Over the next few weeks your going to hear a lot, and I mean A LOT, of political talk as each Presidential Candidate tries to convince you why he is the best choice. Health care will be center stage and controlling the cost of health care will be at the center of the discussion.
I will be the first to tell you that health care cost needs to be reigned in and I will be the first to offer you solutions, many of which are not popular but there aren’t and easy decisions. Just like our national debt, health care spending will only be controlled with unpopular solutions because change is hard and painful change is even harder.
Maryland has been successful at holding down health cost inflation and it is the only state that uses rate setting for hospitals which means the state government decides what all Maryland hospitals can charge for a given procedure. The method must work because Maryland hospitals have the lowest cumulative growth in cost per adjusted admission of any state.
Rate setting isn’t popular and I don’t support it without other cost control measures set in place. To some extent Medicare and Medicaid already administer a rate setting program. Medicare and Medicaid pay hospitals a set amount for a specific DRG (inpatient admission) regardless of what the hospital charges. In most cases commercial insurance pays a percentage of charge or a negotiated rate so rate setting would impact reimbursement from commercial insurance. The downside is the profit from commercial insurance offsets the loss that is often realized from a Medicare or Medicaid admission.
The other reason rate setting is a problem is because it doesn’t do anything to address input costs. Paying a hospital less for an admission doesn’t address the rising cost of technology, increasing liability costs, lack of tort reform and escalating benefit costs.
Maryland is probably too close to Washington D.C. for me to believe they really have it figured out…