Massachusetts, home to the model for President Obama’s national health care law and the controversial Commonwealth Connector, is looking for its next step in health care regulation—imposition of more regulations and price controls, announced by Governor Deval Patrick (D).
“Massachusetts led the nation on health care reform and is poised to lead again on health care cost containment,” said Patrick in a press release issued by his office on February 17th. “Our next major achievement in this arena will be controlling costs while ensuring that the people of Massachusetts continue to receive world-class care.”
According to Joshua Archambault, program manager for health care at the Boston-based Pioneer Institute, Patrick’s proposed steps to control costs involve further expansion of the bureaucracy and remain light on details of implementation.
“The bill leaves many details to be desired. The lack of clarity in implementation is worrisome. The governor seems to have felt the need to put a proposal on the table to see what happens,” Archambault said.
‘Makes Us Very Nervous’
Patrick’s legislation includes several components, mostly focused on modifying the fee-for-service payment system. The bill would change incentives in the current system by creating an infrastructure for alternative payment methods and innovations. It provides standard criteria for Accountable Care Organizations (ACOs) and certification and financial oversight requirements for them.
In addition, the plan is intended to encourage further health care innovations through pilot programs while reforming the medical malpractice system, and includes substantial reduction of fee-for-service payments by the end of 2015.
“There is very little detail on how it will actually be implemented and the carrots and the sticks for individuals,” Archambault said. “Furthermore, most of it still leaves health care to the regulatory process, which makes us very nervous.”
Big Regulatory Power Increase
The bill’s most controversial element, Archambault notes, is likely its empowerment of the Commissioner of Insurance to deny premium increases it believes to be excessive.
“We think that a lot of the powers given to the Commissioner of Insurance are ill-advised. Insurers recently sued when the Commissioner tried to force rate reduction, ultimately settling,” Archambault said.
“It is an unsustainable way to try to contain costs, and this bill sort of doubles down by trying to control costs with price settings that could pressure insurers to leave the state, which is not the preferred outcome when we are trying to encourage a market,” he added.
Patrick Defends State Approach
In testimony before Congress following the introduction of his legislation, Patrick defended his state’s approach to the House Committee on Energy and Commerce, where he was greeted by a challenge from Rep. Marsha Blackburn (R-TN).
“Looking forward to what you have to say about a failed program in your state, MassachusettsCare,” Blackburn said.
Patrick maintained Massachusetts’ health care policy is not a failure.
“We chose to try something, and we moved, and it worked,” Patrick said.
Since the passage of the Massachusetts reforms in 2006 under Republican Gov. Mitt Romney, health care costs in the state have continued to rise by an average of more than 10 percent annually, according to Brandeis University’s Massachusetts Health Policy Forum.
Small Businesses Facing Crunch
In addition to the budget challenges posed by these rising costs, Archambault maintains the Massachusetts program has also damaged the ability of small businesses to compete.
“One of the major concerns that we have for Massachusetts health reform is that the small business community has been left behind. The Massachusetts health care reform law was originally intended to assist small businesses with escalating insurance premiums, but its implementation has left them out of any meaningful reform,” Archambault said.
A recent paper from the Massachusetts-based Pioneer Institute highlighted data indicating small businesses are not being aided by the system.
“Leaving out small businesses makes little economic sense given that they constitute roughly 90 percent of businesses in Massachusetts and have historically driven job creation,” Archambault said. “Many of the policy proposals being implemented or discussed are shortsighted and anti-market and fail to address the many underlying issues of rising health care costs.”
Serious Look at Medical Malpractice?
Archambault claims the best aspect of Patrick’s proposed reform is the governor’s inclusion of medical malpractice reform.
“Medical malpractice reform has never gotten a lot of traction in the state, and the Pioneer Institute is thrilled to see that there is a proposal. We think the legislature should be more aggressive about it, but are glad that a discussion is taking place,” Archambault said. “State experimentation is great, and we should all look to see what works and what does not.”
Patrick’s bill prevents the inclusion of an apology to a patient as evidence in a trial and allows for a six-month period before malpractice suits can be filed, though it does not include a cap on noneconomic damages.
“The window for reforms set by the Commonwealth is fifteen years. So it is an issue that is being tackled over time. Yet the problem with escalation of health care prices is taking place now,” Archambault said. “It needs to be taken care of now to alleviate the pressure that is in the market, particularly for small businesses.”
Sarah McIntosh, Esq. ([email protected]) is a constitutional scholar writing from Lawrence, Kansas.
Fixing the Massachusetts Health Exchange, the Pioneer Institute: http://www.pioneerinstitute.org/pdf/110309_Fixing_Connector