By the measuring rod of coverage, Massachusetts is doing significantly better than the other 49 states. "Only" 2.6% were uninsured in 2008, compared to a national average of 15%.
But by the measuring rod of cost containment, Massachusetts is - so far - a flop. Today the Boston Globe reported that the state's major health insurers plan to raise rates next year by approximately 10%, double the projected national average of 5%. (For the Boston Globe article, see here.)
Massachusetts is pursuing a high risk/high gain approach to health reform. Many political folks say "let's control costs first and then extend coverage." Given our pathetic national passivity about getting serious about health costs this approach is as likely to lead to real action as the sinner's promise to change his ways as soon as the Messiah approaches. Massachusetts' strategy has been to extend coverage first, hoping recognition that the accomplishment will go down the tubes unless costs can be controlled will act as a kind of Viagra for policy that catalyzes ability to overcome our national cost-containment impotence.
Massachusetts has proved that a combination of (1) requiring individuals to have health insurance (or pay a "fine"), (2) subsidizing insurance access for low income folks, and (3) requiring insurers to "pay or play," will (4) substantially lower the number of uninsured. But these accomplishments won't be sustainable unless (5) the state gets a grip on health care costs.
In 2008 Massachusetts created a Special Commission on the Health Care Payment System to "investigate reforming and restructuring the system to provide incentives for efficient and effective patient-centered care and to reduce variations in the quality and cost of care." (The key word is "efficient," a politically correct way of referring to cost containment.) The Commission issued its report in July. The state also contracted with the RAND corporation to develop a menu of cost containment strategies and to determine their potential impact on the health care system in Massachusetts.
Now the really important aspect of health reform in Massachusetts gets underway. The Special Commission and RAND have both recommended radical payment reform - moving from a predominantly fee-for-service system to a system of global payments. The Commission envisions "Accountable Care Organizations" of clinicians and hospitals caring for populations under a budget. The Commission understands that getting from here to there will take time and allows for a transition period of 5 years.
Our way of budgeting for health care in the U.S. is a farce. Rather than deciding what we want to spend we put our finger to the wind, ask what the system is likely to charge, and then create next year's "budget" based on our prediction. In the 1990s we asked health insurers to manage the system actively. For a time that worked - the trend slowed. But a system in which insurers put reins onto providers can't work - there's too much distrust of insurers, and it's too easy to vilify them as uncaring bureaucrats.
What we need is a system in which clinicians and their patients collaborate to manage care. I know first hand that this approach can work well from decades of practice in the Harvard Community Health Plan HMO, a non profit program that cared for a population within a budget. (Norman Daniels and I have described how doctors, patients, and other stakeholders can collaborate this way in "Setting Limits Fairly: Learning to Share Resources for Health.")
In 1630 John Winthrop gave a sermon to the Puritans who were about to found the Massachusetts Bay Colony:
For we must consider that we shall be as a city upon a hill. The eyes of all people are upon us. So that if we shall deal falsely with our God in this work we have undertaken... we shall be made a story and a by-word throughout the world. We shall open the mouths of enemies to speak evil of the ways of God... We shall shame the faces of many of God's worthy servants, and cause their prayers to be turned into curses upon us til we be consumed out of the good land whither we are a-goingIf Massachusetts steps up to the plate and implements what the Special Commission and the RAND consultants have recommended it will become a learning laboratory for the U.S. system. If it succeeds in doing the job right the state will be a city upon a hill!
For those who are interested here are the principles the Special Commission recommended to the state:
1. As currently implemented, fee-for-service payment rewards service volume rather than outcomes and efficiency, and therefore other models should be considered.(See here for the RAND study, and here for the Special Commission on the Health Care Payment System report.)
2. Health care payments should cover the cost of efficiently provided care, support investments in system infrastructure, and ensure timely access to high quality, patient-centered care. Additional payment should reward and promote the delivery of coordinated, patient-centered, high quality health care that aligns with evidence-based guidelines where available, and produces superior outcomes and improved health status. Performance measurement should rely on reliable information and utilize uniform, nationally accepted quality measures.
3. Provider payment systems should balance payments for cognitive, preventive, behavioral, chronic and interventional care; support the development and maintenance of an adequate supply of primary care practitioners; and respond to the cross-subsidization occurring within provider organizations as a result of the current lack of balance in payment levels by service.
4. Differences in health care payments should reflect measurable differences in value (cost and quality). Payments should be adjusted for clinical risk and socio-economic status wherever technically possible, and should promote greater equity of payments across payers and providers, to the extent that this is financially feasible.
a. Differences in health care payments should be transparent, including across different payers.
b. Costs associated with desired investments in teaching and research should be paid outside of base payments, and should require provider accountability for how such payments are spent.
c. Costs associated with desired investment in special “stand by” capacity should be accounted for in the payment system.
5. The health care payment system should be structured in such a way as to minimize provider, payer and patient administrative costs that do not add value.
6. Payment reform must consider how:
a. Some payment methods may require certain organization of the service delivery system, and
b. Health benefit designs either support or limit payment reform.
7. Health care per capita costs and cost growth should be reduced, and providers, payers, private and public purchasers and patients should all share in the savings arising from payment reform.
8. The health care payment system should be transparent so that patients, providers and purchasers understand how providers are paid, and what incentives the payment system creates for providers.
9. It will be necessary to consider the diversity of populations, geography and providers across the Commonwealth when designing payment reform to ensure high quality, patient-centered care to all populations and geographic regions in the Commonwealth.
10. Implementation should be phased over time with:
a. Clear and attainable deadlines;
b. Planned evaluation for intended and unintended consequences; and
c. Mid-course corrections.