Global Budgets Are Coming to the Bay State
Acknowledging that RomneyCare has been a signal failure in controlling Massachusetts’ health care expenditure, the Massachusetts governing elite is working towards a plan that would “encourage flat ‘global payments’ to networks of providers for keeping patients well, replacing the fee-for-service system that creates incentives for excessive care…”
Even though dentists and physicians in the cash market have been quoting individual patients flat fees for years, flat payments have become a health policy fad. But not just any flat payments and not the market determined bundles of services that have been discussed on this blog. The new flat payments will be determined by experts in government with the result that grant-supported researchers all over America are firing up their computers and shoving a lot of poorly understood expenditure data through canned statistical packages, hoping to design and price the perfect ivory tower service bundle that will “transform” a health care payments system that has been distorted by almost 100 years of price and quantity controls.
In a 2011 report prepared for the Robert Wood Johnson Foundation, global payments are defined as risk-adjusted capitation payments that are fixed, regardless of how many services patients actually need. Given that Medicare risk-adjusted capitation payments failed despite a decade of effort to pay enough to cover the costs for the sickest 20 percent of those who were supposedly covered, it appears that the only thing to do is to disguise their failure by applying them to the private sector as well.
The problem with global payments, and the idea of a global health budget set by government, is that their implementation means that individuals may receive only as much health care as the government has allocated, particularly if out-of-pocket cash supplements are outlawed. The problem is that when government faces a choice between buying health care for seriously ill elderly people that it has promised to insure or increasing the compensation of healthy, unionized, government employees, it often does the wrong thing.
The perverse incentives for health care providers to over treat patients – performing as many tasks as possible – is being replaced by the perverse incentives to treat as few patients and provide as little care as possible. Too bad they cannot find a happy medium, where providers have an incentive to treat patients are effectively and efficiently as possible.
From the last sentence of the third paragraph: “it appears that the only thing to do is to disguise their failure by applying them to the private sector as well.”…….I would like to hear a presidential candidate say that.
Also, the fact “that individuals may receive only as much health care as the government has allocated” tells me that with global payments there will be even more pressure on the government to raise taxes so that they can allocate more toward meeting all the healthcare needs they are obligated to pay. Global payments presents a fiscally bad future situation for the public.
Fixed, flat, global payments for health care? What could possibly go wrong with that idea? Sounds like a solution to the NBA strike.
No surprise here.
Linda sure has a way with words! Great observation!
Two comments:
First, I find it remarkable that when some politicians promote the notion of a “flat” payment to providers the cognoscenti declare that we are on the way to solving the problem. However, when other politicians promote the notion of a “flat” payment to patients, via a tax credit or (horror of horrors) a voucher, the cognoscenti declare that it would be a catastrophe.
Second, I would love to have publicly available the billing information from Boston’s world-class teaching hospitals that show how they invoice patients from Canada or Britain or Malaysia or Iran who pay cash. I’d bet my eye-teeth that the invoices are for a “bundle” of services and are very easy to understand.