U.S. studies Massachusetts' mandatory coverage model
Massachusetts became the first state to pass a law mandating that every citizen have health care coverage starting July 1—a move providing incentives and penalties targeted to the state's estimated half-million people without insurance. Overwhelmingly passed by the legislature in April 2006 and signed into law, the bill put the state far in the front of the rest of the country in facing the problem of the uninsured.
Mandatory health insurance will drive more patients into a health marketplace already cramped by a dwindling number of primary care providers. Massachusetts' experiment is being closely watched by states such as California and Connecticut that are debating similar mandatory insurance coverage programs.
Regardless of the outcomes, mandatory health insurance has sparked the first meaningful debate on health care seen in years. ACP Observer examines the impact of such laws from the perspective of a health provider and from health care economists.
The information included herein should never be used as a substitute for clinical judgment and does not represent an official position of ACP.
Internal medicine retrenching to make mandatory insurance work
By Allan H. Goroll, MACP
Massachusetts continues to play at the cutting edge of health system reform to address the stubborn problem of the uninsured. A rather remarkable political compromise was fashioned, spurred by the declaration that affordable health insurance is a social responsibility to be shared by all stakeholders and citizens.
The key elements of the Massachusetts plan are:
- an individual mandate to purchase health care insurance, with premium assistance for adults with incomes up to 300% of federal poverty level,
- businesses required to "pay or play;" if they don't offer insurance they have to pay into the state pool, currently estimated at $295 per employee,
- a new state authority empowered to encourage and approve affordable health care insurance plans, and
- expansion of Medicaid to children in families with incomes up to 300% of federal poverty.
The relatively easy part was the political compromise; the hard part is fashioning a set of insurance options that are affordable for all parties and capable of providing meaningful coverage. Of concern to all is that the lowest cost plans are likely to have the highest deductibles, discouraging timely access to necessary care, especially for preventive services. Payers are currently working through actuarial analyses to find the best mix of coverage and cost. Whether this can be achieved with the dollars available remains to be determined, but a good faith effort is underway and the best estimate of the cost of doing this properly is likely to emerge.
Ironically, even if Massachusetts solves the insurance part of the access equation, it faces another component equally challenging: the disappearance of primary care physicians. The absence of medical school graduates entering primary care over the past five years is leading to serious access problems for patients. In Massachusetts, average waiting time for a new-patient appointment with a primary care physician is five to six weeks, and many practices have closed their doors to new patients entirely. The neighborhood health centers are so depleted of primary care physicians that the Bank of Boston has just announced a $5 million program of loan forgiveness for young doctors willing to sign on for two years. These health centers are expected to absorb the thousands of new patients eligible for coverage under the new law.
The Massachusetts experience provides a coming attraction of the challenges facing our health care system. If we are to truly fix the access problem and have a well-functioning system, not only will we need to solve the insurance conundrum, but also reform the payment and practice of primary care.
ACP's Massachusetts Chapter has payment reform proposals on the drawing boards and is tooling up to conduct collaborative demonstration initiatives. We are looking to pilot replacement of visit-based, primary care reimbursement under resource-based, relative value systems with prospective comprehensive payment for comprehensive care, conducted in practices with an electronic medical record, decision support, multidisciplinary teams, and ability to offer an "advanced medical home." Stay tuned.
Allan H. Goroll, MACP, is a professor of medicine at Harvard Medical School, and Immediate Past Governor of ACP's Massachusetts Chapter.
Mass. mess: Mandates ensure everyone is covered—inadequately
By Alan Sager, PhD and Deborah Socolar, MPH
The April 2006 Massachusetts health care law was the best that could pass. It has spurred debate in other states. It has blessedly extended health insurance coverage to dozens of thousands of people.
But the law is not durably affordable. It aimed narrowly at insuring everyone, paid little attention to adequacy of coverage and ignored cost controls. Powerful hospitals won big Medicaid rate hikes; physicians received little.
If insuring everyone were as easy as this law's backers claim, we would have done it decades ago.
