So, the anniversary of the first year of health reform, as we perceive it, has come and gone, and going into year two we have significantly increased the number of “insured” residents in the Commonwealth. We should and do take great pride and praise for being the first state in the nation to make a commitment to “health care for all” of its residents. Through expansion in entitlement to MassHealth and the “safety net plans” for classes of people too poor to afford market health insurance through Commonwealth Care and the affordable options of Commonwealth Choice we have moved ahead in increasing coverage. However we have done nothing, that even misconstrued, can be considered by any rational person to be health reform. So let’s call it what it is! Or is it what its not?

It is expansion of health insurance in its various iterations, employer based, individual and group, and government sponsored, to uninsured residents of Massachusetts. It is not health reform, and that’s the problem. It is increasing dollars spent on a broken system. It is not changing the system. It is giving people access to care. It is not improving care. It is investing more money with no return on that investment in terms of decreased cost, improved quality or increased accountability. Read more…

Readers of the New York Times picked up their Tuesday paper to read that at least three governors are struggling with the clash between their desire to cover their uninsured citizens and the ever rising cost of health care. Pennsylvania’s Ed Rendell is learning, as the article says – “that to contain costs is eventually to pluck dollars from someone’s pocket. His plan has incited protest from hospitals, doctors, insurers and small businesses, each of them finding something to detest”. Governor Schwarzenegger, the author notes, says that making insurance mandatory will have to include “stringent reductions in health care spending”. But before we in Massachusetts can assert that we have solved the problems that our fellow states have failed to solve, a word of caution is perhaps in order. We are an expensive medical community to begin with, and we are far from immune from the cost pressures that affect every community. Our groundbreaking health reform rests on responsibility shared by taxpayers, individual citizens, and business owners large and small. But the shared responsibility has to include providers as well, if health care is to be affordable over time. The Quality and Cost Council is just beginning to address these issues, first by getting cost information to the public. My own agency, the GIC, is measuring cost effectiveness of specialists. There are other efforts by the federal government and others to focus on cost as well as quality and access. But if Massachusetts is to keep on leading the pack, we’re going to have to keep our eye on the cost issue and be willing to do what it takes to put on the brakes. Slowing down may be the only way to get to where we’re going.

Dolores L. Mitchell, Executive Director of the Group Insurance Commission of the Commonwealth of Massachusetts, the agency that provides life, health, disability and dental and vision services to over 285,000 State employees, retirees and their dependents.

Any reevaluation of the employer “fair share” provisions, as suggested by Senator Moore, should consider the specifics of the agreement reached on this issue as part of the health reform legislation. The “fair and reasonable” test to implement the fair share requirement has been widely misinterpreted as setting a minimum standard of employer coverage. That is simply not the case.

Rather, the fair share contribution was specifically tied to equalizing the obligation on employers to pay for free care. Massachusetts employers that provide employee health insurance contribute to the funding of uncompensated care through an annual $160 million insurance surcharge; the very small number of employers that don’t provide coverage, don’t contribute. The agreement captured in Chapter 58 was to level the playing field by having “non-contributing employers” with 11 or more employees pay for the uncompensated care costs of their uninsured employees. The $295 was the per-employee cost of free care in 2005 for all employees working for employers who made no contribution toward their health coverage. Using this same methodology, the amount of the fair share assessment will be calculated each year, an amount that should decline over time as the use of free care decreases.

The law charged the Division of Health Care Finance and Policy with setting a standard that will differentiate between employers that do contribute to uncompensated care and those that do not – the so-called “fair and reasonable” test. The two-step test established by DHCFP – at least 25 percent employee participation in the employer’s plan or a minimum 33 percent employer contribution to the premium – appropriately reflects the intent of the law. The definition was never intended as a standard for what employers should provide; rather, it is a way to determine whether or not an employer is making a contribution to free care.

