Maryland’s new "all-payer" healthcare system will serve as an experiment on whether or not heavy government regulation can reduce healthcare costs. After more than a year of negotiations, Maryland developed a plan that caps hospital spending and sets hospital prices throughout the state—and hopes to save more than $330 million in federal spending by doing so. Al Jazeera reports:
For the past 36 years, Maryland has regulated the fees hospitals charge patients. Other states have tried and abandoned regulation for various reasons, but Maryland kept it.
Usually, hospitals negotiate fees with each health insurer individually — including the federal government. The fees are based on the services provided and vary from insurer to insurer. The more procedures, the more fees.
The fees are not the same for all 46 hospitals in the state; a hip replacement at Johns Hopkins in Baltimore does not cost the same as one at the Peninsula Regional Medical Center in Salisbury on the Eastern Shore or at Sacred Heart in Cumberland in the mountain west. And fees vary even within each hospital. …
Under the new plan, all the state’s hospitals would get an annual budget, based on what they charged the previous year, and would have to limit its total fees to that amount. All patients at each hospital would pay the same for each service.
“It is moving to a more global budget,” said Stuart Guterman, vice president for Medicare and cost control at the Commonwealth Fund.
Maryland’s system mirrors European countries like Germany and Switzerland, where the government heavily regulates healthcare prices. Massachusetts and Vermont are the only other U.S. states with similarly innovative plans.
Danayit Musse is a Spring 2014 editorial intern.
