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Investigation of Health Insurance Costs in Massachusetts

Attorney General Report Uncovers Cost Reduction Solutions

The report: Examination of Health Care Cost Trends and Cost Drivers, dated March 16, 2010. (Contact Karen Tran at [email protected] for a copy of the report).

The report’s key findings:

  1. “…significant differences in compensation rates among hospital and physicians that do not appear to be based on …quality of the care provided”
  2. “Such increases…threaten the financial stability of individuals and businesses…”
  3. “Price variations are not correlated to (1) quality of care…” (emphasis in original document)
  4. “Price variations are correlated to market leverage…” (emphasis in original document)
  5. Highest can be twice or more the cost of the lowest
  6. “…quality measures from national government and non-profit organizations that are well-vetted and widely accepted including…”
  7. “…parity agreements are pervasive and … lock in payment levels and prevent … competition based on pricing.”

The significance of these finding should not be underestimated. Many professionals in health insurance have long advocated changes in health insurance, moving towards more consumer directed health care service. Under this model, employees and their dependents become educated consumers of health care. Incentives are built in to the plan to motivate them towards that end. Ultimately costs are driven down as there is a major movement away from the most expensive providers.

 

Aug 05, 2010

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