The vote by the Senate Finance Committee to report out a health care reform bill adds momentum to the drive toward national reform. There are now two bills in the Senate and three in the House that, over the coming months, Congress will work to craft, cobble and cram into a single piece of legislation. It is a challenging task with high stakes: an opportunity for major coverage expansions, insurance reforms, and other key features of these bills may not come again for years.

There is no question that the nation needs reform that expands meaningful health insurance coverage to the tens of millions of people who now go without. There is wide support for reform in Massachusetts, and a hope that the rest of the country can benefit in the way many people have benefited here. But Massachusetts is in a unique position among states, having been out front on this issue, and national reform will affect this state differently from others. Whatever the outcome in Washington, Massachusetts should be allowed to continue on its present path.

My colleagues and I at UMass have been tracking the many provisions of the national bills that would affect features of the Commonwealth’s 2006 health care reform initiative. Some elements of the bills are based directly on the Massachusetts model (all include an individual mandate and a Connector-like “Exchange,” for example) but differ in their details, setting up a potential conflict between federal and state laws. Some key issues worth following as the debate proceeds include:

–Massachusetts would not be eligible to receive most of the additional federal matching funds for Medicaid and CHIP that the Senate Finance bill makes available for newly covered populations because Massachusetts already covers these groups. The House bill would bring Massachusetts an additional $350 million to $450 million per year in federal match.

–The premium subsidies in all of the bills are less generous than in Massachusetts; additionally, all of the bills envision consumers at lower income levels than in Massachusetts having to contribute to premiums.

–The affordability standard in the two Senate bills, which determines whether or not someone is subject to the individual mandate, would result in fewer exemptions to the individual mandate than under current Massachusetts standards. That is, more Massachusetts residents might have to pay a penalty for not having health insurance.

–The Senate Finance version of the “Exchange” does not coordinate risk pooling or negotiate rates with insurers; the Connector plays a more active role now in the Massachusetts insurance market and acts in the interest of consumers.

–The Senate Finance bill includes a state opt-out provision (none of the other bills does), which would allow states to seek a waiver from federal requirements under certain conditions. As it is now written, it would be less helpful to states like Massachusetts that are ahead of the curve on policies the bill addresses because waivers would not be granted until 2015, two years after much of the law would become effective.

Other important issues potentially affecting Massachusetts include how the different bills would cover low-income children, employer responsibilities for covering or financing coverage for employees, a proposed tax on higher-cost health plans, different approaches to individual and small group rate regulation, and changes in provider payments.

There is a lot of promise to be realized in the national reform discussions that are now taking place. There is also a lot that Massachusetts has accomplished over the past 3-plus years and would want to preserve or improve. These goals need not be mutually exclusive.

McAllen had the second highest spending per Medicare beneficiary in the country in 2006 – $14,946, behind only Miami. Gawande uses data to dismiss explanations for the excessive spending offered by area physicians – an unhealthy population, better services, the threat of malpractice suits – and points out that in El Paso, a city with similar demographics and public health statistics, spending is half of what it is in McAllen. He argues (and several of the doctors he speaks with agree) that McAllen’s cost disparity is largely the result of a culture of medical practice that overuses intensive, expensive technologies and services.

Dartmouth researchers and others have compellingly argued that, in medicine, more is not necessarily better. Gawande cites the example of Rochester, Minnesota, home of the Mayo Clinic, which delivers excellent care for about $8,000 per Medicare patient less than McAllen. The difference, he says, is that the Mayo model is structured to create incentives for physicians to coordinate their care in the interest of patients, rather than to deliver the maximum number of services. In contrast, Gawande discovers a culture in McAllen that views medicine as a revenue generator. This is the essence of what Gawande calls the “battle for the soul of American medicine… the damning question we have to ask is whether the doctor is set up to meet the needs of the patient, first and foremost, or to maximize revenue.”

One striking feature of Gawande’s conversations with doctors and administrators in McAllen was that none of them were aware of how much higher their health care spending was than similar communities’, let alone what practices were driving that variation. This argues for the basic need for information, on spending and best practices, being easily and routinely available to people making decisions about health services that, in the aggregate, shape the practice patterns of a community. Ultimately, Gawande argues that we need delivery and payment systems that encourage the coordination of care, focus on quality and accountability, and discourage overuse, underuse and profiteering. This will go a long way to determining – in Massachusetts and the nation – whether we can meet the challenge of controlling costs, in order to sustain the improvements we want in coverage, access and quality.

