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Massachusetts leads in spending on healthcare
(Boston Globe, The (KRT) Via Thomson Dialog NewsEdge) Jun. 22--Massachusetts has "the world's costliest healthcare," with average annual spending above $7,000 per person, according to an analysis of federal data to be released tomorrow.
The report by Boston University's Alan Sager and Deborah Socolar, healthcare advocates at the university's School of Public Health, is based on state-by-state 2004 expenditures disclosed last month by the federal Centers for Medicare and Medicaid Services.
The findings also show that healthcare spending in the state increased faster than in the rest of the country from 2000 to 2004, the period covered by the data.
"Massachusetts remains by far the most expensive state in the country," said Sager, a professor and frequent critic of the state's healthcare institutions.
The federal government periodically calculates the per-person price of healthcare expenditures by measuring hospital, physician, and other provider billings as well as spending on drugs and medical devices.
Per capita spending in Massachusetts in 2004 was $7,075, 33.2 percent higher than the national state average of $5,313. The second-most expensive state was New York, at $6,635, and the least expensive was Utah, at $4,043 per person.
The Boston University study also compares spending in the United States and Massachusetts to the rest of the world and concludes that Massachusetts tops the list.
State officials and hospital industry representatives downplayed the significance of the study's findings and said Massachusetts healthcare executives are already taking steps to control costs.
Department of Health and Human Services officials declined to comment on the report because they have not seen it, but they said the recently passed healthcare reform legislation will allow the state to introduce "pay-for-performance" measures that make payments to physicians and hospitals contingent on quality. It also will create restrictive networks that will exclude expensive hospitals from coverage, an effort to hold down costs.
David Cutler, a Harvard University economics professor who specializes in healthcare, said that even though the amount of money spent on healthcare in the state may pose hardships for some, and likely includes considerable waste, the overall benefits of buying more medical goods and services are worth it.
"Really what's happening is we're buying more stuff, and on average that stuff is good for our health," Cutler said. Problems associated with the cost of healthcare "are more than offset by the benefits of living longer, healthier lives," he said.
The data also include spending on patients from other states who come here for care at Boston-area teaching hospitals, accounting for about 2 percent of the total spending, the study said. Money spent on medical research was not included.
Sager blamed the high level of spending on an overabundance of physicians in Massachusetts and a lack of incentive for them to contain costs. The state's heavy reliance on expensive teaching hospitals is another major factor, he said.
The study said the trend toward higher costs could spell trouble for the state's plans to expand health insurance to about 500,000 residents who lack coverage, because it will drive up premiums paid by the state, middle-income individuals, and small businesses.
Higher costs could also leave the state vulnerable in an economic recession, Sager said.
"Because our caregivers are addicted to more money for business as usual, when the economy stops short, healthcare will crash through the windshield," he said.
The Massachusetts Hospital Association said its members are pursuing quality and cost-control initiatives to increase efficiency, including error reduction, electronic medical records, and training and hiring more nurses. The state's hospitals are providing the high level of care expected by its residents, said Joe Kirkpatrick, vice president of healthcare finance at the association.
"Massachusetts healthcare is not only the most expensive, it's the best," he said.
The Massachusetts Medical Society disputed the study's contention that the state has too many doctors. Simply counting up the roughly 25,000 licensed physicians does not tell the real story, said Dr. Kenneth Peelle, the society's president. Thousands of those doctors do not practice medicine, or practice infrequently, and hospitals around the state are reporting shortages and longer patient wait times for doctor visits because of a lack of doctors, he said.
Peelle agreed that doctors do not have enough incentive to hold down costs but said that is changing. Large employers are pressuring health plans to limit premium increases. There have been double-digit hikes in each of the last five years. Health plans in turn are pressuring doctors to hold down costs, Peelle said.
"It is happening, but it is not going to happen overnight. It is not going to be a quick change," he said.
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