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The Massachusetts Plan: What did they know, and when did they know it? by Eric Novack

Dateline, Boston…

According to an article in the Sunday,November 18th, 2007, Boston Globe, “(Massachusetts) the state could face a funding gap as large as $147 million by the end of the fiscal year, according to a state projection.”

2009 looks worse: … “Since insurers who participate in the subsidized program are expected to ask for significantly higher payments from the state”.But, government regulators are keeping up appearances: "It’s too early to make any departure from the health reform plan," said Leslie Kirwan, secretary of administration and finance and chairwoman of theCommonwealth Health Insurance Connector.”

“"It’s a good problem to have – people are getting insured and hopefully getting care," state Senator Richard T. Moore told the newspaper.

Yet somebody knew this was coming: according to a Washington Times opinion piece
from  November of 2006, “In an Aug. 17 [2006] filing to support general
obligation bonds, officials project that the new plan will increase
Massachusetts government health spending by $276.4 million in 2007.
That’s a $151 millionboost over what the public was told the plan would cost as recently as April [2006]”.Let’s
repeat that—‘suddenly’ there is an anticipated $147 million shortfall…
but, in August of 2006, someone wrote that the program would cost $151
million more than expected…So, the real question is: “who knew
and when did they know it?” And why was there not complete disclosure
to the public?  And the side question is: “what are they going to do
about it?”Here is a hint: “Boston Medical Center and Cambridge
Health Alliance negotiated a special deal in the health reform law that
guaranteed them $287 million a year through 2009 in fees and increased
Medicaidrates.

"That’s probably on the table,"” said State Senator Moore.

It is worth remembering Frederick Hayek here (from 1944’s The Road to Serfdom)- “

"But while the entrepreneurs may well see their
expectations borne out during a transition stage, it will not be long
before they find, as their German colleagues did, that they are no
longer masters but will in every respect have to be satisfied with
whatever power and emoluments the government will concede them."

Moore is also noted in the article to discuss controlling healthcare
costs… stay tuned—since there is little doubt that the ‘control’ will
be entirely in the hands of government and bureaucrats, and result in
the severe curtailing of your rights and my rights to make our own
health care choices without getting firstimplicit, and then explicit, permission…

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6 replies »

  1. Dr. Himmelstein–
    Thank you for taking time to respond to this post.
    While there is little doubt that we disagree on how and which health care reforms to implement, we do agree on much, as implied by your post.
    I do not blame Boston Medical Center for trying to secure funds to help cover the costs of caring for a lower socioeconomic group when compared to Mass General and others.
    But you make my point for me by stating that those who could best influence the process POLITICALLY get the benefits.
    This is inherent in any situation where we give government the power to appoint bureaucrats to have near complete control over which hospitals (and physicians) are allowed to exist by making money more or less available…
    Whoever the favored political group of the moment will benefit– so I would expect the debate to be ‘behind closed doors’ between the lobbyists for the different medical centers… the rights or interests of us as patients will barely be an afterthought.
    To repeat, better we invest our resources in limiting government power, which will have the effect of limiting the ability for ‘special interests’ to bend and twist the vast dollars in the health care system toward themselves.
    Have a safe holiday, and thank you for responding.

  2. You seem to imply that the funding shortfall in the Massachusetts reform is attributable to the extra funds earmarked for Cambridge Health Alliance (disclosure – I work there, though I do not speak for the institution) and Boston Medical Center. These are the major safety-net institutions in the Boston area, and other provisions in the reform drained the funds needed to care for the uninsured. Unfortunately, despite state official’s claims that all of the uninsured are being covered, we continue to see large numbers of uninsured patients. These extra funds makes caring for them possible.
    Rather than blaming chronically underfunded safety-net hospitals for the soaring costs, you might look to the huge surpluses being racked up by the powerful teaching hospitals and insurers who essentially wrote the bill. Large tertiary care hospitals such as Massachusetts General secured Medicaid rate increases worth many millions. That hospital’s surplus last year topped $300 million. Meanwhile, Blue Cross – which stands to gain hundreds of thousands of customers coerced to buy policies under the new individual mandate – generated a profit of $110 million in its most recent quarter. It recently gave its retiring CEO a $16.4 million lump sum retirement gift, even as he continued to receive $2.96 million for serving as Chairman of the company.
    Costs are soaring because the state low-balled estimates of the number of uninsured and wrote in vast new payoffs for the powerful – not because the state has chipped in to keep the safety net hospitals from closing their doors.

