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Health Care In Massachusetts Turns To Cost Control

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Transcript

RENEE MONTAGNE, HOST:

It's MORNING EDITION, from NPR News. I'm Renee Montagne.

STEVE INSKEEP, HOST:

And I'm Steve Inskeep. We're working to separate facts from rhetoric on some recent history. It's the 2006 health care law in Massachusetts.

MONTAGNE: That law, which includes a mandate to buy health insurance, is the biggest achievement of then-Governor Mitt Romney. As a presidential candidate, Romney has defended the law. He's also struggled to show how it differs from President Obama's health care law, which Romney and other Republicans attack.

INSKEEP: Beneath the rhetoric is the law's record. We heard yesterday that it's widely accepted in Massachusetts. But it left some work for Romney's successor on health care costs.

Here's NPR's Richard Knox.

RICHARD KNOX, BYLINE: Two out of three people in Massachusetts think the state's 2006 health law is a good thing. Among the other one-third are self-employed businessmen like Fred Definis. He sells parts for playground equipment.

FRED DEFINIS: I'm what's called a non-employer firm. That is, I am my only employee.

KNOX: Massachusetts has almost a half-million businesses like his. When Definis gets together with some of the others, the talk always turns to the soaring cost of health insurance.

DEFINIS: We go around the table and we say: What was your increase this year? And nobody's talking about 10 or 15 percent increases. We're always talking about 15 percent and up.

KNOX: To keep his premiums down, Definis bought a plan that didn't cover prescription drugs.

DEFINIS: Well, lo and behold, the next year the mandate for prescription drug coverage kicked in, and I was hit for another hundred-plus dollars a month to buy some coverage that I didn't really need or want.

KNOX: Massachusetts officials decided prescription drugs should be included under the new law, which was passed under Republican Governor Mitt Romney. But the law didn't do anything about the cost of coverage. It was already among the nation's highest.

When Democrat Deval Patrick took over the governor's office in 2007, he called together top insurers, hospital executives and doctors to talk about controlling costs.

GOVERNOR DEVAL PATRICK: I finally lost my patience, because they'd sit around the table and everyone would start their response the same way: Well, governor, they'd say, it's complicated.

KNOX: The insurers would point to the hospitals. The hospitals would point to the doctors. The doctors would say it's malpractice suits. Patrick says he got more and more fed up.

PATRICK: I understand it is complicated. But the point is we have to stop being defeated by that complexity.

KNOX: So, two years ago, the governor directed his insurance commissioner to turn down the latest round of premium increases because they were excessive. Not every state has this power. Insurance companies were outraged. But Andrew Dreyfuss of Massachusetts Blue Cross-Blue Shield says it was a turning point.

ANDREW DREYFUSS: Unquestionably, when the governor imposed caps on the premiums that we could charge small business and individuals, that was a pivotal point. And I think it sent a message to the entire health care and business community that we had to change.

KNOX: Since then, a lot's happened. Insurers tore up their contracts with hospitals that called for annual increases of eight and 10 percent and negotiated agreements that provide three, two, even zero percent increases. Blue Cross-Blue Shield, the state's largest insurer, has persuaded some of the state's biggest hospitals and thousands of doctors to accept a new kind of payment. Instead of getting paid every time they do something, which encourages them to provide more and more services, they're paid a fixed amount each month for each patient. They also have to show they're not cutting back on quality.

Dreyfuss says a third of the company's 2.8 million subscribers are now on these so-called global payment plans.

DREYFUSS: I'm pretty hopeful that most of the state will be on a global payment system within the next two to three years.

KNOX: Governor Patrick says the health insurance marketplace is changing.

PATRICK: We've got some more work to do here, but average premium increases were almost 17 percent two years ago. They are less than 2 percent right now.

KNOX: He says Massachusetts needs to pass some legislation to lock in these changes and go further: cut down on administrative costs, reform the malpractice system, and other steps.

The big idea you hear being talked about these days is to hold total health spending to a target tied to the state's overall economic growth.

PATRICK: What I want to assure, and why I think we need legislation, is that it's sustainable, that we don't continue to have increases above the rate of growth in the economy, so that over time, without a check on that, health care eats up everything else.

KNOX: Legislators are expected to come up with their own ways to do it this spring. But no one's talking about repealing the state's 2006 health law, not even Fred Definis, the businessman we met at the top of this story.

DEFINIS: I'm not sure that I necessarily want to see the law repealed. What I want to see is some balance on the cost side of the equation.

KNOX: If Massachusetts can do that, it might become a national model again.

Richard Knox, NPR News, Boston. Transcript provided by NPR, Copyright NPR.

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