JAMA Network Controlling Health Care Costs in Massachusetts With a Global Spending Target

The new legislation builds on the far-reaching health insurance reforms that Massachusetts enacted in 2006, including the mandate on state residents to carry a minimum level of insurance or to pay a tax penalty.⁶ The reforms became the model for key aspects of the US Patient Protection and Affordable Care Act of 2010.¹ The many features of the 2012 state act include provisions to improve transparency and accountability for health care providers with regard to cost, financial performance, quality, and competition within markets and to improve the clarity for consumers of information about the out-of-pocket costs of care. The provisions also include reforms to medical malpractice laws that would allow a physician, hospital, or others who provide health care to admit to a mistake or error, without the acknowledgment being used in court as an admission of liability.⁵ Attention, however, is likely to focus on the global spending target and its potential value as a cost-containment tool. From 2004 to 2009, health care spending in Massachusetts increased by 5.8% per year, regularly exceeding economic growth.⁷
The act creates a Health Policy Commission to implement the new law and a Center for Health Information and Analysis to collect and analyze data on health care costs and quality. The commission is charged with establishing by April 15 of every year “a health care cost growth benchmark for the average growth in total health care expenditures . . . for the next calendar year.” Total health care expenditures are defined as “all health care expenditures in the commonwealth from public and private sources,” including “all categories of medical expenses and all non-claims related payments to providers . . . all patient cost-sharing amounts, such as, deductibles and copayments,” and “the net cost of private health insurance.” The “growth rate of potential gross state product” is defined as the “long-run average growth rate of the commonwealth's economy, excluding fluctuations due to the business cycle.”

JAMA Network | JAMA: The Journal of the American Medical Association | Controlling Health Care Costs in Massachusetts With a Global Spending Target Controlling Health Care Costs in Massachusetts

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