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

July 30, 2012

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

Recommended for you

Losing sleep over climate change

May 26, 2017

Climate change may keep you awake—and not just metaphorically. Nights that are warmer than normal can harm human sleep, researchers show in a new paper, with the poor and elderly most affected. According to their findings, ...

Vitamin D supplements could help pain management

May 23, 2017

Vitamin D supplementation combined with good sleeping habits may help manage pain-related diseases. This paper published in the Journal of Endocrinology, reviews published research on the relationship between vitamin D levels, ...

Recommended daily protein intake too low for the elderly

May 23, 2017

You can find the recommended dietary allowance (RDA) on the nutrition labels of all your processed food. Food manufacturers are obliged to list the nutritional value of their products, and therefore must mention the percent ...

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.