Gov. Deval Patrick is out with a plan to tackle a top priority — rising health care costs. Patrick wants the authority to decide how much our insurance premiums can rise every year. That, says the governor, is the stick.
"If the legislation I’ve filed feels like pressure on the market, good, good," he said Thursday. "That’s exactly what it’s intended to do."
The "carrot" is giving hospitals and doctors flexibility in deciding how they will lower costs and encouraging, but not forcing, everyone into larger, full-service health care organizations.
WBUR's Martha Bebinger joined Morning Edition Friday to report on reaction to the governor’s cost-control plan.
Bob Oakes: The governor calls this bill a compromise, and it does seem like a softer approach than one his aides outlined several weeks ago. What’s different here, and why?
Martha Bebinger: Let’s start with the why. In his speech, Patrick named a handful of business, hospital and insurance leaders, among others, who he says influenced the bill. This group did not want a lot of new regulation or a specific new payment formula that would apply to all doctors and hospitals.
For example, the coalition asked the governor not to require everyone to be working under a health care budget or global payment within five years and not to set the rates or prices they would be paid. And health providers are generally pleased that moving to a new payment system in this bill is voluntary, not mandatory, and it sets alternative payments, not global payments, as the goal. So there is more flexibility here than the Patrick administration may have originally imagined.
But Patrick does propose setting a cap on health insurance premium increases every year. He has the authority to do that for small business rates now, but would be able to do that for everyone under the bill. That looks like a "stick" that the hospitals and doctors don’t want him to have.
Yes, especially because the bill would give the state insurance commissioner the authority to look at what each insurer is paying a hospital when considering whether to approve or reject the latest insurance rates. Alice Coombs, president of the Massachusetts Medical Society, worries about having someone who doesn’t understand medicine decide what charges are reasonable.
"We have to be very careful about this notion of just looking at costs alone. So it’s cost and quality," Coombs said.
But Andrew Dreyfus, president and CEO of Blue Cross Blue Shield, says this pressure on doctors and hospitals will help lower rates.
"It gives us even greater clarity and force when we go to a hospital and say, 'The community cannot enjoy the kind of clarity that you’ve enjoyed in the past,' " Dreyfus said.
And then you have health policy experts, including Nancy Turnbull, an assistant dean at the Harvard School of Public Health, who say it’s great the governor is taking on this issue, but he’s got to enforce more specific changes if he really wants to lower health care costs.
"I think we have ample evidence over many, many years now that market forces have not been and will never be successful in controlling health care costs," Turnbull said.
There will be a lot of debate around how heavy-handed the state government should be in trying to control costs.
In filing this bill, Patrick reiterated his sense of urgency about controlling health care costs. What’s the evidence it will accomplish that goal?
The governor says that more-coordinated care, and paying doctors to do what’s best for the patient, will save money over time, but the evidence that we will see lower premiums in the next few years is a bit thin.
Take, for example, Atrius Health. They are a large, well-coordinated physicians' group and were among the first to sign onto a global payment contract that Blue Cross started offering a few years ago. Atrius CEO Gene Lindsey says the company is reducing costs but is using the savings in these first few years to retrain and reorganize what they do. But since it will take some time to show savings, Lindsey says the state has to move quickly.
"I’m not sure if we have five years without real damage to our total economy from health care costs. We’ve waited about as late as we can wait to get started," Lindsey said.
Senate President Therese Murray did say Thursday that this bill is a good conversation starter and that she expects to do something to change health care payments this year. On the House side, some members say this seems pretty ambitious. The focus in that chamber right now seems to be on a bill that would try to reduce health care costs for cities and towns, but not a system-wide change.
This program aired on February 18, 2011.