August 16, 2012
Authored by: benefitsbclp
While the Patient Protection and Affordable Care Act is not a carbon copy of the original Massachusetts health care reform law, there are many similarities. One similarity is that critics of both laws have argued at different times that they don’t do enough to “bend the cost curve” on health care.
(As an aside, we always thought the term “health care reform” was a bit of a misnomer for PPACA, as it is really a health insurance reform and tax bill. Interestingly, the President agrees. On the day he signed the law, he said, “today…health insurance reform becomes the law in the United States of America.”)
To address this issue, Massachusetts recently passed Bill S. 2400, which is designed to reign in the cost of health care in the Commonwealth. As you might expect, the bill is a long, complicated piece of legislation (a briefer summary is here). The bottom line goal of the legislation is to control the health care cost growth rate. It is designed to limit the annual increases in the cost of health care in Massachusetts to the increase in the Gross State Product (GSP) of Massachusetts from 2013 to 2017. After that, the increase would be between GSP and GSP – 0.5%.
When the bill was passed, we asked on Twitter whether this could be a model for a “PPACA 2.” If it is, a writer for the Health Policy Forum gives a fairly grim picture (he calls it the “Triangle of Painful Choices”) of what would have to happen from a tax and/or non-health care spending perspective for this to work on a national level. His conclusion (not in so many words) is that a “PPACA 2” designed to achieve the Massachusetts cost increase goals would be an expensive blockbuster sequel (and we have learned from Hollywood that a sequel is almost uniformly received worse than the original).
The key takeaway here is that employers should keep a watchful eye on Massachusetts because this (or something like it) is likely a coming attraction at the national level. While we are not aware that legislation like this is currently being considered, at some point, it seems inevitable that Congress will address the health cost increase issue. Employers would probably welcome such cost control. However, it is not likely to come without additional burdens on employer-sponsored health plans. That is something Massachusetts cannot do directly because of ERISA preemption, so the law does not necessarily provide a blueprint for what those burdens might be.
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