A Lesson on Health Care From Massachusetts

By KEVIN SACK
Published: March 28, 2009

In any effort to restructure American health care, two interconnected goals inevitably compete for primacy. One is providing health coverage to the uninsured, counted in 2007 at 46 million, or 15 percent of the population, and almost certainly more now. The other is slowing the relentless and unsustainable growth of health costs, which threaten virtually every family, in imagination if not in fact.
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What Massachusetts Has Done, What Obama Has Proposed
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As President Obama takes on the health care behemoth in concert with Congress, his positioning suggests he has put cost first. His campaign plan did not mandate health coverage for every American, only for children. His comments since taking office, informed by polls showing broader concern about cost than access, have focused on health care’s bankrupting potential for families, the economy and the government. Just last week, in a news conference, he argued that reducing health spending was central to prospects for economic growth.

Mr. Obama’s strategy is to sell the expansion of access — largely through public insurance programs — as inseparable from serious efforts at innovation and restraint. This month, he pointedly opened a White House forum on health care by asserting that exploding costs pose “one of the greatest threats not just to the well-being of our families and the prosperity of our businesses, but to the very foundation of our economy.”

But there is only one real-life model in this country for the kind of sweeping change being considered in Washington, and that is in Massachusetts, where a landmark law signed in April 2006 has achieved near-universal coverage. And in that state, leaders decided from the outset to decouple access and cost, and to deal first with covering the uninsured.

Predictably, rising costs now threaten the viability of the Massachusetts plan, leaving Gov. Deval Patrick and his Legislature to play catch-up. Mr. Patrick has warned he might try to regulate insurance premiums if insurers and hospitals do not demonstrate self-discipline. And lawmakers are awaiting recommendations from a state commission charged with reinventing the payment system so doctors and hospitals are rewarded for preventive care rather than the quantity of treatment they provide.

Health policy experts differ about how much one state can do. However, they agree that misplaced financial incentives are responsible for tremendous waste in American medicine, contributing to premiums that have grown this decade at four times the rate of inflation.

Yet, even now, the lawmakers and strategists behind the Massachusetts plan strongly defend their incremental approach. Only by deferring the big decisions on cost containment, they said in recent interviews, was it possible to build a consensus among doctors, hospitals, insurers, consumers, employers and workers for the requirement that all residents have health insurance.

The coalition held last year, when Mr. Patrick and the Legislature spread the pain in filling a deficit in the state’s new subsidized insurance program. It will now be more seriously tested by attempts to change the payment system, but the gamble is that stakeholders are now so invested they cannot back away.

The times and the politics are different in Washington, where the recession has convinced both parties that cost containment cannot wait. But by addressing costs and access simultaneously, the White House and Congress risk alienating key interest groups from the get-go.

“When you start talking about cost, you create winners and losers and that leads to a political challenge,” warned Andrew Dreyfus, executive vice president of Blue Cross and Blue Shield of Massachusetts.

Universal coverage should itself bring down costs over the long run by preventing chronic disease and reducing the amount of non-urgent care provided in emergency rooms. But it requires increased government spending in the form of subsidies for those who cannot now afford coverage.

Under Mr. Obama’s framework, half the cost of providing those subsidies would be raised through tax increases on top earners. The rest would come from savings wrung from the health system. That level of savings may prove elusive, as the estimates attached to many of the proposals to cut costs, like expanding electronic record-keeping and improving management of chronic conditions, are considered highly speculative.

The designers of the Massachusetts plan stress the importance of distributing the burden evenly and deferring at least some of the discomfort until the benefits of expanded coverage can be seen.

Jon M. Kingsdale, director of the Commonwealth Health Insurance Connector Authority, which oversees the new subsidized coverage program, suggested that Congress pass legislation to expand access while delegating cost-control decisions to a commission. Like the military base-closing commissions of the past, it would make recommendations that would be subject to an up or down vote.