Bay State Health Plan Facing Fiscal Woes

Despite increased levies on businesses, hospitals, and health insurers, the Massachusetts universal health insurance program is facing yet another budget shortfall, with this year�s costs estimated at $1.3 billion versus a budget of $895 million.

Massachusetts’ universal health insurance program continues to face fiscal woes. When Bay State lawmakers were crafting the landmark law, they decided not to address healthcare cost containment issues, fearing that it would cause hospitals, doctors, insurance companies, and business groups to balk at taking part in the program. Now, despite increased levies on businesses, hospitals, and health insurers, the program is facing yet another budget shortfall, with this year’s costs estimated at $1.3 billion versus a budget of $895 million.

Adding to the financial pressure is a decision by the Commonwealth Health Insurance Connector Authority, which oversees the program, to hold the line on premium increases for the program, citing the severe economic downturn. To ease the fiscal pinch, Gov. Deval Patrick is looking to revamp the way doctors and hospitals are paid. The goal is to curb runaway healthcare spending in the Bay State, which runs about 33% higher per person than the national average. One idea on the drawing board is to scrap fee-for-service payments in favor of reimbursements that reward preventive care and effective management of chronic disease.

Some healthcare experts, however, believe that these measures, although they may help, will not significantly slow the rise in healthcare spending. To do that, they say, the federal government and the states may have to put caps on healthcare spending, a move that could lead to rationing of healthcare.