The Massachusetts Legislature will soon pass a bill promising to control health costs. But a bill that can pass will be too weak to work. Political pressure to craft a law with real teeth is still lacking.
The world’s other rich democracies surpass the U.S. in containing health costs while covering all people and enjoying superior longevity. Despite big differences in how they raise money, cover people, and pay hospitals and doctors, they share six key approaches to containing costs.
First, those countries unite all public and private payers to play on the same team. Second, they set annual budgets for hospitals that cover both patient care and salaries of hospital-based physicians. Third, they negotiate financial and political deals with office-based doctors — deals crafted so that hard-working doctors earn target incomes. Fourth, they have lots of primary care doctors and lower-cost community hospitals. Fifth, they set lower prices for brand name drugs. Sixth, they hold down administrative waste.
Successful foreign countries are also similar in shunning market competition, government micro-management, financial incentives, and high out-of-pocket costs. Instead, their budgeting and political negotiations move hospitals and doctors toward serving as trusted fiduciaries or stewards who marshal vast but finite resources. (Interestingly, the American Medical Association endorsed physician stewardship just this week.)
The Legislature’s plans use none of the six tools proven to work in the world’s other rich democracies. Instead, the proposal merely threatens to act if health spending continues to grow faster than the state’s economy. Political will is lacking today; why would it materialize in a few years?
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