The Massachusetts Legislature passed a first-in-the-nation bill Tuesday that seeks to limit the growth of health care costs in the state.
The bill would not allow spending on health care to grow any faster than the state’s economy through 2017. For five years after that, any rise in health care costs would need to be half a percentage point lower than the increase in the state’s gross domestic product. Legislative leaders say the bill, which includes other cost-slowing provisions, could save as much as $200 billion in health care spending over the next 15 years.
Although Massachusetts, under Gov. Mitt Romney, became in 2006 the first state to require most residents to have health insurance — the model for President Barack Obama’s national health care overhaul — the law did little to slow health care costs that were already among the highest in the nation. Such spending has increased 6 or 7 percent a year recently, compared with annual state economic growth of less than 4 percent.
Gov. Deval Patrick, a Democrat, has been pushing for a plan to rein in health care spending, promising that Massachusetts would show other states how to “crack the code on costs.” He is expected to sign the bill, which was filed just before the end of the legislative session as a compromise plan after the House and the Senate passed differing versions.
According to a summary of the bill released by legislative leaders on Tuesday, a new commission would monitor the growth in health costs and enforce the spending targets. But the bill contains no real penalty for missing the targets, and some consumer advocates are skeptical.
“These targets have the potential to establish a clear incentive to make real changes that will reduce costs, eliminate waste and improve patient care,” Cheri Andes, executive director of the Greater Boston Interfaith Organization, said in a statement. “However, to accomplish these aims an enhanced enforcement mechanism will likely be necessary.”
The bill includes a number of other provisions meant to cut health care costs, including dedicating $60 million collected from insurers over the next four years to prevention efforts and encouraging the creation of “accountable care organizations,” groups of doctors and hospitals that work together to coordinate patients’ care.
One contentious proposal that was not included in the final bill would have imposed a “luxury tax” on high-priced medical providers and would have redistributed the money to struggling hospitals. Past investigations have revealed that large, prestigious providers command substantially higher reimbursements from insurers than do their smaller and lesser-known peers.