The law is under-financed. Business pays virtually nothing. Individuals and families—those with the least political power—are forced to buy insurance. Many face premiums they can't afford.
Because the law doesn't control underlying medical costs, Massachusetts faces soaring premiums, eroding benefits or unbearable demands for greater state subsidies in the years ahead.
Even today, state government lacks enough money to subsidize new insurance policies to make them affordable for all people. This is visible in numerous debates on benefits, premiums, and out-of-pocket costs. The planned high premiums and high out-of-pocket costs will leave many newly covered people financially stressed and unable to afford needed care.
Massachusetts also legislated coverage for all in 1988. But that law was never implemented owing to its lack of cost controls, small business opposition, a recession and a new governor.
Since then, the rising cost of health care—up 59% as a share of the state's economy—has made it even harder to cover everyone by spending more.
Nationally, health spending is four times defense spending. Health spending in Massachusetts is over $10,000 per person this year, one-third above the U.S. average, and the highest of any state.
Sadly, about one-half of health care spending is wasted on unnecessary clinical services stemming mainly from defensive medicine and financial incentives to over-serve; on wasteful paperwork born of complexity and mistrust; on excess prices for pharmaceuticals, equipment, and other things; and on theft.
We already spend enough to pay for the care that works for the people who need it, so winning affordable health care for all should be the easiest problem to solve. Other pressing needs—such as education or infrastructure—require spending more.
Still, covering everyone is possible only when married to cost controls. This parallels driving a stick-shift car. If the accelerator and clutch aren't coordinated, the car stalls or races its engine while spinning its wheels.
But health care lacks a working clutch. All cost controls—both market and regulatory—attempted in the U.S. over the past three decades have essentially failed.
Why? First, many politicians' cost control proposals sound good but are designed to fail. They don't confront powerful insurers, hospitals, and others who remain financially addicted to more money for business as usual. Instead, they demand high cost-sharing to induce sick people to play doctor. This won't save money but could kill.
Second, political motivation to cut costs was weak because savings were not pledged to expanding concrete benefits like covering uninsured people or adding dental insurance.
Third, cost controls ignored doctors or treated them as objects whose fees should be trimmed. That's a fatal flaw, since doctors' decisions essentially control almost 90% of personal health spending. The rest is for OTC drugs, dental care, and other services that don't require a physician's order.
To contain cost by cutting waste, and to marshal the savings to finance solid coverage for all Americans, we urge a clinical, financial, legal and political treaty with doctors. It will liberate doctors to steer by a clinical compass, as they were trained.
The treaty's main provisions are clear. First, we should completely relieve doctors of the threat of malpractice suits, which neither compensate injured patients fairly nor weed out or re-educate dangerous doctors. We need one set of new tools to aid people harmed by medical care and another to vigorously attack quality problems.
Second, we should slice doctors' payment-related paperwork. That is possible only when doctors and payers trust one another. To build trust, sharp financial incentives to give more care must be eliminated, and doctors must be assured fair incomes. Trust allows simplified payment methods, which cut doctors' practice costs and thereby boosts both net incomes (especially for primary care physicians) and time available for patients.
Third, in return, doctors must agree to take on the job of carefully spending vast budgets to ensure equitable care for all, guided by evidence on efficacy and cost-effectiveness.
To start, groups of doctors could accept pairs of budgets to finance care for groups of patients. In each physician group, one budget would cover physicians' own incomes. A second budget would cover the tests, surgery, drugs, and other care that doctors authorize. Then, the only motive to withhold care from one patient would be to give more valuable care to another. Doctors could not make more money by skimping on care.
If reformers focus solely on putting insurance cards in Americans' pockets, that coverage will inevitably be flimsy. Soaring costs will undermine efforts to cover everyone unless reformers respect physicians' vital role in spending money carefully.
Alan Sager, PhD, and Deborah Socolar, MPH, are directors of the Health Reform Program at Boston University School of Public Health.
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