Robert Seifert is a Senior Associate at the Center for Health Law and Economics, University of Massachusetts Medical School

Our analysis, being released today by the Blue Cross Blue Shield of Massachusetts Foundation, suggests that it is, at least at this early stage of reform. We took a comprehensive look at who was paying the premiums and other costs of private and public health insurance among employers, consumers, and government in 2005, the year before the law, and in 2007, the first full year after. We also looked at the distribution of spending on uncovered services, since an explicit goal of reform was to see these payments reduced as coverage increased.

Overall, we found that the shares of spending on coverage and uncovered services remained essentially the same between 2005 and 2007: employers and union health plans accounted for about 45 or 46 percent of total spending, government contributed about 30 percent, and individuals the remaining one-quarter. Embedded in these overall findings were some interesting dynamics. For example, the government’s share of spending on coverage increased slightly faster than the other two sectors’, mainly because of the introduction of Commonwealth Care. This was offset, however, by the rapid decline in spending for uncovered services the government had been making through the Uncompensated Care Pool (now the Health Safety Net) and supplemental payments to hospitals. This shift, of course, was an important goal of the reform law.

We consider this analysis of shared responsibility in the first full year of reform to be a baseline. The overall picture bears monitoring as reform continues to unfold and as policy makers focus on sustaining and expanding initial coverage gains, while taking on the challenge of controlling the increasing cost of that coverage.

Robert Seifert and Paul Swoboda are Senior Associates at the Center for Health Law and Economics, University of Massachusetts Medical School

This, of course, costs money ¬– money that is scarce in the Commonwealth, as the Governor and Legislature wrestle with outsized budget deficits. But help may be coming from the federal government. The American Recovery and Reinvestment Act, the economic stimulus package supported by President Obama and recently reported out by the House Appropriations Committee, contains a number of provisions that will help Massachusetts residents maintain health coverage, and help the States meet the increased demand for public programs. The bill includes:

• An increase of 4.9 percentage points in the federal matching rate for State Medicaid expenditures through the end of 2010. In Massachusetts, this means the federal share of spending for Medicaid and Commonwealth Care would increase from 50 to 54.9 percent, with a corresponding reduction in the State contribution. This provision alone would be worth $2.6 billion to Massachusetts.

• The bill offers states the option of extending Medicaid benefits to people who have been laid off and are receiving unemployment benefits or who have exhausted them; are receiving food stamps and are not otherwise eligible for Medicaid; or are in families with income below 200 percent of the federal poverty level. The federal government would pay the entire cost of Medicaid coverage for these populations through the end of 2010. Though Massachusetts already covers many people in these categories through MassHealth and the Medical Security Program, it would presumably be able to take advantage of the enhanced federal contribution to extend coverage to additional people who meet the bill’s criteria.

• The bill also provides assistance with COBRA coverage to people leaving jobs: a 65 percent premium subsidy for up to 12 months after becoming involuntarily unemployed, and continuing eligibility for COBRA coverage to workers age 55 and over, until they become eligible for Medicare or secure new employer-sponsored coverage.

The bill still has to work its way through Congress, and is encountering some opposition. Though the details may change, the intent is well-founded: that the federal government help states make Medicaid function as it is supposed to – as public support to people in need, the importance of which grows when economic fortunes decline.

Robert Seifert is a Senior Associate in the Center for Health Law and Economics, UMass Medical School

Even if the number of uninsured does not grow significantly, though, the number of underinsured might. A real phenomenon with no precise definition, “underinsurance” basically describes a circumstance in which health insurance does not adequately protect a person from prohibitive, potentially catastrophic medical expenses. One typical measure of underinsurance is whether a family’s out-of-pocket expenses exceed 10 percent of its income (or 5 percent for lower income families). The threat to access is that underinsured people are similar to the uninsured in their likelihood to forgo needed care, not fill a prescription, and have problems related to unpaid medical bills.

An Urban Institute analysis of the first years of health care reform in Massachusetts found that underinsurance declined in 2006-07, even as it was growing dramatically across the country. This is a promising finding for the Commonwealth; still, simple math suggests that if incomes decline in an economic downturn, the burden of out-of-pocket spending would grow, and access to care could suffer. A recent New York Times article documented a national decline in prescription drug use for the first time in at least a decade, linking it in part to “consumer belt-tightening.”

The cost of health care will continue to rise faster than other prices and wages, exacerbating the challenge. A national survey projected that combined premium contribution and out-of-pocket payments for workers will increase by 9 percent in 2009.

