Investigation of the Impact of the Massachusetts Health Care Reform on Hospital Costs and Quality of Care

In 2006, the Massachusetts legislature passed a landmark health care reform bill (the Reform) that has served as a model for the national health care reform. By aiming to provide “access to affordable, quality, accountable health care,” the goals of this reform were to reduce the number of uninsured Massachusetts residents while containing health care costs and improving the quality of health care services. This bill has been the subject of much controversy at both the national and state level. Although most agree that the Reform has improved the insurance coverage rate of Massachusetts residents, the financial impact of the Reform has been of special concern with critics arguing that the Reform has increased the overall cost of health care. Despite this scrutiny, it is still unclear whether the goals of the Reform have been achieved. We propose to test a subset of the Reform’s goals by examining at the hospital level whether the Massachusetts Health Care Reform has achieved its cost containment and quality improvement goals. We use Centers for Medicare & Medicaid Services (CMS) and Hospital Compare (HC) data to investigate this issue and study hospital costs and quality for the period spanning 2003 to 2009. To assess the impact of the Reform on costs and quality, we compare the change in Massachusetts hospital costs and quality pre- and post-Reform to changes in two states that provide a similar level of health care quality for the same period (namely, Connecticut and Wisconsin). Data from acute care hospitals show that there is no evidence that Massachusetts total hospital costs or salaries of departments providing clinical services were adversely affected by the Reform. Moreover, we find that quality of care improved for several quality measures post-Reform to a greater extent in Massachusetts than in our control states. In sum, our evidence is consistent with the claim that Massachusetts hospital costs were contained and quality improved subsequent to the Reform. Thus, this study provides preliminary support for the argument that the Reform achieved some of its financial and quality goals