Monday, May 14, 2012

Whose judgment do you trust?

I think it is a shame that editorial writers don't identify themselves in the major newspapers.  If they did, we could address questions to them personally.  Here is one that I would ask the author of a recent editorial who was writing about the dueling health care bills in the Massachusetts legislature.

You say that "the House bill is marred by regulatory overreach" because it contains a provision that "would create a new, quasi-independent authority, the Division of Health Care Cost and Quality, and vest it with broad power to set health care standards, investigate rates charged by hospitals or physician groups, and demand corrective action when it deems those rates unjustified. It could also assess a so-called luxury tax when providers’ rates are more than 20 percent above the statewide average."

You say that the "plan includes a problematic, blunt-instrument regulatory thrust. The luxury tax, for example, leaves much to the judgment of the new quasi-independent authority, which would assess whether a price premium of 20 percent above the state average was justified by quality or uniqueness."

Let's see, the current pricing regime is characterized by secret negotiations between the dominant insurance company and the dominant provider group, whose "judgment" has led to persistent and pervasive over-pricing of that system's services.  This has imposed a tax on Massachusetts employers and individuals, in an amount that I would conservatively estimate as $200 million a year.  Whose judgment would you rather have in place?

By the way, there are lots of ways to have a regulatory regime in place that is not overly obtrusive.  We need to think about those because we can't just hope the problem away.  My view is that there should be a rebuttable presumption that rates should be equal, unless the insurer can demonstrate to a rate-setting body that a differential is warranted.  This is different from normal public utility rate-setting or what existed before in the insurance world, but it would offer independent oversight over parties that clearly are not interested in solving the problem.

Oh, and if you think equal rates for equal service are somehow off base, please understand that, across the country and within Massachusetts, Medicare pays hospitals and doctors in that fashion (with appropriate adjustments for teaching residents, cost of living, and the like.)  If that works for over 30% of health care costs, why not for the rest?

1 comment:

Anonymous said...

Well said. As someone with more experience in campaigns, elections and politics than healthcare I find remarkable the degree to which public debate in Massachusetts is dominated by two parties-- Partners, and Blue Cross.