Lessons from the Massachusetts healthcare experiment

BOSTON AND WASHINGTON —  Three years ago, Massachusetts passed the most sweeping healthcare bill in the country, adopting a plan that closely resembles the proposals being considered by Congress. It is a plan that now offers powerful lessons for the whole nation.

The state’s system, like the proposals moving toward votes in the House and Senate, focused on three goals: making medical insurance almost universal, fostering competition through a regulated insurance exchange, and helping low-income workers pay for coverage.

Today, Massachusetts leads the nation with 96% of its residents covered by insurance -- an even larger share than some of the plans before Congress would cover. The employer-based insurance system remains intact despite fears that the state’s healthcare overhaul might cause companies to pull back.

And at least some Massachusetts residents who buy coverage are paying less.

But insurance premiums for most residents are going up, not down. Many middle-class people who had insurance before the overhaul see little change -- except that they’re spending more. They’re seeing little or no difference in the quality of their care.

In crafting their plan, Massachusetts lawmakers ducked the tough issues of cost control, including how much public and private insurers would pay physicians and hospitals. So the state still has some of the most expensive medical care in the U.S. And costs are rising faster than the national average. Far faster than wages too.

“What we did was health insurance reform, not healthcare reform,” said Massachusetts state Sen. James Eldridge, a Democrat who regrets having voted for the bill.

Critics of the healthcare overhaul bill that passed the Senate Finance Committee this week say that it too doesn’t do enough to control costs.

Robert Laszewski, a healthcare policy analyst and former insurance company executive, calls the finance panel’s bill “Massachusetts all over again.” Ralph Neas, of the National Coalition on Health Care, says that the few cost provisions focus too much on public programs, especially Medicare, and not enough on reducing what doctors, insurers and hospitals charge customers who get their coverage from the private market.

“The long-term cost-control provisions are few, and they do not have adequate enforcement mechanisms,” Neas said.

Other experts say there’s still time to address the cost issue more forcefully as Democratic leaders hammer out the final Senate bill this month.

“At the national level, there has not been an explicit decision to postpone cost containment,” said Paul Ginsburg, who heads the nonpartisan Center for Studying Health System Change. “There’s a lot of belief that we should deal with it now.”

Among those who have trouble seeing the benefits of what Massachusetts did are 62-year-old Joan Young and her husband, David, who live in a suburb west of Boston. They pay more than $1,100 monthly for insurance, plus a $1,000 deductible each before coverage kicks in.

Their insurer, Blue Cross Blue Shield, like the others in the state, says it expects to raise the price of premiums by 10% next year.

“It’s not helping people like us,” Young says. “They forget about the middle class.”

Because she has serious medical issues, the Youngs encountered another problem as well:

Massachusetts, like Congress and President Obama, shied away from anything that might interfere with the relationship between consumers and their existing healthcare insurance. That left the Youngs free to choose the coverage they wanted. But it also left them responsible for thousands of dollars in medical expenses not covered by their plan.

Now that these and other problems have surfaced, the Legislature is going back and trying again, this time fashioning policies to govern insurers’ profits and doctors’ pay -- entering a second phase of healthcare reform that many analysts think also lies ahead at the national level.

A special state commission established to tackle the cost problem said that the stakes were high. Continued cost growth, it said in a report this summer, “threatens the viability” of the healthcare initiative.

The Massachusetts overhaul has made things better for the 430,000 residents who previously had no insurance. The state mandated coverage for almost everyone, as Congress is moving to do nationally. And as with the plans before Congress, it provided subsidies to help low-income individuals and families pay their premiums.

Individuals who make less than $32,496 a year, and low- to moderate-income families -- those making as much as $66,155 a year for a family of four, for example -- are eligible to buy state-subsidized plans. That has made buying a policy possible for many -- 165,000 people are covered under such plans.

“The subsidized plans, in terms of access for low-income people, have been a godsend, really,” said Carol Pryor, policy director of the Access Project in Boston.

The state also created a regulated insurance exchange to help consumers compare and buy policies.

For some in the individual market who don’t qualify for government assistance, the regulated exchange has produced policies with premiums as much as 20% lower, the state says.

“If you are buying insurance on your own and you want the insurance, you’re in a much better position,” said Jon Kingsdale, executive director of the state’s insurance exchange, the Commonwealth Connector.

The price cuts have not been shared by all. Because consumers can still be rated by age, insurers are free to charge higher premiums to older consumers who may be more likely to incur substantial medical bills. A 55-year-old could pay almost as much as before.

Beyond what it has meant to particular individuals, the overall cost of the program has soared -- for the state and for individuals.

Whereas the subsidized plans cover only about 3% of the 5.4 million in the state who have health insurance, for instance, the subsidies are estimated to carry a price tag of $1.3 billion by 2011 -- double the 2007 cost.

One reason is that more residents applied for assistance than the state had projected. Also, Massachusetts has always had exceptionally high healthcare costs, and it still does -- in part because it has some of the most advanced and costly medical centers in the world.

At the same time, in 2008, yearly family premiums here averaged $13,788, the highest in the nation.

Then there is the problem of underinsurance -- coverage by budget-minded plans that have high deductibles and leave consumers with a much larger share of their medical bills than the more expensive plans.

Moira Rioux, 45, of Plymouth suffers from an immune deficiency that requires monthly treatments costing $6,560 each. She’s covered through her husband’s employer-based insurance, but the policy pays only 40% of the cost of her treatments.

Rioux now carries two policies -- her family plan and an individual plan that she bought through the government-regulated exchange. The second policy has helped, she said, but not enough.

“How am I going to manage these costs?” she asked. “It’s nice that everybody in Massachusetts has care at this point, but there’s still missing pieces to the puzzle.”

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