Sarah Gardner: Health care has become one of the biggest and most contentious issues in the presidential election. Obama's running on his reforms. Mitt Romney is running against them. The two men don't agree on much, except that something needs to be done to bring down costs. And if the past is any indication, it's not going to be easy.
Before Congress passed the new law expanding health insurance, Massachusetts did it when Romney was governor. Today 98 percent of residents there are insured and Massachusetts has the highest per capita health care spending in the nation.
From New Hampshire Public Radio, Dan Gorenstein reports.
Dan Gorenstein: There's this persistent myth about health reform that's pretty common, even in health policy circles.
Ashish Jha: If we could just give everyone health insurance, somehow we would save billions and billions of dollars.
That's Harvard Public Health Professor Ashish Jha.
Jha: It turns out empirically it's not true.
If anything, the health reform experiment here has proven insurance doesn't equal savings.
Jha: I always say, if the goal is to save money on health care, the best way to do it is just deny everybody health care.
Jha says the secret about giving people health insurance is they use it. Folks who had held off going to the doctor -- scared for their wallets -- now are making appointments. So, spending continues to rise 4-7 percent a year. Everyone agrees that's unsustainable, and in Massachusetts now it's against the law. This summer legislators passed a plan that says health care costs can grow no faster than the state's economy -- that means health care increases must be cut roughly in half.
But even before the legislation took effect, insurers, hospitals and doctors were on the sacred quest to save money.
David Elvin: It's great to make people healthy. It's really spectacular to make people healthy and save people money at the same time.
Dr. David Elvin and the team at the Cambridge Health Alliance hospital group have targeted their 400 sickest and most expensive Medicaid patients.
Elvin: We are talking about patients that inexplicably seem to be costing a lot of money and are clearly not getting better.
Like this one woman with diabetes.
Elvin: Her numbers they were just getting worse and worse and worse.
Elvin dispatched his staff to investigate and after digging into this woman's life a little, they found out...
Elvin: This person's child, the adult child, was stealing her medications and selling them. And each month she just promised herself that she would keep the medicines safe. And each month he would come into her home and rob her.
At that point, Elvin and his staff did something unusual.
Elvin: We accompanied her to court and got a restraining order.
The patient held onto her meds, got better and costs fell. Elvin says he's got lots of stories like this, which is why the new program is on track to reduce spending by 3 percent. He says here's the lesson: if doctors really want to bend the cost curve, they've got to address whatever gets in the way of their patients getting good care.
The state's top insurance companies are also changing the way they operate to save money. Doug Thompson works with Elvin on the business side. He says there is a growing move among insurers to give doctors and hospitals a lump of money, say $5 million to manage 1,000 patients a year.
Doug Thompson: More and more here in Massachusetts each patient will be part of a budget.
That means questioning every test, every procedure, every prescription.
Thompson: And we will need to manage those resources even more than we did in the past.
Under these deals, the more money the docs save, the more they make -- and if patient health improves, bonuses kick in. If they go over budget, doctors and hospitals may owe the insurance company money.
That's why guys like Gene Muise have become a hot commodity.
Gene Muise: I am a licensed pharmacist in Massachusetts.
Muise works for a group of doctors, the Mount Auburn Cambridge Independent Practice Association (they call it MACIPA). He's the guy who keeps the drug costs down.
Muise: I look at the drugs that are available, I look at what those drugs cost... And what I do is, I provide that information to our physicians so that we can make a choice on what drug is best for the patient.
Dr. Barbara Spivak is president of MACIPA.
Barbara Spivak: I have a patient who has 18 different problems and 25 different medicines. If you look at one of the most common reasons why people get sick it's because of confusion about their pills.
These new contracts are forcing doctors to make tough decisions about the things they do every day, and it appears to be working. Blue Cross Blue Shield of Massachusetts, the state's largest insurer, says it reduced costs by more than 3 percent last year.
The Blue's Dana Safran says numbers like that means matching spending increases to inflation is within reach.
Dana Safran: We have to get health care spending growth look more like the rest of the economy so that health care isn't eating everybody else's lunch.
Safran says health reform 1.0 -- getting everybody insurance -- is in the rearview mirror.
Health reform 2.0 -- solving out-of-whack cost increases -- that's still a long road ahead.
I'm Dan Gorenstein for Marketplace.
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