  3. You seem to imply that the funding shortfall in the Massachusetts reform is attributable to the extra funds earmarked for Cambridge Health Alliance (disclosure – I work there, though I do not speak for the institution) and Boston Medical Center. These are the major safety-net institutions in the Boston area, and other provisions in the reform drained the funds needed to care for the uninsured. Unfortunately, despite state official’s claims that all of the uninsured are being covered, we continue to see large numbers of uninsured patients. These extra funds makes caring for them possible.
    Rather than blaming chronically underfunded safety-net hospitals for the soaring costs, you might look to the huge surpluses being racked up by the powerful teaching hospitals and insurers who essentially wrote the bill. Large tertiary care hospitals such as Massachusetts General secured Medicaid rate increases worth many millions. That hospital’s surplus last year topped $300 million. Meanwhile, Blue Cross – which stands to gain hundreds of thousands of customers coerced to buy policies under the new individual mandate – generated a profit of $110 million in its most recent quarter. It recently gave its retiring CEO a $16.4 million lump sum retirement gift, even as he continued to receive $2.96 million for serving as Chairman of the company.
    Costs are soaring because the state low-balled estimates of the number of uninsured and wrote in vast new payoffs for the powerful – not because the state has chipped in to keep the safety net hospitals from closing their doors.

  4. I don’t think there’s an honest universal healthcare advocate out there who won’t agree that universal coverage will be expensive in the first year or so. But all you need to do is listen in to the quarterly conference calls of the publicly traded Medicaid health insurers, Centene, Amerigroup, Molina and WellCare, and listen to them talk about the process they go through when absorbing “previously unmanaged populations.” Medical loss ratios are typically high for three to four quarters, after which they settle down and become boringly predictable as medical and cost management begins to bear fruit — or at least ROI.
    One thing nobody did a year ago in Massachusetts was say that the state’s plan should be adopted because it will cost the state less money. It’s not being done to be cheap. It’s being done because it’s the right thing to do.
    For a time it will be expensive. And there may be cost overruns (in the grand scheme of things, $150 million is small as a percentage of the whole).
    But, Eric, you play the hare, and I’ll play the tortoise, and we’ll both see who was right, say, two years from now.

  5. Peter- the actual wash times article is no longer available… so i had to find a reprint source…
    The point is that someone in Mass government— not the ‘right wing conspiracy’— filed for the bonds over a year ago.
    Sally Pipes, who wrote the opinion piece, did not make up the information– nor was she offering an ‘opinion’ at that point of the article…
    I have no problem that you disagree with me on ‘solutions’… but denying the fact that costs are way over already cannot be denied. What should worry you is who and how the bureaucrats, special interests and ‘experts’ will decide will be doing the real denying to ‘bring costs under control’.
    On that, I presume, you and I will agree.

  6. Eric, I like that your link to the Washington Times opinion piece is actually a link to Medical Progress Today. Intentional subterfuge? Reading some of the “opinion” it appears the site is in the fear mongering business; “The Russians are coming, the Russians are coming!!!” When Canadians established their medicare system the largest opposition came from the doctor’s group who used the same arguments, “it’s for the patients”. Maybe the docs can work with the Tobacco Industry (Oregon SCHIP campaign)to see if they’ll lend them some of their tactics to fight government run single-pay. We all know that Tobacco puts healthcare in the best interest of citizen’s rights.

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