Let’s size up the unfolding MA conversation on health care cost control so far:
In January, Sen. Mark Montigny and Rep. Jim Marzilli filed comprehensive cost control legislation (S.1238; H2197.) – promoted by HCFA – which, among 17 proposals, would require the Division of Insurance (DoI) to hold public hearings whenever premiums increase by seven percent or more in the newly merged small/individual health insurance market. We propose allowing DoI to disallow unjustified increases.
In October, Sen. Pres. Therese Murray, in a speech to the Greater Boston Chamber of Commerce, announces the Senate will advance legislation to require DoI to hold public hearings for premium increases over seven percent, though without authority to deny rate increases. Word now is the Senate will unveil legislative proposals in January.
Last Monday, the MA Assn. of Health Plans, led by Harvard Pilgrim CEO Charlie Baker and Tufts CEO Jim Roosevelt, proposed their own list of 17 (where’d they get that number?) proposals to control costs. One of them would require the new Commonwealth Quality and Cost Council (QCC) to hold a public hearing every year on insurance premium increases, requiring not just insurers but providers as well to testify, and without any regulatory authority to deny or reduce any increases.
We applaud the interest of health plans in opening up dialogue, though we think their plan to hold hearings before the QCC is a dodge, and a way to avoid hearings before a body such as DoI with real regulatory clout. The QCC has two staff and more than enough on its plate already. And, by the way, Charlie Baker sits on the QCC. ‘Nuf said.
And last Tuesday, the Connector Board voted to press private insurers in the unsubsidized Commonwealth Choice set of plans to restrict premium increases for those products next year to no more than five percent. “We’ve got to do something about cost, and we’ve got to do it now,” Dolores Mitchell, a member of the connector board, said after yesterday’s meeting. (Click here for Globe summary.)
This is one of the unexpected benefits of Chapter 58 – the triggering of a robust conversation and proposals on controlling rising premiums. Two real focal points now – the Connector and Sen. Pres. Therese Murray.
The Connector is in a strong position to make its Commonwealth Choice suite of policies the focal point for conversation. Enrollment to date is far from robust – 16,000. But because CommChoice is so much in the public eye, along with the Connector, it’s in a strong position to drive a goodly part of the process.
Sen. Murray also has a lot to offer if she decides to push hard. We look forward to seeing her proposals in January. Still waiting for the House of Representatives and the Patrick Administration. We suspect the latter is preparing something substantial. The House may play this like they did health reform – let everyone else go first, and then use the big foot.
Game on, and that’s good.
John McDonough
The CEO’s of Tufts and Harvard Pilgrim eat and get paid well. It is almost criminal that their more affordable health care vehicles are beyond the reach of most folks “Making it in Massachusetts.” A healthy family policy, the kind the CEOs themselves might want, costs in excess of 4,000 -6,000 USD ($$$$). Certainly, through the profit streams of these Managed Care Organizations, lower cost policies could be written and funded in part by the very profitable companies themselves. Imagine these companies taking some X% of their profits and rolling it into a reduced cost premium.
Let’s do some math. If you are a family in Massachusetts, living in Greater Boston, trying to live in a “safe” area and can’t afford a home, your rent will probably be $1500-$1800 per month.
Let’s assume you are making 40K on a combined income (married) and have two kids. 18,000 dollars goes right out to rent. Another 5K to health care policy with Harvard Pilgrim (23K). A year of standing copays for some vital medicines for kids, wife and husband. 10-15$ time 4 time 12 (let’s just call it another $500/year). One car for the family–insurance $1200. Gas and other expensive for the same car–another 4K….food, paltry amounts of college tuition etc……..We’ve spent the income and the rent. The same type of unsettling, unhealthy living applies to those making combined incomes of 60K or 70K. Let’s be real. Health Care for All must include addressing rent, equal education, job flexibility and private contributions to health care.
Peter,
There is only one dominant system and only one dominant insurer. Better you should ask them.
As to what I would do about cost pressures, please see multiple posts on my blog and also comments on this one about Sen. Murray’s ideas, which I think are quite thoughtful.
But, I don’t think I understand your question. I was replying to the idea that the Connector could hold down rates in some manner that was not reflective of underlying costs.
PS John, Do you really think MAHP’s proposal having 17 points was anything other than pure coincidence? Come on…I doubt this was really a key component of HCFA’s framing and messaging on its legislation.
Paul, In response to John McDonough’s posting last week on the WBUR blog, I thought many of you argued that there is no “health reform dividend….” (i.e., no reduction in costs or at least reduced pressure on private payor costs because of enrolling hundreds of thousands of previously uninsured people into public programs). If that was true last week, why do you think this week that there would be any reverse impact (cost-shifting to employers and employees if the Connector holds tough with health plans for Commonwealth Care)?
The most important conversations going on right now about costs are occurring between dominant health plan and large provider systems over the contracts and payment terms for the next contract period. We can talk about all we like about quality improvement and it won’t matter much at all to costs if dominant hospital systems and big payers agree on generous payment terms. These will ripple through the entire health care system, both in absolute terms and in the precedent that will be set for other contracts with other health systems and with other payors.
The most significant isssue that needs to be addressed in cost control right now is what to do about dominant hospital systems (and their resultant control of large numbers of physicians), and their competition for physicians (which is causing bidding wars and driving up physician costs all over the state). I know you oppose regulation because of your DPU experience but what would you do, right now, to address cost pressures, if you were running the Connector or the Medicaid program?
Why does it make sense to restrict the insurers’ increases to five percent if the overall cost of care is increasing at a rate greater than that? Is your aim to cause a shifting of costs between the clients of those plans and the standard plans offered to businesses and their employees?
Delores has been “trying to do something about costs” and quality for the Group Insurance Commission for several years now. Has it worked for the GIC? If so, what has been learned from that that could be applied in this other sector? If not, why would you think you could, by fiat, declare that it should be so?
There are demographic reasons for health care cost increases. There are other reasons in MA, too, including a highly competitive environment for health care workers that drives up costs. And then there are underlying reasons having to do with overuse, underuse, misuse, and waste throughout the continuum of care. Several of us are working hard on this last one, but so far there is no evidence that we can offset the other factors and permit the overall increase in costs to drop to five percent, or even seven percent, in the next year.