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Globe Editorial

Health costs require action, but Cahill’s attacks won’t help

March 17, 2010

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STATE TREASURER Tim Cahill’s denunciation yesterday of the state’s much-praised 2006 health-care overhaul is an irresponsible act of demagoguery — one that seeks to redirect the understandable anger over rising costs toward the largely unrelated issue of providing insurance to people who would otherwise be in the state’s free-care pool.

Cahill, who is running for governor as an independent, is right, of course, in pointing out that health costs are growing at an unsustainable level, and weigh heavily on the state’s economy. But his suggestion that Massachusetts-like reform will “wipe out the American economy within four years’’ is merely inflammatory.

The insurance-reform packages being debated in Washington, like the one enacted here in 2006, don’t by themselves solve the cost crisis. But Massachusetts, having succeeded at the Herculean task of guaranteeing near-universal care, is now doing the commendable work of trying to reduce medical inflation. At this week’s state hearings at UMass Boston, decision-makers are getting a harsh primer on the subject:

■ Health costs in 2006 equaled 17 percent of the nation’s median family income. A manageable 7 percent in 1987, they will rise to up to 45 percent by 2016 under present trends.

■ Medicare costs in 2008 equaled 3.2 percent of gross domestic product. They will rise to 4.5 percent by 2020 and 7.3 percent by 2035, based on current trends.

These nightmarish projections at yesterday’s UMass hearing came from Len Nichols, health care economist at George Mason University. “We can’t afford business as usual,’’ he warned.

The challenge in Massachusetts begins with the fact that between 2005 and 2008 the state’s higher-cost hospitals saw an increase in patient volume while the lower-cost hospitals saw a decline. If higher rates reflected higher quality, the trend might be understandable. But as Attorney General Martha Coakley recently reported, the higher rates reflected market power, not quality or the complexity of cases treated. Simply put, the biggest-name hospitals often used their clout to charge much more for ordinary services that could easily be provided in less-costly settings. And insurers, fearful of losing customers if those hospitals weren’t in their networks, caved in and offered higher reimbursements, passing on the costs in the form of higher premiums.

Over the long term, the only realistic solution is a system in which insurers are able to negotiate better rates from providers, and patients feel satisfied that they will receive high-quality care even if their plans lack the priciest hospitals or doctors. Governor Patrick’s request to make public all the contracts between insurers and providers will help give the public information it needs to make informed choices. Coakley’s report, presented in greater detail yesterday, is also helpful in identifying the real drivers of costs.

What’s not helpful is Cahill’s attempt to blame the problem on good-faith reform efforts and take the public focus off the hard work of fixing a complicated system. There’s been far too much disinformation infecting the federal health-care debate; everyone should be wary of attempts to cloud up the state debate, as well.

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