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by Free Market Duck

Romney Care 2.0

Editorial, The Wall Street Journal

(Aug 06, 2012)

With costs rising fast, Massachusetts moves to dictate medical care.

New York, NY -- ObamaCare's illusions are starting to fall like autumn leaves, even among some liberals, and what they're discovering are things that have happened over and over again in Massachusetts. Beacon Hill "reformed" health care four years before Capitol Hill, and ever since it has reliably predicted the national trend—on surging costs, price controls, physician shortages and so much else.

So Boston's latest adventure deserves particular scrutiny, since odds are its methods are coming soon to a hospital near you. After more than a year and a half of debate, last week the legislature passed a far-reaching "cost containment" bill that Democratic Governor Deval Patrick is about to sign. It is the inevitable postscript to the model that Mitt Romney introduced in 2006.

The claim then, as with the Affordable Care Act, was that health care would be less expensive if everyone had insurance. Soon Massachusetts Democrats leaked that their political strategy all along was to expand coverage only, because had RomneyCare seriously squeezed providers it never would have overcome industry opposition. "Bending the curve" on costs could be saved for another day, once a vast new government liability was locked in.

Sure enough, 79% of the newly insured are on public programs. Health costs—Medicaid, RomneyCare's subsidies, public-employee compensation—will consume some 54% of the state budget in 2012, up from about 24% in 2001. Over the same period state health spending in real terms has jumped by 59%, while education has fallen 15%, police and firemen by 11% and roads and bridges by 23%.

Meanwhile, Massachusetts spends more per capita on health care than any other state and therefore more than anywhere else in the industrialized world. Costs are 27% higher than the U.S. average, 15% higher when adjusted for the state's higher wages and its concentration of academic medical centers and specialists.

The health-care postman always rings twice, and now medicine itself is the target, instead of unsympathetic insurance companies. Under the plan, all Massachusetts doctors, hospitals and other providers must register with a new state bureaucracy as a condition of licensure—that is, permission to practice. They'll be required to track and report their financial performance, price and cost trends, state-sanctioned quality measures, market share and other metrics.

The best that can be said is that in principle such transparency could increase useful information about cost and quality. Today's lack of comparative tools makes it hard for consumers to search for value in health care, even when they have the incentive to do so.

But Massachusetts takes 360-degree surveillance and converts it into a panopticon prison. An 11-member board known as the Health Policy Commission will use the data to set and enforce rules to ensure that total Massachusetts health spending, public and private, grows no more than projected gross state product through 2017, and 0.5 percentage points lower thereafter. (And Paul Ryan's Medicare projections are unrealistic?)

No registered provider is allowed to make "any material change to its operations or governance structure," the bill says, without the commission's approval. The commission can also rewrite the terms of provider contracts with insurers and payment levels and methods if they are "deemed to be excessive."

As the commission polices the market, it can decide to supervise the behavior of any provider that exceeds some to-be-specified individual benchmark—that is, doctors and hospitals that are spending too much on patient care. These delinquents must submit a "performance improvement plan" that the commission must endorse.

In other words, the commission is empowered to control the practice and organization of medicine. The Massachusetts left complains that this government control is too weak because the delinquents can only be fined $500,000 for disobeying the commission's dictates. But more teeth can always come in round three when this plan fails, as it will.

The main reason is that the enlightened planners never allow for the complexity of medicine in the real world. For example, Medicare has for years been trying to lower hospital readmissions using the strategies across the health policy universe—generate performance and quality measures, then pay "good" hospitals more and the "bad" less.

But it turns out that many of the supposedly bad hospitals also have much lower mortality rates than the ones Medicare is rewarding in its readmission programs monitoring heart attack, heart failure and pneumonia. The reason is that patients who die can never be discharged and then readmitted if something later goes wrong. The alleged underachievers that Medicare punishes are often much better at treating sick people and saving lives, less good at crunching the numbers.

Despite these Medicare failures, Washington has never gone as far as Boston is now going, installing itself as the arbiter of care in order to redesign care, though under ObamaCare it's only a matter of time. Everyone agrees that the health system needs to deliver medicine more efficiently and be more accountable, but accountable to whom? The answer for the political rulers of medicine, if not patients, is always: government. – FM Duck

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