The Future Of Mass. Health Reform, And Will We Need Insurers?

In case you missed it, here are three nuggets of interest from today's forum on the future of health care cost containment in Massachusetts. It was sponsored by the Blue Cross Blue Shield of Massachusetts Foundation, whose head, Sarah Iselin, displayed peerless sagacity today when she referred to the moderator, WBUR's Martha Bebinger, as a "treasure."

But enough of this fundraising-week self-promotion. My nuggets: First, Tufts Health Plan chief Jim Roosevelt offered a nicely ringing assessment of just how big a health care experiment is beginning in Massachusetts, now that it is entering the cost-cutting phase of reform; The new reform law, passed this summer, has so many elements in it that it can be hard to sum up, but he does it this way:
[module align="right" width="half" type="pull-quote"]'We are the first state ever to set a total medical-expenditure-growth goal that applies to every aspect of the health system.'[/module]'
"The big deal in the law is that we are the first state ever to set a total medical-expenditure-growth goal that applies to every aspect of the health system — and notice I say health, not even health care — in the commonwealth, and that is going to create a dynamic, a discussion and really an imperative that goes beyond anything not just we've experienced before but I think anyone has experienced in the American system."

Second, Martha asked Dolores Mitchell, head of the Group Insurance Commission that oversees insurance for state and municipal workers, about her recent notice to insurers who want to contract with the GIC, telling them that by 2016, she expects no increase at all in premiums. How, Martha asked, might they get there?

Dolores Mitchell replied that the new health cost measure provides not just a mandate but an actual law to hold down prices and tighten belts. "And yes, we are going to push that envelope a little faster and a little harder than we absolutely have to, but I'm a great believer in seizing the moment, and I think the climate is right." If you don't seize the moment, she said, "it goes right past you."

Which leads us to a related third nugget, stemming from an audience question. Josh Archambault of the Pioneer Institue asked: Does the new health-cost law allow for direct contracting between public programs — such as MassHealth and the Group Insurance Commission — and an Accountable Care Organization, thereby cutting out the insurance company?

At that, my ears pricked up. It's a theme that has sounded repeatedly as health reform has encouraged hospitals and doctors to "take on risk," putting themselves on budgets and taking the risk of financial gains or losses depending on how much their patients' health care actually turns out to cost. Doesn't that sound sort of, like, um, a health insurance company? And if doctors and hospitals start doing that, what are health insurance companies for?

[module align="left" width="half" type="pull-quote"]'The red-line distinction between health plans ad providers will become less distinct.'[/module]

First, the answer to Josh Archambault's question. Dr. JudyAnn Bigby, the state's secretary of health and human services, replied that "Yes, I think that is a possibility as providers become more integrated, they take on risk, and as the Division of Insurance works to define what a risk-taking provider is, I hope that we’ll see different ranges of that. We’ve already got providers and health plans working together in several instances in the state. And so I think that the red-line distinction between health plans ad providers will become less distinct, and it is possible that providers could be contracting directly.

But I will add that there is an incredible role that we have to acknowledge that health plans play. As we emerge from this transformation that we're going through, there's no reason to reproduce the infrastructure, data-gathering, data-recording and other tools that are embedded in health plans that we need in order to make this next stage of reform successful."

Dolores Mitchell, pithy as ever, responded that "my first preference is not to be purchasing directly from providers if for no other reason than out of parsimony." As a small agency in a sea of providers, she said, "the mechanics of it strike me as kind of terrifying."

But she would say, she added, "to the health plans that are about to bid on our business: You should take this as a challenge to demonstrate your ability to make this work, because if you don't, you'll leave us with very little option except to go to the providers and I'd rather not do that." In other words, she said, "I would say now's the time to show what you can do."

I asked her to clarify a bit in the Youtube video above. She was not asking health insurers to justify their very existence, she said; they offer clearly valuable services. Judging by the broad popular sentiment against health insurers, however, I suspect many people question their reason for being all the time...

After the session, I asked Josh Archambault why he had posed that question, and he e-mailed:

1. This provision favors large provider groups that can afford to take on risk and puts smaller groups at a disadvantage, which will lead to even greater market-consolidation. Given the AG’s work on this front in her reports, I am not sure greater provider power is the policy goal we set out to achieve. However, Chapter 224 is leading us in that direction.

2. This would dramatically change the role of an insurer. They would need to develop a new business model to stay afloat. It will probably mean layoffs in the short-run.

Readers, thoughts? Massachusetts has some of the highest-rated health insurers around, but are they soon going to need to change radically to survive?