Massachusetts lawmakers moved a step closer yesterday to addressing the health-cost crisis facing employers as the House of Representatives approved a measure that would limit the growth of medical spending to a rate slightly below overall economic growth.

House leaders say the bill, which passed 148-7 after a daylong debate, will eliminate $160 billion in health care costs over 15 years and free those resources for job creation and business growth in the productive economy. A conference committee must now iron out differences between the House proposal and a less ambitious Senate bill that would keep medical spending even with gross state product beginning in 2016.

AIM has set a far more aggressive cost-control target than either chamber, calling upon the health care industry to reduce the growth of medical spending to two percentage points below overall state economic growth. The House nevertheless deserves credit for taking an encouraging first step to rationalize costs in an industry where experts agree that $1 in every $3 is wasted.

The House proposal seeks to reduce costs by paying doctors for outcomes instead of procedures, closing the imbalance between low-cost and high-cost medical providers, and providing interoperable electronic medical records by 2017. The bill includes a nearly $200 million, one-time assessment on large providers and insurers to be redistributed to struggling community hospitals, and proposes to tax high-cost hospitals at which price variations from lower-cost providers can’t be justified.

“The market is most certainly not working. The market is absolutely broken,” said Rep. Steven Walsh, lead author of the bill.

AIM is disappointed that an amendment passed last night would remove the ability of health insurers and health care providers to renegotiate contracts to lower costs. The amendment weakens the available options should the health-care industry fail to reach the cost growth goal established in the bill. AIM believes that a strong monitoring and public reporting system is essential to ensure that the health-care system is making progress to achieve the goal within the allotted time.

A more positive development came when House members included in the bill an amendment long promoted by AIM that would allow small businesses to reduce their “fair share” assessments under the 2006 health care reform by not counting employees who already have qualifying insurance coverage from a spouse, parent, veteran’s plan, or a plan tied to disability or retirement against their head count for required employee insurance. 

Other items of importance to employers:

• A new tax credit for employers who participate in wellness programs equal to 25 percent of the costs of the program up to $10,000.
• Employers will have a seat on the newly created Division of Health Care Cost and Quality Board that will monitor the health care industry’s progress in meeting the cost containment goals.