Those who argue that a 33 percent contribution threshold is too low miss another point. Read more…

As executive director of the taxpayer group that successfully fought the graduated income tax five times on the Massachusetts ballot, I am always alert to any violation of the constitutional mandate for a flat rate income tax. I’m not a lawyer, could be wrong — and far be it from me to discourage any grassroots activism — but opponents of the health insurance law will probably be wasting their time arguing that the new health insurance law is unconstitutional. Read more…

Maybe I’ve had too much free time while on vacation in Wyoming (where 18% of adults and 10% of kids are uninsured), but I’ve been thinking about transparency. The latest infatuation of many pundits in health care, transparency is the notion that if consumers have more information on costs and quality, they’ll become a potent new force for improving care and moderating health care spending. Although I am deeply skeptical that transparency will have any real impact on costs (a topic for another blog entry), I think consumers should know much more about the quality and cost of their health care. But while we’re pushing transparency in health care, let’s not forget about health plans. In the new world of health reform, there’s lots more we need—and are entitled —to know about where our health insurance dollars are going.

Health plans are perhaps the biggest “winner” in Chapter 58: they are likely to get hundreds of thousands of new members, both from the expansions of public coverage through Medicaid and Commonwealth Care and from a growth of private coverage because of the individual mandate. Most people in the state are now required to purchase health insurance or pay tax penalties. Since buying health coverage is no longer really voluntary, the public has a right to know much more about the health insurance system. And health plans should expect to be subject to a much higher level of accountability to us for the prudent use of our money. Read more…

Economic theory states that having insurance – of any kind – can change the behavior of the person being insured. This is known as “moral hazard,” a theory that has driven American health policy for most of our lifetimes. Moral hazard comes in many forms; spending someone else’s money is just not the same as spending your own. How many fewer $200 hotel rooms would there be without business expense accounts? With budgets in the billions, this is how the Pentagon ends up with the infamous $640 toilet seat.

When it comes to healthcare, proponents of moral hazard fear that, absent a financial stake, patients will demand more expensive and unnecessary tests and treatments. They argue that a “brake” on this demand is needed to assure efficient consumption of healthcare. It’s one of the reasons co-payments, deductibles, and the notion of “skin in the game” are solidly entrenched in our health care system and the reason why we’re likely to see more cost sharing in the name of consumer-driven healthcare.

But how does economic self-interest affect health care consumption? Read more…

Under the Massachusetts Health Care Reform Act, employers with 11 or more full-time equivalent employees in Massachusetts must make a “fair and reasonable” contribution toward the cost of their full-time employees’ health insurance. Employers that fail to do so, or which do not offer any employer-sponsored health insurance, will be required to pay an annual fee of up to $295 per full-time employee. The fee, known as the “Fair Share Contribution,” will be pro-rated for part-time and seasonal employees.

This Fair Share Contribution is used to help fund state-subsidized health plans that are available to low-income people who do not have access to employer-sponsored health insurance, and to provide rate increases to certain Medicaid providers. Its purpose is to help equalize the burden of expanding health care access among all employers.

When the Health Care Reform law was being negotiated in the legislative Conference Committee, legislators did discuss whether it was necessary to set minimum levels of contributions by business. However, legislators were told that the major health insurance plans did not write insurance for groups that did not have at least fifty percent of employees in the program and for which the employer contributed at least fifty percent of the premium cost. The average employer share at that time was 75%. Therefore, the actual provisions for implementing the “Fair Share Contribution” were left to the executive branch of government.

When the Romney Administration was developing its standards, numerous healthcare advocates, unions, and other organizations criticized the proposals and asked the Division of Health Care Finance and Policy to increase the minimum company contribution to 50 percent of an insurance premium to avoid the assessment. At the time, Representative Patricia Walrath and I, as co-chairs of the health care conference committee, wrote to the Administration to underscore that the legislative intent was not to go below the levels of employer-based insurance then in effect. However, leaders of business and taxpayer groups endorsed Romney’s proposed regulations setting a very low standard. Read more…