How Maryland's healthcare system is different

Kaiser Health News published an article where the author detailed her experiences with health care in two different states. In Maryland, the cost of her consultation with a specialist was between $350 to $400 while the same type of appointment in New York was $1,775 (about four times as much). The article recounted some of the author's research into the discrepancy.

The background that the article provided is that Maryland set rates for various procedures in the 1970's, and appears to have contained costs better than other states. Apparently, the reimbursement scheme has given hospitals added incentives to encourage active management of patient health so that fewer patients end up in the hospital.

The article also commented that this type of reimbursement structure would be difficult to pull off in other states, in part because of the strong financial position of various hospitals. When Maryland implemented its system, it seems that hospitals experienced a feast-or-famine environment, leading hospitals to be willing to give up some upside gain in exchange for some guaranteed payments. Now, provider networks in other states that do very well financially and can withstand a large degree of uncertainty have much less incentive to limit their downside risk. Increases in health insurance premiums continue to outpace inflation, and at some point, it seems like something will change -- it's just unclear when and how.