Global budgeting for MA health care? Not really.

[eridani]

http://jama.jamanetwork.com/article.aspx?articleid=1352960
August 22, 2012
Controlling Health Care Costs in Massachusetts With a Global Spending Target
By Robert Steinbrook, MD

In July 2012, after years of consideration, Massachusetts enacted wide-ranging health care reform legislation that aims to control costs and improve quality. A signature feature of the act, signed into law by Deval Patrick, the state's Democratic governor, on August 6, 2012, is the creation of an annual global spending target for total health care expenditures, which is tied to the growth rate of the state's economy.

For 2013, the health care cost growth benchmark is set at 3.6%. For 2014 to 2017, the benchmark is set at the growth rate of potential gross state product, and for 2018 to 2022, it is set at the growth rate of gross state product minus 0.5%, with some provisions for adjustment. The state will not dictate how the annual benchmark is met.

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With a global spending target, health care in Massachusetts is still likely to be very expensive as compared with the United States and all other member countries of the Organisation for Economic Co-operation and Development. Health care may just not be quite as expensive as it could be without a spending target.

Comment by Don McCanne of PNHP: Recognizing that health care reform in Massachusetts enacted when Mitt Romney was governor has failed to control health care spending, Massachusetts has now enacted legislation supposedly designed to limit spending. One of the most important features is the introduction of global budgeting, an important economic tool long advocated by Physicians for a National Health Program. No, wait. It isn't a global budget, but rather a global spending target, and that is the point of today's message.

Massachusetts continues to finance care through a fragmented, dysfunctional system that can never be reined in. There is no state universal budget for health care, so there can be no global budgeting. Even hospitals cannot be globally budgeted because they have to interact with so many different payers. All this legislation does regarding global spending is to identify the various entities that exceed the targeted rate increases and them put them on a naughty boys' list.

Be prepared. A few years from now, when we continue to teach that global budgeting is one of the more effective tools that we should be using to contain costs, we'll have to respond to the claim that Massachusetts already tried that and it didn't work. No they didn't. Erecting targets on the sidelines has nothing in common with crafting a budget using real dollars.