In Massachusetts, 'individual mandate' led to decreased hospital productivity

July 30, 2012, Wolters Kluwer Health

As the "individual mandate" of the Affordable Care Act moves forward, debate and speculation continue as to whether universal health insurance coverage will lead to significant cost savings for hospitals. The assumption is that providing appropriate primary care will improve the overall health of the population, resulting in less need for hospital services and less severe illness among hospitalized patients. Findings from a recent study published in Health Care Management Review challenge that assumption.

The new study reports that mandatory individual insurance coverage in Massachusetts was followed by a significant near-term drop in hospital productivity. The results raise the possibility of similar decrease in U.S. hospital productivity once the individual mandate is implemented as part of reform. "As such, current of the Act's impact on overall health spending are potentially understated," write Mark A. Thompson, PhD, of Texas Tech University and colleagues.

Hospital Productivity Drops after Mandatory Insurance

The researchers used to evaluate the effects of mandatory insurance coverage on hospital productivity. The analysis focused on the impact of the universal insurance coverage mandate implemented in Massachusetts in July, 2007.

Data from 2005 to 2008 was used to compare trends in productivity at 51 Massachusetts hospitals, 197 matched hospitals and other 2,916 hospitals across the United States. The analysis first used " matching" techniques to match hospitals in Massachusetts with the hospitals with comparable characteristics.

From 2005 to 2006--before passage of the Massachusetts legislation--productivity decreased slightly for all hospitals. However, the largest and only significant decrease (2.4 percent) was seen among hospitals in Massachusetts. During the transition period, all hospitals again saw a slight decrease in productivity in 2007 compared to 2006, but Massachusetts hospitals had a significant decrease which was more than twice that of their matched hospitals.

In 2008--immediately after the mandatory insurance law took effect--Massachusetts hospitals had a significant 2.5 percent increase in productivity over the previous year. This increase was than for the comparison hospitals, but less than for hospitals across the United States.

From 2005 through 2008, the Massachusetts hospitals had an overall productivity loss of 3.5 percent, compared to a 1.6 percent loss among the comparison hospitals and a 4.1 percent gain in productivity among all hospitals.

Unexpected Effect on Productivity May Reflect 'Pent-Up Demand'

In Massachusetts, it was expected that mandatory insurance coverage would "bend the health cost inflation curve"--making hospitals more productive and lowering the overall cost of public programs. However, the costs of providing universal insurance in Massachusetts have been higher than expected, raising questions about whether the "individual mandate" actually led to the predicted increase in hospital productivity.

"Based on the Massachusetts experience," Dr Thompson and coauthors write, "legislating mandatory at the national level is likely to be accompanied by a near-term decrease in overall hospital productivity and a concomitant increase in overall health care costs." They speculate that increased access to health care may lead to "release of pent-up demand" for costly discretionary services. The researchers add, "In the long-term, universal coverage should lead to significant savings for hospitals if they can shift non-emergent care away from their emergency departments."

In the meantime, Dr Thompson and coauthors urge realistic expectations about how increases in demand associated with universal coverage are likely to affect . They write, "In the face of policy change at the national level, the healthcare industry will undergo process and outcome transformation that may mimic Massachusetts."

Explore further: The only experiment in the country to predict outcome of Obama health care reform was not successful

More information: Health Care Management Review is published by Lippincott Williams & Wilkins, a part of Wolters Kluwer Health.

Related Stories

The only experiment in the country to predict outcome of Obama health care reform was not successful

June 27, 2012
(Medical Xpress) -- With the U.S. Supreme Court decision looming on the fate of the Patient Protection and Affordable Care Act (PPACA) – informally known as Obamacare – two Texas Tech University researchers and ...

Massachusetts health-care reform associated with increased demand for medical safety-net facilities

August 9, 2011
(Medical Xpress) -- Patient demand for care from safety-net providers (such as community health centers and public hospitals) in Massachusetts has increased, even though the number of patients with health insurance also increased ...

Study examines impact of Massachusetts health law on emergency department visits

June 6, 2011
While overall emergency department use in Massachusetts continues to rise, the number of low-severity visits dropped slightly since the implementation of the state's health care reform law, according to an Annals of Emergency ...

Massachusetts health-care reform increased access to care, particularly among disadvantaged

July 15, 2011
Recent research conducted at Harvard Medical School and the Harvard School of Public Health may have strong implications for informing the controversial debate currently surrounding national health care reform.

Recommended for you

Number of older people with four or more diseases will double by 2035, say researchers

January 23, 2018
A study published today in Age and Ageing, the scientific journal of the British Geriatrics Society, reports that the number of older people diagnosed with four or more diseases will double between 2015 and 2035. A third ...

Placental accumulation of flame retardant chemical alters serotonin production in rats

January 22, 2018
A North Carolina State University-led research team has shown a connection between exposure to a widely used flame retardant chemical mixture and disruption of normal placental function in rats, leading to altered production ...

Marijuana use does not lower chances of getting pregnant

January 22, 2018
Marijuana use—by either men or women—does not appear to lower a couple's chances of getting pregnant, according to a new study led by Boston University School of Public Health (BUSPH) researchers.

Women run faster after taking newly developed supplement, study finds

January 19, 2018
A new study found that women who took a specially prepared blend of minerals and nutrients for a month saw their 3-mile run times drop by almost a minute.

Americans are getting more sleep

January 19, 2018
Although more than one in three Americans still don't get enough sleep, a new analysis shows first signs of success in the fight for more shut eye. According to data from 181,335 respondents aged 15 and older who participated ...

Wine is good for you—to a point

January 18, 2018
The Mediterranean diet has become synonymous with healthy eating, but there's one thing in it that stands out: It's cool to drink wine.

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.