Editorial: Tackling health costs

The House is expected to vote on health care reform today, taking a historic step toward making insurance available and more affordable for millions of Americans. No one should be distracted by procedural controversies that come with every hard-fought legislative battle: This legislation, while far from perfect, is good for the country, good for the economy and good for our health. According to the Congressional Budget Office, it will even reduce the federal deficit.

What it won't do, at least not soon enough and dramatically enough, is control the skyrocketing cost of health care. Covering 30 million uninsured will help reduce costs, if only by expanding the risk pool. Health economists agree the tax on "Cadillac" health plans will discourage premium increases, but that provision doesn't kick in until 2018. Tougher anti-fraud programs should help. We're hopeful that a collection of pilot programs, including tort reform, changes in the fee-for-service system and increased interstate competition, will produce savings down the line.

None of that should stop Massachusetts from taking stronger measures to rein in health insurance costs that are hurting families, businesses and taxpayers. A recent series of hearings and revelations underlines the problems and the importance of acting soon.

A report by two Boston University professors found that hospital costs in Massachusetts are now running 55 percent above the national average. The gap has grown steadily since 1996, Alan Sager and Deborah Socolar found, for reasons that include the high cost and political clout of the state's large teaching hospitals.

Documents released last week by Harvard Pilgrim Healthcare complicate the picture by showing a wide disparity in hospital costs for the same treatment. The outsized cost of care at teaching hospitals plays into this, but other reports indicate special deals between hospitals and some large health insurers add to the disparities.

Hearings on health costs on Beacon Hill last week illustrate the political difficulties involved in untying this knot. Health insurers, under fire here and in Washington for dramatic premium increases, pointed their fingers at physicians and hospitals. Business groups and political leaders called for caps on premiums and provider charges.

Small businesses are most in need of relief from premium increases, which are hitting hard at an especially vulnerable moment. A survey by the Retailers Association of Massachusetts found its members are seeing an average premium increase for 2010 above 22 percent. The average family premium is now $16,332 with a $3,800 deductible.

Lawmakers should resist the temptation of price controls, which hardly ever succeed in the long run. Instead, small businesses must be allowed to join together in purchasing groups, an option taken away from them years ago under pressure from the insurance lobby.

The Legislature must move on other fronts as well. We need more transparency, especially of deals between insurers and providers that push costs up. The state, as a major provider of health coverage, should steer more patients to community hospitals, which tend to be far less expensive than teaching hospitals for routine procedures. And lawmakers must begin moving toward a "global payment" system as an alternative to fee-for-service, which rewards quantity of tests and treatments rather than results.

Because of the political difficulty involved, the state's 2006 health reform law made no attempt to contain rising costs. But dealing with that challenge can wait no longer, regardless of what happens in Congress.