This environment underscores the close connection between access to care and the need to contain the growth in its cost. The state’s policy makers knew this already, as evidenced by Chapter 305 and other cost containment initiatives. In the face of government retrenchment and competing demands for scarce resources, dedication to this goal should continue to be a high priority.

Robert Seifert is a Senior Associate at the Center for Health Law and Economics, part of UMass Medical School’s Commonwealth Medicine division.

The report scores the U.S. health system on 37 indicators in five areas: healthy lives (measures of mortality, life expectancy and limitations on activity); quality (effectiveness, coordination, safety and patient-centeredness of care); access (coverage and affordability); efficiency (administrative and clinical waste, inappropriate care or setting, readmissions); and equity (racial and ethnic disparities across select measures). Overall, the U.S. scores a 65 compared with a benchmark score of 100 and shows no improvement since the Fund published its first scorecard in 2006. Across the specific indicators, only 35 percent of them showed improvement from the 2006 report to 2008, while scores relative to benchmarks fell for 41 percent of the measures. It’s a discouraging assessment. As the authors put it: “The U.S. health system continues to exhibit suboptimal performance relative to what is achievable and to the resources invested.”

How do we improve? One clue is found in the few measures where scores went up significantly from 2006 to 2008. All of these indicators have been a focus of concerted national initiatives supported by measurement and, in many cases, public reporting: controlling chronic disease such as diabetes and hypertension; hospital patients receiving recommended care for heart attack, heart failure and pneumonia; and hospital standardized mortality rates. The conclusion: “What receives attention gets improved.”

This is simple to the point of being obvious, and leads us to ask what other indicators are candidates for the attention treatment. A number of the national scorecard indicators have either declined substantially or are at a very low level, including (to name a few):
• Preventable mortality
• Hospital admissions and readmissions among nursing home residents
• Medical, medication or lab test errors
• Potential overuse or waste
• Use of emergency room for conditions that could have been treated in a doctor’s office

In Massachusetts, the list would be somewhat different (see, for example, data from the state scorecard the Commonwealth Fund published last year) but the principle is the same. Measure, report, and encourage organized improvement efforts. This is the philosophy underlying much of the work of the Health Care Quality and Cost Council, which is charged with setting and demonstrating progress toward achieving quality and cost goals for the Commonwealth. There is much to be gained by key health care players in Massachusetts examining the data together and coordinating behind a strategy to yield the maximum increase in value for the Commonwealth’s people. Not only will it improve lives; it will reduce costs in the bargain.

Robert Seifert is a Senior Associate in the Center for Health Law and Economics, Commonwealth Medicine, University of Massachusetts Medical School

What is the long view? Can Massachusetts reach and sustain its goal as one of a very few individual states that have enacted broad coverage reforms without national reform soon to follow? And what is the state’s role, as a “laboratory of democracy,” in bringing about national reform? Two contrasting articles in the current issue of Health Affairs examine the limits and promise of state experimentation in contributing to a comprehensive national solution, and are worth our attention.

First, Henry Aaron and Stuart Butler argue that bold state experiments can be a catalyst for action at the national level, which has been otherwise stalled at an ideological impasse for years. They propose that the federal government set goals for coverage and then give states the flexibility needed for innovation through a “legislative waiver” process. They submit that success in several states would “transform the national debate,” thought they do not offer an argument for how that debate would necessarily transform national policy.

Following Aaron and Butler, Alan Weil takes issue with the notion of states as laboratories. He notes that the evaluation of state experiments (even Medicaid’s Section 1115 “research and demonstration” waivers) is limited or non-existent, and the diffusion of learning from policy innovations is slow and unsystematic. He proposes a much greater emphasis on evaluation of state initiatives and changes in federal rules and financing that would make states much more effective as instruments of national learning.

Aaron and Butler and Weil agree that, for states to inform national reform, there must be a national commitment to universal coverage, and the flexibility and knowledge transfer to allow true experimentation. Weil has the last word on the subject for now: “In the absence of federal action, states will lead, and states will accomplish as much as they can, given the constraints they face… But piecemeal state action will not add up to what the nation needs.”

Robert Seifert is a Senior Associate in the Center for Health Law and Economics, Commonwealth Medicine, University of Massachusetts Medical School

There’s much food for thought here. The speakers’ presentations will be available at the Mass. Health Council’s website within the week, and more information about this work is available through the links here. A few common themes were apparent in all of these presentations:

• Though the conference was billed as focusing on affordability, the presentations told stories of successful efforts to improve the quality of care delivered to patients in a particular system. To be sure, the efforts appear to have realized significant cost savings, but it was done through investments in transforming entire systems for the benefit of patients, rather than with a single-minded (or even a primary) focus on finances.

