Thursday, April 09, 2009

Mass Revisited

[Welcome Kaiser Network readers!]

It has been a while since we looked at the Massachusetts experiment to provide universal health care, so we decided to take a closer look. We were prompted, at least in part, by the fact that the folks in Washington who think money grows on trees seem to be eyeing the Mass plan as a model of efficiency and something that should spread to the other 49 states.

While the plan may not have driven off the Chappaquiddick bridge . . . yet . . . it is certainly in need of some retooling.

According to Cato (no, not the O.J. house guest):

Massachusetts has significantly reduced the number of people in the state who lack health insurance. However, it has not achieved, nor does it expect to reach, universal coverage. (The best estimates suggest that more than 200,000 state residents remain uninsured). And, significantly, roughly 60 percent of newly insured state residents are receiving subsidized coverage, suggesting that the increase in insurance coverage has more to do with increased subsidies (the state now provides subsidies for those earning up to 300 percent of the poverty level or $66,150 for a family of four) than with the mandate.

The cost of those subsidies in the face of predictably rising health care costs has led to program costs far higher than originally predicted. Spending for the Commonwealth Care subsidized program has doubled, from $630 million in 2007 to an estimated $1.3 billion for 2009.
I have no idea about the standard of living in MA, but $66,150 for a family of four is probably not at poverty levels. The Kaiser Foundation reports the median income for 2005 - 2007 for Mass was $58,286 vs. $49.901 for the country. So you can earn 14% above the state median income and still qualify for taxpayer assisted health insurance.

And let's not overlook the doubling in spending for this program in two years time. Can you say government bailout?

Now the state is turning to a variety of gimmicks to try to hold down costs, including possibly cutting payments to physicians and hospitals by 3-5 percent. However, the (NY) Times quotes health reform experts who have studied the Massachusetts system as warning “the state and federal governments may need to place actual limits on health spending, which could lead to rationing of care.”

Good word.

Rationing of health care.

Not a good word.

But what about that NYT reference?

They report the bill to offer universal health care was passed "with Paul Revere speed" and that then Governor Mitt Romney "made an expedient choice, deferring until another day any serious effort to control the state’s runaway health costs."

Deferring issues on cost until another day.

Somehow this sounds very familiar.

The day of reckoning has arrived. Threatened first by rapid early enrollment in its new subsidized insurance program and now by a withering economy, the state’s pioneering overhaul has entered a second, more challenging phase.

Thanks to new taxes and fees imposed last year, the health plan’s jittery finances have stabilized for the moment. But government and industry officials agree that the plan will not be sustainable over the next 5 to 10 years if they do not take significant steps to arrest the growth of health spending.
The plan will not be sustainable.

Then what?

Once entitlements are put in place no politician wants to take them back. When is the last time you heard of government cutting out an entitlement program?

Mass has this great idea for controlling health care costs. They want to change the way docs & hospitals are comped.

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.
Who determines what is "effective control"? Most chronic illness is preventable with lifestyle changes, so why penalize the medical provider for a lack of self discipline on the part of the patient?

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.
Mental health parity.

So in the midst of expanding services and a health care budget that doubles every two years they opt to increase benefits.

Mass not only requires all residents to have health insurance or pay a fine ($1,068) but also requires insurance carriers to accept anyone regardless of health.

Think of it like you would a bank that will issue a mortgage to anyone, regardless of credit or their ability to pay back the loan.

In its first full year of operation, Commonwealth Care drew higher enrollment than anticipated, and the state found itself facing an inaugural budget gap. Mr. Patrick and the legislature filled it by assessing insurers and hospitals, raising the penalty on noncompliant businesses, increasing premiums and co-payments for consumers, and raising the state tobacco tax.

There was another issue as well, as we reported before. The Big Squeeze means more patients for the doctors.

That's the good news.

The bad news is, longer waits to see the doc.

Let's see. Free or almost free health care. Increased demand. More difficult to see a doc.

Can't figure out why no one saw that coming.

Blue Cross and Blue Shield of Massachusetts, the state’s largest insurer, recently devised an innovative model that pays doctors a flat fee per patient, with adjustments for age, gender and health status, and then adds bonus payments for high standards of care.
Novel. Has some promise. Tracks the HMO model where providers are paid a capitated fee rather than fee for service.

Some health policy experts argue that changes in payment practices will not be enough to slow the growth in spending, even when combined with other cost-cutting strategies. To truly change course, they say, the state and federal governments may need to place actual limits on health spending, which could lead to rationing of care.

“Really controlling costs requires just stopping spending,” said Stuart H. Altman, a professor of health policy at Brandeis University.
Stop spending.

Yeah, that works too.
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