Baseball is here, but look to Massachusetts for some new hardball…Back to the Blog »
April 13th, 2010
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As all New Englander’s know, if not most of the country, Massachusetts is one of the states that has been tagged as taking a leading role in trying to tackle healthcare reform. In 2007, the state implemented Commonwealth Care (also known as RomneyCare or MassCare) with the goal of increasing statewide insurance coverage levels, similar to ObamaCare .
The good news is that Massachusetts now has the highest state level of population with insurance in the country with a mere 2.6% left uninsured. The bad news is that the program has done nothing toward tackling the rising cost of healthcare. With a significant state commitment to subsidizing costs, the original estimates pegged state costs for Commonwealth Care at $725 million per year. In two years time, that projection has been increased by 20% to $880 million per year. In addition to the economic downturn, the state has been faced with significant budget concerns some of which are attributed to the weight of the new healthcare program. In response to growing financial pressures, in 2009 Massachusetts took the unpopular position of eliminating 30,000 legal immigrants from the program to reduce expenses by $130 million.
Now, the latest challenge. Recently, several state insurance companies filed rate increases for individual and small group policies (less than 50 employees) ranging from 8-32%. In most states, this process has historically been a rubber-stamp process. However, the State Insurance Commissioner, backed by Governor Deval Patrick, has denied the requested increases for April 1 and is requiring that current rates remain in place. Six insurers have filed an injunction against the state, four of whom had operating losses in 2009, and indicate that the increases are required to address increases in costs. As of Monday, a judge has ruled that the injunction will not be granted and that the insurers had not exhausted their administrative appeals process. Needless to say, price controls on a private industry will remain front and center in both Massachusetts and on the federal level as both programs struggle with effective means to contain costs. Is this a foreshadowing of ObamaCare?
As we see with most pieces of legislation, politics will play an important part of public policy. Governor Patrick will be in a highly contested fight for his seat in Massachusetts in 2010 and some question his strong stance against insurance company’s rate increases as posturing against one of his formidable challengers, Charlie Baker, former CEO of Harvard Pilgrim Health.
In addition, as Mitt Romney eyes a potential presidential bid for 2012, it will be interesting to see how he attempts to nuance the success (greater number of insured) with the programs financial troubles and its similarities to the recently passed federal reform approach.
It may be as good a sport as Yankees vs. Red Sox watching this one unfold…
Posted by Brian in Healthcare Reform
Gee I’m so glad to hear that the people adminstrating my COBRA
are so gung-ho to maintain the status quo.
I’ve put 20 years working in medical device design, my employers were always very clear that we loved being in an industry posting
20% annual growth … they never seemed to have the foresight to
see that these were not rates of growth that can be maintained
over the long term but they’ve done everything they could over
that 20 years to lobby for rules that would keep it that way.
Get with doing something to help or get out of the way.
Elaine-
I’m sorry I missed this comment and it took me so long to respond.
Please don’t take our opposition to the Mass Reform law and the new federal reform law as support for the status quo. If you follow some of the history of earlier posts (here, here and here as examples), you can see that we are strongly in support of reform that reduces the cost of healthcare. Costs are up 131% over the past 10 years while wages are up only 38% and CPI 28%–clearly we have an enormous problem.
But you know and I know (look at Mass.) that reform that expands coverage without addressing intrinsic costs is unsustainable and in fact it exacerbates the real problem. So while I respect and share your desire for substantive change, the laws that we have in Mass. and the new federal law have already made the cost problem worse not better.
There is widespread attention in Mass. for payment reform–moving toward a form of global compensation for providers-and that has promise for reducing cost. But politics being what they are, I am afraid it will be some time before the issue gets addressed at it’s core. In the meantime, the only card that can be played is Gov. Patrick’s price controls, which are an artificial, knee-jerk, temporary band-aid that serves to make the problem worse not better.
Our message has been consistent-focus first on cost control and then look to expand coverage. These plans do exactly the opposite and the result is easy to predict, and it isn’t good for anyone. But the laws are in place now, so our focus has to shift to how to take advantage of the opportunities. Thats the subject of my next post.