"A Serious Test" by David F. Torchiana, MD

Over 430,000 Massachusetts residents are newly insured since the health reform legislation was signed into law in 2006. One mostly unnoticed aspect of this story is that the percentage of employers offering health coverage to their employees has been steady at around 70%, not declined, as was feared. In total, 159,000 of the newly insured have obtained coverage via their employer, far more than anyone anticipated. This is a major incremental contribution from business (estimated at as much as $750 million in new employer contributions) to the funding of health care in Massachusetts, money that potentially saves state government from paying additional subsidies for low-income workers. A catastrophic downturn in the economy will put this progress to a serious test. If Massachusetts health reform survives the next few years it should be able to survive anything.

There are a limited number of ways to cut outlays for health care. The simplest is to cut payment rates. That’s started already with the 9C cuts and will undoubtedly continue. This approach has limits as government rates are already below costs for many providers, leading to cost shifting into commercial premiums. The next lever is to make eligibility standards for state programs more restrictive and begin to drop patients from coverage. While this is technically feasible, it is virtually impossible to contemplate as a first line measure given all the recent focus on improving access and extending eligibility.

A final set of options centers on policy initiatives.

Reconsidering mandated benefits could lower cost but is politically charged. Setting up a center for review of clinical effectiveness to limit costly therapies and diagnostics that have marginal proven value makes sense but could be stifling to innovation and hard to do at a state level. Payment reform can theoretically create better incentives in the payment system for cost management but there are tradeoffs there as well.

Unfortunately, the area most at risk for further cuts is where short-term investments in infrastructure offer long-term cost management opportunities. Cutting support for expansion of primary care or for the extension of electronic health records are examples of short-term savings that could limit long-term gains.

One of the painful early lessons of health reform is that not only have expected reductions in emergency visits not materialized, the opposite may be happening. Formerly uninsured patients who now have coverage seem to be using ED’s more, not less. Part of this may be due to a shortage of primary care providers; but patients with primary care doctors use emergency rooms too. To reduce ED use more effort is needed to organize the care of the most complex chronically ill patients. Care coordination – to improve quality, eliminate duplication and reduce preventable ED visits and hospital stays – is essential. I’ve written here about the promising demonstration project we have underway for our most complex Medicare patients – it is possible to take better care of patients at less cost. Every provider organization needs to start tackling this problem and every payer needs to be thinking of ways to encourage better coordination of care.

We put off implementation of electronic systems, like electronic medical records and computerized provider order entry, at our peril. These tools are the cornerstones of care coordination, safer care and efficient use of resources and they need to be implemented. If we cannot hold onto the critical underpinnings needed to evolve to a more effective healthcare system, we will fail the test.

David F. Torchiana, MD
Massachusetts General Physicians Organization