Roberta Herman, MD, Chief Medical Officer and Interim Chief Operating Officer, Harvard Pilgrim Health Care frets about how much national health reform might cost the Commonwealth:

Throughout the many months of debate on Capitol Hill on how to achieve health care reform to meet the goals set forth by President Obama, it has not been surprising that many key elements have been drawn from the Massachusetts reform which has been decades in the making. Some of these elements (market reforms, guarantee issue, no preexisting conditions) have been in place for some time, while others (Exchange/Connector, individual mandate) are more recent achievements.

Based on this observation, one might reasonably expect that the legislation being deliberated in Congress would be aligned with, and supportive of, the reforms put in place by the Commonwealth – or at least be benign in impact. However, as the specifics of what is likely to be the final bill begin to emerge, a few very troubling truths are becoming increasingly clear:

Expanded coverage of the uninsured is very likely to come at the expense of increased federal budget deficits, from the balance sheets of small businesses already doing the right thing by providing health insurance to their employees, and from the pocketbooks of individuals already struggling to provide coverage for their families in an economic recession. Harvard Pilgrim’s CEO Bruce Bullen recently blogged on this topic on Let’s Talk Health Care.

The laws of economics tell us that new taxes and fees, the inevitable cost shift from an expanded public presence in the insurance market, a weak individual mandate, and the glaring absence of meaningful cost containment will all conspire to drive up premiums among the privately insured. Read more…

Roberta Herman, MD, Chief Medical Officer and Interim Chief Operating Officer at Harvard Pilgrim Health Care wants more employers to find tangible ways to improve the health of their workforce:

Wellness means different things to different people, but I think we can all agree it’s about improving one’s health and well-being, both physically and emotionally. Ultimately, wellness improvements can only happen if an individual takes action, but there’s a lot employers can do – working in partnership with their health plan – to encourage and support employee wellness. There is good reason to expect that support for wellness in the workplace will decrease traditional health care costs in the long-term; in the short-term, it can make a very positive impact on the “hidden costs” of workplace absenteeism, productivity, retention and morale.

Wellness programs are also a valuable – and sometimes overlooked – companion to cost-curbing, cost-sharing health plans, which continue to grow in popularity. In fact, wellness programs and decision support tools and other resources are vital to employees who – for whatever reason – want to behave more like health care consumers or want to focus on staying healthy.

So, what exactly can employers do to help? Read more…

Proponents of a “public” plan offering in the commercial marketplace frequently cite competition as the reason that such an option is needed. But would competition in fact be the result, or would reimbursement rates to providers be driven to lowest common denominator levels?

While the language used to sell the public plan references competitive forces, behind the rhetoric is a plan to fix provider reimbursement rates, preferably at Medicare levels. This is viewed by many in Congress as a significant cost savings initiative, and as a way to make private markets more efficient. It isn’t.

Most providers survive by being able to negotiate reasonable levels of reimbursement from private insurers. In Massachusetts Medicare typically pays providers on average 30% less than private insurers do. If the public plan fixes reimbursement rates at Medicare or some percentage of Medicare, the resulting premium will be low enough to induce a large shift of enrollment from private plans to the public plan. Is this competition? If we want government to fix reimbursement rates, let’s just say so.

Even if the public plan paid at fixed rates would its costs be lower in the end? Medicare’s experience would argue no. Read more…

Policymakers in Washington seem enamored of the idea of a public plan that would compete with private plans. There are a few problems with this idea however, beginning with the definition of “public”. Do we mean government designed, government funded, government administered, government regulated? No one knows. In fact, the real attraction of the public plan idea seems to be the prospect of lowering the cost of the product by paying health care providers Medicare rates, which are significantly lower on average than rates paid by private health plans.

What would happen if the federal government introduced a product that had benefits comparable to private plans and paid providers Medicare rates? Read more…

On February 19, the Division of Health Care Finance and Policy (DHCFP) will hold a public hearing on proposed regulations implementing an assessment on insurers to raise $33 million for the state’s general fund. The proposed regulations set a very low bar for determining how much insurers should keep in reserve in order to offer coverage safely to subscribers. This low bar should be concerning to everyone with a stake in maintaining the stability of our health care system.

