Massachusetts is running the country's most aggressive experiment in controlling health-care costs — and the first year results suggest it could be working.
Two years ago, Massachusetts set what seemed like an ambitious goal: it would be the first state in the entire country that would put a firm cap on health-care spending. By 2017, the state planned to have health-care costs grow slower than the rest of the economy — something that never happens anywhere in the United States.
Massachusetts' budget cap kicked in last year and, earlier this morning, the state reported a victory: it stayed within the 2013 growth limits.
Massachusetts set a target to have health-care costs grow no faster than 3.6 percent in 2013. New data from the Center for Health Information and Analysis (or, as it's known by its amazing acronym, CHIA), shows that health costs grew by an average of 2.3 percent per person in Massachusetts.
The good news: per capita health-care costs grew slower than Massachusetts had hoped. The bad news: medical spending still grew faster than overall inflation in the state. And all of this is happening in an era when, across the country, health-care costs are growing at a slower-than-normal pace.
So while growth in health-care costs "was below the benchmark, it is also notable that the state economy also grew slowly over this period," the report notes. "Moreover, health care expenditure growth has been slowing nationwide. It is difficult to distinguish the effect of Massachusetts-specific policy … because the observed trend is broadly consistent with national trends."
The next few years will likely be a better test of Massachusetts' ability to control costs. By 2017, the state aims to have health-care costs growing 0.5 percent slower than the rest of the economy. That's a much more challenging goal to hit — and, if Massachusetts can pull it off, one that lots of other states will want to copy.