The board of the Connector, on which I serve, is facing some difficult decisions about enrollee premiums and cost-sharing for the Commonwealth Care (CommCare) program. State finances are tight, CommCare enrollment is larger than expected, and health care costs and premiums continue to rise much faster than overall inflation or wages. All of these factors are combining to put financial pressure on the CommCare program.
Let’s be clear about the problem: The financial challenges facing CommCare result from covering more people than projected at this point in the program’s development. Spending per person is on target. Of course, this doesn’t lessen the need to deal with the finances of the program. But it does suggest that the problem results from something good: getting more people insured.
As one approach to moderating rising program costs, the Connector board is considering asking Commonwealth Care members to pay more, in the form of larger copayments for those above the poverty level and bigger premium contributions for program enrollees who have incomes above 150% FPL. We don’t yet know how much these proposed changes would save for the state or how much they would cost enrollees, and the Connector board, and the public, need that information before any vote on any proposed changes.
Some increase in cost-sharing for Commonwealth Care enrollees might be necessary. But as we seek to deal with the financial challenges of the program, we need to make sure that we distribute the burden fairly. Here are a few thoughts on this equation:
The long-term solution to dealing with the challenges of the CommCare program (and other coverage aspects of Chapter 58) must be to find enduring approaches to moderating the growth of health care premiums and costs. The cost conversation is getting louder and stronger in Massachusetts. This is a welcome result of the “Coverage First” approach that is embedded in Chapter 58—first cover people, and then we will have better preconditions for talking seriously about costs. It’s hard to galvanize public and political resolve to really tackle the challenges of controlling costs without a clear benefit. Now we have one: sustaining and extending the coverage gains of Chapter 58.
While the cost conversation is beginning in earnest, it’s unlikely to produce any dramatic results in the short-term. So that leaves us with only three blunt instruments to deal with CommCare spending: cost-shifting, and increasing revenues, and tough negotiation/moral suasion.
Cost-shifting, in the form of larger copayments and premium contributions will create financial and access burdens for CommCare members, all of whom have low to moderate incomes. Lori Berry of the Lynn Community Health Center and Reverend Hurmon Hamilton of GBIO have recently written eloquently about these issues on this blog. Among the points they made is that if higher cost-sharing discourages CommCare members from getting necessary care, this approach is penny wise and pound foolish.
The Patrick administration has already proposed giving the CommCare program significant additional state funding. In the Governor’s budget, proposed spending for the Commonwealth Care program increases by $250 million in FY09 compared to projected spending for FY08. (The state and federal governments would share this additional cost.)
But other resources, including new resources, may be needed in the short-term if we want to avoid shifting significant costs onto CommCare members. According to press reports, the Senate President and Speaker may be willing to consider a cigarette tax increase to help fund health reform. But we should also talk about what other resources could be tapped through tough negotiation in the short-term to help deal with rising CommCare spending, while we work to make significant and sustainable progress on the cost control front.
For example, many folks, on this blog and elsewhere, have noted that providers and insurers are among the major “winners” in Chapter 58. The benefits for providers included significant Medicaid rate increases (designed to reduce cost-shifting to the private payers), changes to the methodology used to pay for free care under the Health Safety Net Trust Fund (aka the Uncompensated Care Pool), and the preservation of significant special payments that go to certain providers. For insurers, there have been hundreds of thousands of new members, both in the public CommCare and MassHealth programs, and also in the private market because of the individual mandate. These membership gains come during a period of robust overall profitability for many providers and health plans. For example, in 2006, the health plans based in Massachusetts had profits of more than $400 million and their combined net worth/reserves as of year-end 2006 exceeded $2.6 billion. We’ll soon see the financial results for 2007, when the health plans file their year-end financial reports with the Division of Insurance at the end of the month. Of course, the financial performance and position of individual organizations varies widely. There are striking disparities in performance across the hospitals and insurers—some doing very well and others are not. So any proposal to examine the other resources that might be available to help fund health reform in the short-term must be calibrated carefully to the circumstances of individual entities.
Some employers could also be asked to do more: for example, the fair share assessment, imposed on companies that do not insure their workers, has generated only $5 million, far, far less than was anticipated. Another idea was raised at the Connector’s last meeting by board member Celia Wcislo, who noted that the payer and provider assessments that help fund the uncompensated care pool/Health Safety Net Trust Fund haven’t risen for many years.
All of these potential sources of additional revenue deserve serious consideration. If we are going to even think about asking CommCare members, who are among the poorest and most vulnerable among us, to pay any more of the costs of health reform, we must also ask more from the many others who are benefiting from health reform.
After all, isn’t that what shared responsibility is all about?
Harvard School of Public Health