March 16th and the findings will be presented to the Massachusetts Office of Health and Human Services, Division of Healthcare Finance and Policy.   

For more information on Massachusetts’ unique approach to healthcare access, see the following website on the state mandate and statute.  If you need to obtain health insurance coverage, see the following guide to choosing a health plan.

If you have questions about medical negligence or medical malpractice, please feel free to contact our firm for a free consultation at 800-379-1244