• Many, if not all, of the presenters emphasized the importance of changing the culture of an organization, not just the technical processes it employs, to effect system improvements. This implies a long-term, ongoing process, with strong leadership and participation at all levels of an organization. There is no quick fix for real cost containment.

• Successful transformations are characterized by recognition of the need of all actors to contribute to a common good, perhaps at the sacrifice of some level of individual gain. Meredith Rosenthal of the Harvard School of Public Health, who closed the conference with a summary of the day, pointed out that this sense of a “collective will” was developed in the Massachusetts effort to reform coverage two years ago. She noted that such a sense may be more difficult to achieve in addressing costs, and asked: what will motivate key parties to give something up in order to gain affordability for the system?

A good question.

Robert Seifert
Center for Health Law and Economics, University of Massachusetts Medical School

This new research reinforces a larger body of work documenting the inefficient overuse of certain services and calling for better alignment of incentives and local delivery system accountability for the cost and quality of care. (I’ve written about some of Fisher’s contributions before here.)

Cost control solutions such as increasing copayments in order to slow premium growth, as the Connector Authority is now considering, address short-term fiscal demands but are unlikely to have a great effect on costs and may hinder access. Taking on variation of the sort reported by Baker et al. might produce substantial rewards in both slowed costs and improved quality, but would challenge the status quo and, potentially, the status of some major health care players. (Blue Cross has taken a step in this direction with its recent contracting plan, but its voluntary nature will limit its reach, and it is only one payer, albeit an important one.) The challenge is this: can we contain the growth of health care spending in Massachusetts to the degree needed without a fundamental restructuring of the delivery system and the incentives that drive it? And what institutions will move us in the direction we need to go?

Robert Seifert is a Senior Associate in the Center for Health Law and Economics at UMass Medical School’s Commonwealth Medicine, and is a member of the Massachusetts Health Care Quality and Cost Council.

Proton beams created by particle accelerators are more precise than the x-rays typically used in radiation therapy, according to the article, and are therefore particularly valuable in treating tumors in the eye, brain, neck and spine, and for treating children. Ideally, the health care system would supply enough of this advanced technology to treat all cases where there is a clinical advantage in doing so, but not much more. Unfortunately, there are few mechanisms for ensuring optimal supply. The Times article states that much of the use of the five proton centers operating today is for treating prostate cancer, a use which, according to two radiation oncologists interviewed, is no more effective yet much more expensive than the latest X-ray technology.

The article reports that a dozen more proton therapy centers are being developed, spurred by market forces that include profit-seeking firms and local and state governments promoting medical tourism. Proton centers can cost more than $100 million to build, so it is reasonable to think that, once built, there is tremendous pressure to keep them busy. Medicare pays about $50,000 for proton treatment of prostate cancer, about twice what it pays for radiation therapy using X-rays. In short, proton therapy is, according to a companion article, a potentially very lucrative service. But someone’s lucre is someone else’s cost.

I am singularly unqualified to comment on the medical benefits of proton beam therapy and happily accept the view of experts who see it as a great step forward in the treatment of some cancers. As an informed layperson with a responsibility to consider how to slow the growth of health care spending in Massachusetts, however, I have questions and concerns. My main concern is about the overuse of a “supply-sensitive service,” as described by Dr. Elliot Fisher, to whom I referred in a previous post. To guard against costly oversupply, we must ask: in what cases is this treatment effective, relative to alternatives? What is the cost of the incremental effectiveness? How much investment in new proton therapy capacity is clinically worthwhile? When we have this evidence, how can it best be applied to guide the system toward optimal supply?

The example of the proton accelerators is but one of many that cry out for reasoned analysis in order to allocate resources in the public interest. This is especially critical now in Massachusetts, where the future affordability of coverage expansions depends on the adoption of bold strategies – in the public and private sectors – to bring spending increases under control. The Commonwealth Fund’s Commission on a High Performance Health System recommends as one of its 15 “Options for Achieving Savings and Improving Value in U.S. Health Spending” the creation of a “Center for Medical Effectiveness and Health Care Decision-Making,” which seems to me one logical approach.

Whatever the approach, though, as citizens and representatives of institutions with a stake in the continued availability and affordability of our health care, we must ask these questions and begin to answer them with more rigor than ever before. And we must commit to acting on the answers.

Robert Seifert is a Senior Associate in the Center for Health Law and Economics at UMass Medical School’s Commonwealth Medicine, and is a member of the Massachusetts Health Care Quality and Cost Council.