AMHERST - Massachusetts' landmark health-care system enters its fourth year of existence this year, a program equally defined by the successes it has achieved and the challenges it faces in the future.
The state has posted some impressive results since health-reform legislation was enacted in 2006 by then-Gov. Mitt Romney. The law requires that all Massachusetts adults receive health insurance, provides free insurance to those residents making less than 150 percent of the federal poverty level and provides subsidies to residents making up to 300 percent of the federal poverty level.
The law also established the Health Connector, an independent authority, which helps provide subsidized coverage, as well as aid individuals with private insurance to find a private plan. In October 2006, Commonwealth Care, the state's program for low income individuals, was launched.
Today, nearly 97 percent of Massachusetts residents have some form of health insurance. Bay State employers are far more likely to offer their employees insurance than their national counterparts, and the number of individuals reporting to have received a high quality of care increased in the years following reform.
Yet those gains remain fragile in 2010.
Health-care costs have become an increasing liability on the state's balance sheet, threatening the commonwealth's ability to pay for the programs that provide medical coverage. Public health plans pay hospitals less than the cost of doing business and medical inflation continues to skyrocket. Health-care premiums have grown at a stronger clip here in Massachusetts than they did nationally since 2006.
Lagging in western Mass.
Those problems have been exacerbated in western Massachusetts, where access to care has lagged behind the rest of the state. The Blue Cross Blue Shield of Massachusetts Foundation, an insurance company-affiliated think tank, reckons that residents in the western part of the state have more difficulty finding providers who accept their insurance and are more likely than their eastern neighbors to visit the emergency room because they couldn't get a doctor's appointment.
The mixture of success and challenges has left policymakers, providers and patients in a bind. Few want to drop the state's expanded coverage, but nearly all say that cost curtailment must be addressed if the system is to be preserved.
Amy Lischko, an assistant professor of medicine at Tufts University and a fellow at the conservative Pioneer Institute in Boston, figures expanding coverage was the easy part of the health-care equation.
"The argument that was made pretty persuasively here was to get everyone in the system first," Lischko said. "You establish an individual mandate, people come in, and you provide subsidies to people who can't afford it. That was pretty easy. There were some partisan lines drawn to a certain extent, but those themes really resonated with all sides."
The cost containment piece is much more contentious, she said, "because the two ways to contain costs are to ration care, and provide less coverage, which consumers don't like, or to pay providers or someone else less. You are going to have all those groups lobbying against that."
Addressing the costs
Indeed, addressing health-care costs has proved a difficult task for state lawmakers.
State Sen. Stanley Rosenberg, D-Amherst, recalled when he first entered the Legislature in the late 1980s. An amendment was submitted as part of the budget, he said, that aimed to reduce administrative health-care costs by requiring all insurance companies to use the same form. The industry's powerful lobbying arm went to work and the measure was squashed, Rosenberg said.
These days, it's even tougher to contain costs, he said.
"It is extremely difficult, because there are federal regulations to contend with, insurance industry private sector control to deal with, there are an enormous amount of redundancies to deal with, there is defensive medicine, you have a litigious society, you have all of these factors that contribute to driving up costs," Rosenberg said. "You have to attack each of them separately, and you try to tackle each of them."
A detailed look at why the state's health-care premiums remain so high reveals a complicated picture. The state Division of Health Care Policy and Finance reports that health insurance premiums rose by an average of 3.9 percent in Massachusetts between 1996 and 2000, while at the national level they grew by 7.4 percent annually over the same period.
That changed after 2000. Massachusetts premiums increased by an average of 7.5 percent each year between 2000 and 2008, while national premiums rose by 6.5 percent annually.
An expensive state
Lischko said health insurance has traditionally been more expensive in the Bay State.
"The health-care providers here are more expensive," Lischko said, noting the large number of research hospitals in the commonwealth. "We pay doctors and hospitals more than other places."
Craig Melin, president and CEO of Cooley Dickinson Hospital in Northampton, said a fee-for-service system, in which doctors are paid for each treatment or test they administer, is primarily to blame for the sharp rise in the cost of health care. That system is made even worse by the sour economy, he said.
State revenue has fallen as a result of the economic crisis, leading the state to reduce reimbursements to hospitals for patients covered by public plans such as MassHealth, the state's Medicaid program and Commonwealth Care, Melin said. Those reimbursement rates are often far lower than the cost of providing care, Melin said, leading hospitals to try to boost the number of patients seen and the number of treatments administered.
Contrary to mission
Yet the hospital president noted that boosting the volume of patients at the hospital actually runs contrary to the whole notion of providing health care. Worse, he said, programs designed to keep people out of the hospital, such as diabetes education, are often the first things to be cut as hospitals try to slash overhead.
"There is pressure on us to cut out the very things that keep people healthy," Melin said, noting his hospital spends $5 million, or 3 percent of its annual budget, on programs designed to prevent serious medical conditions. "The object should be to keep people out of the hospital."
