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TMFHelical (99.03)

Massachusettes and Healthcare

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July 30, 2009 – Comments (5) | RELATED TICKERS: UNH , WLP

This is mostly a paste of a post on the New Paradigm board which has seen its share of healthcare discussion of late.  It is a shame I have not been blogging more on healthcare reform of late, even if just to link what I have been reading.

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I'm a MA resident, which often puts me on the frontline regarding healthcare news (which I enjoy). As many know, MA implemented a system a few years back (under Romney) which attempted universal coverage. It has been quite successful at increasing coverage.

It has not been successful at reigning in costs, and it does not have a public plan option (PPO). Many, particularly on the federal level are looking at the need for a PPO as a tool to control costs. It probably would, but many fear that option - and reasonably so, as it likely would signal the end to broad health coverage plans based on ability to compete.

MA is trying something else, and it is a shame that more states aren't experimenting with different types of programs. MA is attempting to create the 'Medicacl Home' and move away from pay-for-procedure and toward pay-for-performance. It won't be easy, and can go off the rails if not implemented well. But .. should it work it is a game changer, and could make healthcare stocks 'new paradigm' all over again.

Here is an excellent commentary on what is being attempted and its challenges (good blog to follow for wonks on this).

http://www.healthpolcom.com/blog/2009/07/29/real-health-reform-in-massachusetts/



Another good commentary on what is going on in MA, and how it could be game changing is in this New England Journal of Medicine perspective piece.

http://content.nejm.org/cgi/reprint/NEJMp0906556.pdf

Now, because this is so so important to get right, I really do think that at the federal level we need to wait to see how it plays out before ramming through too much change. Again, it is a shame more states aren't trying something, so as to have more to contrast against. I absolutely do think change is needed and the current system is awful, mostly due to the hard tie of coverage to employment and absence of visibility to the consumer to true costs (which has allowed the system to get increasingly more expensive in a stealth-like manner).

This debate is long from over, but with the near certainty that change is indeed coming. Opportunities always present with change (just wish I was better at IDing them with foresight rather than hindsight).

And finally, thanks to ncfool2 for linking in this 40 minute debate regarding healthcare reform.  The discussion is between a conservative and liberal economist on the topic.  As ncfool2 stated, it is surprising on how much they agree on, particularly in regard to acknowledging/identifying the problems.

http://www.npr.org/templates/story/story.php?storyId=111173038

TMFHelical
Home Coverage Team

 

5 Comments – Post Your Own

#1) On July 30, 2009 at 1:28 PM, SuperCharge (80.01) wrote:

Tremendous points & I can't agree with you more that they should implement a variety of trials at the state or even the city and county levels.

Letting the system go as is should not be an option because of rising costs, but it's hard to have much faith in the supposed long term fix they're trying to quickly force through right now.  

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#2) On July 30, 2009 at 9:09 PM, devoish (98.81) wrote:

An Open Letter to the Nation from Massachusetts Physicians:
Early Outcomes from Massachusetts’ Health Care Reform

We write to alert colleagues and the nation to the disturbing early outcomes of Massachusetts’ widely-heralded approach to health care reform. Although we wish that the current reform could secure health insurance for all, its failings reinforce our conviction that only a single payer program can assure patients the care they need.

In 2006, our state enacted a law designed to extend health coverage to virtually all state residents. Political leaders in other states as well as several Democratic presidential candidates have embraced this model.

Massachusetts’ law mandates that uninsured individuals must purchase private insurance or pay a fine. The law established a new state agency to ensure that affordable plans were available; offered low income residents subsidies to help them buy coverage; and expanded Medicaid coverage for the very poor. (Immigrants are mostly excluded from these subsidized programs.) Moneys that previously funded free care for the uninsured were shifted to the new insurance program, along with revenues from new fines on employers who fail to offer health benefits to their workers. In addition, the federal government provided extra funds for the program’s first two years.

