Gov. Deval Patrick’s New Health Law Is Flat-Out Dangerous

Beacon Hill was the scene of great fanfare earlier this month when Governor Deval Patrick signed controversial new healthcare reform legislation into law. The governor proudly proclaimed that Massachusetts was “the first to crack the code” on the problem of ever-increasing healthcare costs.

The mood outside the statehouse, however, has been far more sober. In reality, Patrick’s new law will restrict patient access to vital medical treatments and squeeze a hospital system that’s already in dire financial straits.

Described as “immensely complex” by the Massachusetts Hospital Association, the core of the 349-page law aims to control the state’s mounting medical costs by indexing healthcare expenditures to the gross state product (GSP) — that is, the state’s total economic output. Starting next year, healthcare spending will be allowed to grow no faster than GSP — and between 2017 and 2022, no faster than a half percentage point below GSP.

Insurers and large hospitals in Massachusetts will also have to pay $225 million in surcharges over four years, starting in 2013. The measure’s backers project savings of $200 billion over 15 years.

Massachusetts State Rep. Steven Levy (R-Marlborough) has noted that the law contains no specifics as to how the savings it mandates will actually come into being. He’s also called the gross state product a “random” number with which to straitjacket the healthcare budget.

Healthcare providers that don’t hit the government’s new annual spending targets will face serious consequences. Two new state agencies — the Health Policy Commission and the Center for Health Information Analysis — have been created to discipline them.

Physicians who fail to reduce costs can be compelled to file “performance improvement plans.” These filings are essentially designed to embarrass struggling hospitals. If providers don’t adhere to their improvement plans, the agencies can fine them up to $500,000. And there don’t appear to be any means for appeal or judicial review of these fines.

Encumbering physicians with yet another layer of red tape is no way to reduce costs. Massachusetts Medical Society President Richard Aghababian has voiced misgivings that “the bill’s very stringent reporting requirements” will be particularly burdensome to “the smaller medical practices in the Commonwealth,” which generally lack the resources needed to shoulder such a hefty administrative burden.

Witness the impact that previous rounds of government-directed “reform” have already had. A study published last year in the New England Journal of Medicine noted that the Bay State’s 2006 health reform package had been associated with rapid new hiring in the Massachusetts health system.

That might sound like good news. But it wasn’t doctors or nurses getting hired. Rather, it was scores of administrative workers, who were needed to process all the new paperwork mandated by the reform effort.

The latest round of reforms will only exacerbate this trend.

When costs go up for healthcare providers, they have to compensate somehow — perhaps by laying off staff, restricting treatment options, or in the most severe cases, closing up shop entirely.

Ultimately, that leaves patients with fewer providers to treat them — and thus substantially longer wait times. The Massachusetts Medical Society has predicted that Gov. Patrick’s law will force many hospitals to cut staff and result in delayed care for some patients.

Bay Staters already have to wait 45 days on average for an appointment with a family medicine doctor, according to the Society. That’s a 50 percent jump in wait time since 2010.

Credit rating agency Moody’s has concluded that the law will have a “credit negative” impact on Massachusetts hospitals — meaning that it will reduce their revenues. Defenders of the law may view that as a feature, not a bug, of the reform effort. But in so doing, the law will undoubtedly force providers to cut costs by scaling back the availability of healthcare services.

This new legislation is the product of willful blindness on the part of Massachusetts legislators. Governor Patrick has authorized a hodgepodge of new mandates whose enactment only makes the specter of healthcare rationing and interminable delays more real.

As national policymakers watch, let’s hope they see Massachusetts’s approach for what it is — the antithesis, not the model, of genuine reform.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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