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The Massachusetts Model? |
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The Institute for America’s Future has a new report out on the Massachusetts health care plan. Here’s the gist:
Massachusetts has implemented new and innovative health care reform that provides subsidies for people under 300 percent of the federal poverty level unable to afford coverage. While reform has been very effective at increasing accessibility of insurance to residents across the socioeconomic spectrum, resulting in the lowest rate of uninsurance in the nation, the Massachusetts model is unsustainable, with skyrocketing costs and no systems in place to drive value.
Key problems include:
- Overall Health Care Cost Containment – Since the Massachusetts plan does not contain any mechanisms for reining in the rapidly increasing cost of health care, the plan has limited potential for long-term sustainability….
- Meaningful Competition – The Massachusetts plan promotes health insurer oligopolies in the state. It offers no countervailing power through a public health insurance plan to drive competition, offset insurer market power and rein in costs; rather it maintains the status quo that has led to spiraling health care costs.
While Massachusetts continues to be a leader in providing affordable health care to its residents, using it as a model for national reform would not address many of the significant issues facing our health care system. The public health insurance plan option proposed by President Obama and Senator Baucus would compete with private insurance plans on a level playing field, control costs, provide guaranteed back-up coverage for anyone who needs it and set a benchmark for ensuring everyone in America quality, affordable health care.
Basically, the Massachusetts model is good because it has indeed expanded coverage, but it’s bad because it hasn’t controlled costs, mostly because it lacks a public health insurance option to force private insurance to compete. Thus, it’s unsustainable as a national model.
I don’t think anyone’s arguing that doing coverage without controlling costs is a good idea, but there is some disagreement on whether politically it’s smart to go for coverage first, then do cost, like Massachusetts may be doing. Jonathan Cohn makes the argument:
Note, by the way, that the state is now moving forward on cost control. A new commission is investigating ways of moving the state away from straight fee-for-service and towards payment systems that reward high quality and efficiency. And, as Monday’s New York Times article from Kevin Sack noted, many officials and experts in Massachusetts have argued that it is the clear progress on coverage that makes this new discussion possible.
Given the voting strength of fiscal conservatives in Congress, particularly the Senate, it seems to me this is an equally important lesson to draw from Massachusetts: Once you succeed in addressing the coverage problem, it becomes a lot easier to control costs.
I’m not sure that follows. There are a few ways to control costs in our health care system; you can ration care (not an acceptable option), regulate the market, or increase competition. Here’s what Massachusetts plans to do:
They want a new payment method that rewards prevention and the effective control of chronic disease, instead of the current system, which pays according to the quantity of care provided. By late spring, the commission is expected to recommend such a system to the legislature.
This basically means regulating the market and the insurance industry.
It’s tricky business. Because Massachusetts doesn’t provide for a public health insurance option, it must police all the private plans in the state. The regulations have to be written in a way that provides the right incentives to private industry, and the punishments for breaking regulations must be hefty enough that private insurance can’t chalk them up to the cost of doing business. If our “regulation” of the stock market can serve as a recent example, regulations alone are often a poor strategy.
The far easier way to control costs would be to create a public health insurance option that anyone in the state could buy into. The government would have to make sure all insurers - public and private - played by the same set of regulatory rules (ie. standard minimum benefits package, no denying pre-existing conditions), but other than that, the public insurance option would serve as a de-facto regulator. If people got fed up with private insurance, or if costs were too high because their payment structures didn’t reward preventative care or health outcomes, people could just switch to the public option. The extra competition would likely do more to reign in costs than any regulation on its own could ever do.
I’m also unsure if it is politically easier to do costs second. Again, from the New York Times:
Those who led the 2006 effort said it would not have been feasible to enact universal coverage if the legislation had required heavy cost controls. The very stakeholders who were coaxed into the tent — doctors, hospitals, insurers and consumer groups — would probably have been driven into opposition by efforts to reduce their revenues and constrain their medical practices, they said.
Now those stakeholders and the state government have a huge investment to protect. But the task of cost-cutting remains difficult in a state with a long tradition of heavy spending on health care. Massachusetts has more doctors per capita than any state, Boston is home to some of the country’s most expensive academic medical centers, and a new state law requires comprehensive benefits like prescription drug and mental health coverage.
The public health insurance option is a bright line for opposition groups and it will always be. The insurance industry worries it will cut into their profits (and undoubtedly it will). Organized business groups are filled with ideological conservatives opposed to government anything, even if choice is preserved. And the AMA (which has been an enemy of health care reform since 1934 [pdf]) is worried that public insurance will pay them less. In other words, enemies of reform have been looking out for their profits for years, even at the expense of our health. I’m not sure why doing coverage first would change that incentive.
The public health insurance option is the big piece. Without that piece, any “health care reform” plan isn’t really worthy of being called health care reform. And getting that piece will be just as hard in the future as it is now.
So, if we’re serious about controlling costs (which the President is), then we need that public health insurance option. And we might as well fight for it now, because it’s not going to get any easier.
(And of course, there are some that will just ignore all this nuance and simply state that government and private industry can never compete on a level playing field. No matter how much they state their point, it doesn’t make it true. These kind of enemies will always be there, too.)
(also posted at the NOW! blog)
