Mandatory insurance coverage and hospital productivity in Massachusetts: bending the curve?

Objective: The aim of this study was to examine whether universal insurance coverage mandates lead to a more productive use of hospital resources.

Data Sources: The American Hospital Association's Annual Survey and the Centers for Medicare and Medicaid Services' case mix index for fiscal years 2005 through 2008 were used.

Study Design: A Malmquist approach was used to assess hospitals' productivity in the United States and Massachusetts over the sample period. Propensity score matching is used to "simulate" a randomized control group of hospitals from other markets to compare with Massachusetts. Comparisons are then made to examine if productivity differences are due to universal health insurance coverage mandate.

Principal Findings: In the early stages, Massachusetts' coverage mandates lead to a significant drop in hospitals' productivity relative to comparable facilities in other states. In 2008, Massachusetts functioned 3.53% below its 2005 level, whereas facilities across the United States have seen a 4.06% increase over the same period.

Conclusions: If the individual mandate is implemented nationwide, the Massachusetts' experience indicates that a near-term decrease in overall hospital productivity will occur. As such, current cost estimates of the Patient Protection and Affordable Care Act's impact on overall health spending are potentially understated.