Massachusetts confronts cost problem, but will it work?

The New York Times reported today about the growing cost problem in Massachusetts as the commonwealth looks to rein in the expense of their universal healthcare program. Milliman principal Cathy Murphy-Barron discusses the cost challenges posed by healthcare reform in an article published in November.

Of particular interest is the Massachusetts plan to use prevention and other value-based measures to fight costs. Quoting the Times article:

They want a new payment method that rewards prevention and the effective control of chronic disease, instead of the current system, which pays according to the quantity of care provided. By late spring, the commission is expected to recommend such a system to the legislature.

This sounds reasonable, and most people can agree on the need for preventive care; many believe the fee-for-service payment system is flawed. But will a commitment to prevention result in savings? Cathy addresses this point in her article:

Wellness. Disease management. Consumer-driven health plans. Value-based insurance design. There has been no lack of effort on the part of the healthcare and insurance industries in recent years to tackle the problem of spiraling costs, and the work to date holds much promise. Yet every time we look at these innovations, we find ourselves unsure of the one thing we most want to know—their effect on cost. Most innovations show at least modest potential for cost savings but the long-term effect on costs is not yet clear.

Time will certainly tell whether what the Times calls ” perhaps the boldest state health care experiment in American history” will have as much early success tackling the cost problem as it has had tackling the access problem.