Getting a grip on health care costs

But what about the costs? With consumers struggling to afford health care, it will be especially important to understand what this legislation does — and doesn’t do — to lower health care costs. After all, high-quality health care is only useful if people can afford it. A 2024 annual report from the Center for Health Information and Analysis found that nearly one-third of Massachusetts residents reported going without needed health care because of cost in 2021. A recently published Pioneer Institute study ranked the costs of health care as one of the top three reasons people are leaving Massachusetts.

The legislative process provides time to carefully analyze each section of legislation, clarifying its cost implications. The Senate is expected to propose its version of the bill, after which a vote will send it to a conference committee.

An important cost-related provision of the House legislation that may need tweaking is the establishment of a “capital rate target,” the latest iteration of years-old policy proposals intended to support community hospitals in financial difficulties. The legislation would single out a small number of hospitals that have historically received low commercial insurance reimbursements. While these have not been named, they likely include hospitals such as Heywood Hospital in Gardner, Lawrence General Hospital and Holyoke Medical Center. It would initially set a cap on how much these hospitals must be paid at no less than 15 percent below the average payments made by each insurer. It would then recommend regular increases in amounts tied to (and for the first few years, higher than) the state’s health care cost growth benchmark. House leaders say the floor is not a mandate, but there are regulatory incentives if insurers comply with it.

The policy would provide additional money to hospitals that are historically underpaid, which is important to stabilize struggling facilities. But it would not address the long-standing problem of hospitals being paid vastly different amounts for the same service. And because it sets a floor on payments, but not a ceiling, insurers can raise reimbursement rates for higher-paying hospitals while raising charges for lower-paying hospitals. That differs from a policy recommended by the Massachusetts Health Policy Commission to cap prices for higher-paid providers and is raising concerns about cost.

The Employers’ Health Coalition, a recently formed coalition of business and health insurance groups, wrote in a letter to House leaders that the approach “accelerates rate inflation, fails to address price variations in a cost-effective manner’ effective and will result in higher costs for employers and consumers who purchase health insurance. If the Legislature carries the House parity rate target into legislation, they will need a mechanism to ensure that it does not significantly increase overall costs.

The House bill would also revamp how the benchmark for health care cost increases is calculated. The standard sets a target for health care cost growth that providers and insurers must strive to meet. Physician practices and insurers may be required to undertake performance improvement plans if they cannot justify excess spending.

The standard is ripe for an update. Only one performance improvement plan has ever been released. The benchmark was unable to adequately reflect the sudden drop and subsequent increase in health care costs during the COVID-19 pandemic. Providers have consistently exceeded the standard. Providers without affiliated primary care physicians are not subject to review.

The House bill would create a three-year benchmark and change the factors that go into its calculation, while expanding which providers are covered. But there are also factors in the current language that could make it difficult for the commission to hold health systems accountable in the short term.

Although the Health Policy Commission recommended setting the standard at 3.6 percent by 2025, the bill says no provider would be penalized for increases below 4 percent during that time. The bill would require the commission to review spending at the end of each three-year period, rather than every year, so if the commission sets a benchmark period covering 2026 to 2028, regulators would sooner get data to determine whether providers would meet the target in 2030.

The bill also includes a provision that this board has required health insurance regulators to consider affordability in setting premiums.

The bill would reduce the Health Policy Commission from 11 to nine members, adding two representatives of the health care industry — a hospital representative and an “innovation” representative from the pharmaceutical, biotech or medical device fields — while eliminating a primary care physician. , nurse, mental health expert and business representative.

Notably, the bill does not address the pharmaceutical industry. This board has expressed support for subjecting drug companies and pharmacy benefit managers to the Health Policy Commission’s cost trends hearing process.

Healthcare industry interest groups disagree about the impact of many of these proposed policies. Will they increase costs by allowing providers to raise prices or save consumers money by stabilizing lower-cost hospitals? Will they create a better standard process? Will HPC become more important or more prone to conflicts of interest?

The challenge for lawmakers will be to find accurate financial models and independent experts so they can understand before they vote on a final bill what these policies will do and what they will mean for all of us who use health care and buy health insurance.

Editorials represent the views of the Boston Globe Editorial Board. Follow us @GlobeOpinion.