New York Times Examines Challenges Facing Massachusetts Health Insurance Law

Main Category: Health Insurance / Medical Insurance
Also Included In: Public Health
Article Date: 17 Mar 2009 - 3:00 PDT

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Massachusetts' health insurance law will not be sustainable over the next five to 10 years unless the state takes significant steps to reduce health care spending growth, government and industry officials say, the New York Times reports. Architects of the 2006 law said that it would not have been feasible to include heavy cost control measures in the legislation. According to the Times, "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."

Spending on health insurance programs in the state is expected to increase by 42%, or $595 million, this year, compared with 2006, and nearly 60% of the newly insured are covered by public health insurance programs. Since the law took effect, about 432,000 people have obtained coverage, leaving about 2.6% of the state's population uninsured -- about one-sixth the national average.

According to the Times, "With Washington watching, the state's leaders are again blazing new trails." Gov. Deval Patrick (D) and a state commission are considering a new payment method for physicians and hospitals that would reward prevention and effective control of chronic diseases, rather than the current fee-for-service model. Changes being considered include reimbursing providers for episodes of care rather than for each visit and bundling payments to groups of providers who would collectively be responsible for a patient's health. The commission is expected to recommend such payment changes to the state Legislature this spring.

Health care policy experts say that if Massachusetts is successful in eliminating the fee-for-service model, "it would be as audacious an achievement as universal coverage." However, the state faces a number of challenges in altering the payment system, including getting CMS approval for changes to Medicaid and Medicare reimbursements. Some health care policy experts say that even if combined with other cost saving measures, changes in the payment system will not be enough to curb spending, the Times reports. They say that to achieve substantial reductions, state and federal governments would have to limit health care spending, which could result in the rationing of care. The Times notes that because Massachusetts requires nearly all of its residents to obtain health insurance, the state cannot cut health care costs by restricting eligibility for public health insurance programs.

Meanwhile, the state's largest insurer, Blue Cross and Blue Shield of Massachusetts, recently introduced a new payment method that provides physicians a flat fee for each patient -- making adjustments for age, gender and health -- with additional payments for high standards of care. Company officials say that the new plans will cut premium growth by half over five years and expect that such flat rates will comprise 15% of the BCBS' business by June (Sack, New York Times, 3/16).

Commonwealth Care Premiums
In related news, Massachusetts' Commonwealth Health Insurance Connecter Authority board on Thursday voted unanimously to keep premium levels for state-subsidized health insurance plans flat for the year beginning July 1, and to decrease premiums for some plans, the AP/Boston Herald reports (AP/Boston Herald, 3/12). The authority oversees Commonwealth Care, which offers subsidized plans for state residents with incomes up to 300% of the federal poverty level who do not qualify for Medicaid and have no access to employer-sponsored coverage. About 165,000 residents are covered through the program, and the authority covers the full premiums for about 70% of those beneficiaries.

As a result of the Thursday vote, the lowest-priced plans will see no increase in monthly premiums, while premiums for the higher-priced plans will decrease (McConville, Boston Herald, 3/13). The board also voted unanimously to accept a bid from Commonwealth Family Plan, a joint venture of Centene and Caritas Christi Health Care Network, to offer coverage through Commonwealth Care (Lazar, Boston Globe, 3/13). The addition of this plan brings the total number participating in the program to five.

John Kingsdale, the authority's executive director, said, "This is a home run. We have succeeded in simultaneously lowering costs and increasing access" (Boston Herald, 3/13). State Secretary of Administration and Finance Leslie Kirwan said her staff recommended the decision because of the "severe economic environment." State officials said they were able to keep premiums flat without reducing benefits or shifting costs because of a new competitive bidding process that allows insurers to share in the cost savings they would provide to the state (Lazar, Boston Globe, 3/12).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2009 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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