Starting January 1, 2008 Massachusetts residents face fines if they cannot offer proof of insurance. Yet as of December 1, 2007 only 37% of the 657,000 uninsured had gained coverage under the new program. These individuals often feel well served by the reform in that they now have health insurance. However, 79% of these newly insured individuals are very poor people enrolled in Medicaid or similar free plans. Virtually all of them were previously eligible for completely free care funded by the state, but face co-payments under the new plan. In effect, public funds for care of the poor that previously flowed directly to hospitals and clinics now flow through insurers with their higher administrative costs.

Among the near poor uninsured (who are eligible for partial premium subsidies) only 16% had enrolled in the new coverage. And barely 7% of the uninsured individuals with incomes too high to qualify for subsidies had enrolled according to the official state figures. Few can afford premiums for even the skimpiest coverage; the lowest cost plan offered for a couple in their fifties costs $8,200 annually, and carries a $2,000 per person deductible.

Moreover, the state’s cost for subsidies is running $147 million over the $472 million budgeted for fiscal year 2007. Meanwhile, collections from fines on employers who fail to provide coverage are 80% below the original projections. The funding gap will widen in future years as health care costs escalate and insurers raise premiums. Already, state officials speak of making up the shortfall by forcing patients to pay sharply higher co-pays and deductibles, and by slashing funds promised to safety net hospitals.

While patients, the state and safety net providers struggle, private insurers have prospered under the new law, and the costs of bureaucracy have risen. Blue Cross, the state’s largest insurer, is reaping a surplus of more than $1 million each day, and awarded its chairman a $16.4 million retirement bonus even as he continues to draw a $3 million salary. All of the major insurers in our state continue to charge overhead costs five times higher than Medicare and eleven-fold higher than Canada’s single payer system. Moreover, the new state agency that brokers private coverage adds its own surcharge of 4.5% to each policy it sells.

A single payer program could save Massachusetts more than $9 billion annually on health care bureaucracy, making universal coverage affordable. But because the 2006 law deepened our dependence on private insurance, it can only add coverage by adding costs. Though politically feasible, this approach is already proving fiscally unsustainable. The next economic downturn will push up the number of uninsured just as the tax revenues needed to fund subsidies fall.

The lesson from Massachusetts is that we still need real health care reform: single payer, non-profit national health insurance.

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#3) On July 30, 2009 at 9:18 PM, devoish (98.81) wrote:

Skyrocketing healthcare costs were easily predictable for the 2006 Massachusetts reforms. In 2006. The Single Payer advocates were correct. The reason why from the same article...

Third, the legislation will do nothing to contain the skyrocketing costs of care in Massachusetts, already the highest in the world. Indeed, it gives new infusions of cash to hospitals and private insurers. Predictably, rising costs will force more and more employers to drop coverage, while state coffers will be drained by the continuing cost increases in Medicaid. Moreover, when the next recession hits, tax revenues will fall just as a flood of newly unemployed people join the Medicaid program or apply for the insurance subsidies promised in the reform legislation. The program is simply not sustainable over the long - or even medium - term.

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#4) On July 30, 2009 at 9:27 PM, devoish (98.81) wrote:

At the time of Mass 2006 reforms similar plans had already been tried and failed in Tennessee, VT, Oregon, Maine, Washington State and I believe 1993 Massachusetts by Governor Dukakis. Congratulations. Insurers bought "two more years of lets think about it".

There are over a dozen models of better, less expensive ways of paying for healthcare. Pick one and lets have a success story.

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#5) On July 30, 2009 at 10:19 PM, TMFHelical (99.03) wrote:

devoish,

The points are solid in the letter from physicians.  That many were previously uninsured was not the same as saying they were denied care, though it generally came only via the emergency room. I am very closely involved with someone who once had free care and now has co-pays (which are managable with the additional help she gets).  I do disagree with the conclusion to the letter though, which implies that a single payer system would not have the same problems. Also disagree that the system would be fixed by making the true costs even more invisible to consumers.

The point of the blog was not to praise MA's original initiative which did little to control costs, but the changes being made within it, which have real promise in my opinion but high hurdles as well.  I do hope it gets implemented effectively, as it really could be the paradigm that works.

You are correct that other states have tried in the past, but MA's last attempt as well as Oregon's efforts at very limited universal coverage (which had promise but failed) were some long time back.  Not enough is being tried now.

TMFHelical 

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