All health insurers need reserves in order to pay claims in the event of an unexpected surge in health services, for example, a particularly bad flu outbreak. Some policymakers have appropriately asked whether reserves not needed for this purpose might be redirected for other public purposes. Read more…

In the coming months, the Obama Administration and the new Congress are expected to give serious consideration to reforming the nation’s health care system and expanding coverage. Senator Kennedy is expected to play a key role in this effort, giving us a unique opportunity to apply what we have learned from the Massachusetts health reform experience to the national debate. A bit of time worn advice for federal policymakers:

Don’t reinvent the wheel. States have considerable experience providing coverage to low-income populations through their Medicaid and SCHIP programs. These programs can be scaled to grow quickly. Massachusetts has been able to successfully reduce the number of uninsured by expanding its Medicaid and SCHIP programs in both the mid-1990’s and in the most recent health reform initiative. Sensible expansion of these programs should be a key building block for federal reform.

One size does not fit all. Uninsured individuals have coverage needs that differ based on age, income, and health status. The Massachusetts Connector model recognizes this: Commonwealth Care enrollees have very little point-of-service cost sharing and pay little or no premium; Commonwealth Choice enrollees can choose among three levels of coverage. Limiting coverage options, say, to the Federal Employees Health Benefit Plan could either depress enrollment or greatly increase subsidy costs.

Health care is local. Read more…

On September 9, the Connector Board will hold a public hearing on proposed changes to the standards – known as MCC — that define the minimum level of coverage that meets the requirements of the individual mandate.

Last year, the Connector Board set the initial standards for MCC, including a requirement that all Massachusetts residents have prescription drug coverage by January 1, 2009. This set a very high bar – so high in fact that it did not include health insurance plans already being purchased by hundreds of thousands of Massachusetts residents who will now pay more for coverage.

In considering additional MCC changes, the Connector Board should be careful not to raise the bar even higher. In particular, the Connector Board needs to make sure that innovative plans that can be used with Health Savings Accounts (HSAs) continue to meet the MCC standard and are not subject to burdensome administrative requirements. These plans meet enrollee coverage needs at a more affordable premium and allow them to save tax-free for future health care expenditures. In a recent survey conducted by the National Business Group on Health HSA plans were listed as the most popular offering going forward.

The Connector Board should also exercise restraint in defining the “broad range of services” that need to be included in an MCC-compliant plan. Read more…

It is an accepted fact that health reform will succeed only with focused attention on cost control. All stakeholders seem to agree that we will not be able to afford universal coverage unless health care costs are brought under control, and there are many worthwhile ideas about how best to meet this goal. Unfortunately, there are just as many, if not more, ideas that would increase costs.

When it comes to coverage, Massachusetts’ health insurers are heavily regulated. The rules were established with the best of intentions, but each new rule adds to the cost of coverage, either by requiring coverage for specified services or by making it more difficult for health plans to manage care.

The Health Reform Act recognized the impact of such requirements on the cost of coverage. It imposed, for instance, a moratorium on new mandated benefits until the Division of Health Care Finance and Policy completed a study of the cost impact of existing mandates. The Division has not yet released this important report.

Against this backdrop, it is surprising that some of health reform’s staunchest allies are supporting laws that would expand benefits further. Read more…

As we move into our third year of health reform, Massachusetts has surpassed expectations when it comes to covering the uninsured. At the same time, Massachusetts tops the nation in overall health care spending per capita, and our medical trend far exceeds the national average. We will not be successful long-term unless we begin to control health care spending. Thanks to the leadership of Senate President Murray, we have an opportunity for a serious conversation about cost control. Senate President Murray’s bill offers a multi-pronged approach to controlling costs and improving the effectiveness of our health care system. Her bill contains many good ideas, and I applaud her efforts.

The conversation about controlling costs must begin with greater public disclosure of health care cost and quality information. Public hearings involving both insurers and providers can and should serve as the forum to provide this information.

For a number of reasons, the Massachusetts Association of Health Plans and Harvard Pilgrim believe that the Health Care Quality and Cost Council should conduct these public hearings. Read more…

Hopes have been high for the Commonwealth Connector as an “exchange” through which individuals could purchase health insurance on a pre-tax basis, carriers could offer more affordable products, and consumer choices would be expanded. Although more individuals now purchase on a pre-tax basis and have more affordable options than were previously available to non-group subscribers, opportunities for more choice exist.

A few recent product and pricing decisions by the Connector have narrowed rather than created options. Instead of allowing individuals to make coverage choices, the Connector has mandated that all policies must include drug coverage. Instead of encouraging product diversity, the Connector has required that alternatives to their Bronze offerings must be tiered or select network products rather than low-cost HSA plans. Most recently, the Connector asked carriers simply to cap their rates.

While these policies may be understandable in isolation, taken together they narrow options and make it more difficult to meet affordability expectations, like the 5% cap on premium increases set by the Connector for July 2008. Read more…