Rather than the fee-for-service system, Melin said he would prefer a global payment system, in which doctors were paid a fixed sum per patient over a set period of time. That amount would be determined by the health of an individual, he said, with the sick paying more than the healthy.
On the subject of rising health-care costs, Melin said he did not think such increases were attributable to the commonwealth's health reforms. In fact, he said, he favored the Massachusetts model.
"I am really arguing for broad coverage, which is in fact the Massachusetts way," Melin said. "People are healthier if they have their own doctor, and the cost per person over time is likely to be lower."
Chapter 58
Many advocates of Chapter 58, the official name for the state's health reform initiative, said the initial goal was to expand coverage first and address the cost issue later.
"Chapter 58 was designed to improve access to coverage," said Lindsey Tucker, the health reform policy manager at Health Care for All Massachusetts, an advocacy group. "By that benchmark, it has been a success. We have covered over 430,000 people across the state and dropped down to around 2.5 percent (uninsured), which puts us well ahead of any other state in the country."
"Chapter 58 was Phase 1, and it was all about access," she continued. "It began to look at quality and cost, and now that is continuing."
Meg Kroeplin, executive director of the Amherst-based Community Partners, sounded a similar note.
"The most vulnerable residents of our state, who had been told their whole adult life they couldn't go to the doctor for years, can now go to the doctor," Kroeplin said. "I think that's amazing."
Improvements can still be made to the system, Kroeplin said, noting that insurance forms could be made much simpler, and information-sharing among state agencies could cut down on bureaucratic red tape.
Rural challenge
Providing care to rural communities in western Massachusetts also presents its own set of unique challenges, Kroeplin said.
"Rural areas all over the country are experiencing a shortage of health care. It's a national emergency and not unique to us," she said. "In rural areas, you have to be willing to make less, work harder and be more isolated."
A report by the Blue Cross Blue Shield Foundation would seem to confirm that notion. The group found that 27 percent of residents living in the western part of the state reported having difficulty finding care because a provider did not accept their type of insurance or was not accepting new patients. That stood in contrast to the area just outside of Boston, where only 8.4 percent of residents reported a similar problem, the survey reported.
Nine percent of western Massachusetts residents reported visiting the emergency room because of an inability to get a doctor's appointment, compared to 6.4 percent in the Metro West region, the survey found.
Kroeplin said the problem was tied to the reimbursement rates doctors receive from public plans. "The reimbursement rates for Medicaid need to get better, and until they get better, doctors are not going to want to cover MassHealth, because they don't cover the cost of business," Kroeplin.
While reimbursement rates seemed an issue for many, the quality of care received by individuals as a result of the reforms was less contentious.
Quality of care
Shanna Shulman, director of policy research for the Blue Cross Blue Shield Foundation, said the quality of care patients are receiving as a result of the reforms appear to be high. She cited a New England Journal of Medicine survey of 2,000 physicians in the state, in which 37 percent of the doctors surveyed said the law had helped improve the quality of care they deliver. Nearly 35 percent said it had little impact, 12 percent said the law was hurting, and 17 percent didn't answer.
Patients, too, have reported a high quality of care, Shulman said. The number of residents reporting they received good or excellent care was 70 percent in 2007, up from 63 percent prior to 2006, she said. Lower-income individuals, most likely to use the programs implemented by the reforms, saw a similar increase. There, the number of people satisfied with care rose from 53 percent prior to the reforms to 58 percent in 2008, Shulman said.
The reforms have provided more than 400,000 new people with coverage, Shulman said.
"More coverage means higher quality of care," she said.
The delivery of that care is expensive, however. Health-care spending on MassHealth and other programs accounts for $10.3 billion in FY 2010, according to the Massachusetts Budget and Policy Center, a think tank. That figure represents nearly 38 percent of the commonwealth's $26.9 billion budget. The think tank reports that under Gov. Deval Patrick's proposed budget for FY 2011, spending on MassHealth and other programs will rise 9 percent above the current fiscal year's levels.
Such increases are occurring even as the state faces a sharp drop in revenue. The commonwealth is facing an estimated $3 billion deficit in FY 2011, and to help close the gap Patrick is proposing to further reduce hospital reimbursement rates and eliminate dental coverage for those who are currently receive it under MassHealth.
The Legislature formed the Special Committee on Health Care Payment Reform last year. The committee released a series or recommendations in July and called for the fee-for-service system to be replaced with a global payment system of the sort advocated by Melin. The Legislature has yet to act on any of the committee's recommendations.
Rosenberg, the state senator, said the state's health care programs are worth the budgetary increases.
"We would lose half a billion dollars a year (if the programs were stopped)," Rosenberg said, noting that the federal government pays for a large portion of the state's health care programs. "We'd have hundreds of thousands of people flooding our emergency rooms, which would leave people with insurance paying more. Those who have insurance subsidize those who don't."
"We're kind of locked into it morally and financially," he said.