Contradictions in Massachusetts

I have written before
about the strange things going on in the Massachusetts health care
insurance market. For those from out of state, here are some quotes
that will give you a sense of the contradictions in the public policy

They are, respectively, from two stories that appeared on
the same day in the Boston Globe:
cap for insurer overturned
" and "Officials
give up cutting health perks

(1) An insurance appeals board yesterday overturned the state’s
cap on health premium increases for small business and individual
customers covered by Harvard Pilgrim Health Care . . . [finding] that
rate increases Harvard Pilgrim initially sought in April are
reasonable given what it must pay to hospitals and doctors. That ruling
trumped the Insurance Division’s earlier finding that the requested
increases were excessive.

The state’s public employee unions won a major victory this week when
the Legislature abandoned efforts to allow cities and towns to trim
generous health care benefits enjoyed by thousands of municipal
employees, retirees, and elected officials.

You can read
the rest and related stories, but what is most disturbing is that the
spirit of cooperation and compromise that existed when Massachusetts
approved its health
care reform law
in 2006 has broken down. Part of the reason is
that commitments made at that time have not been delivered upon. For
example, the state had promised to lift Medicaid payment rates to
something closer to the cost of delivering that service. Once the
economy sank and state budgets were stressed, that was not possible.
This left providers needing to collect more of their income from private

Meanwhile, the underlying determinants of health care
cost increases continued apace — wages and salaries of health care
workers, supplies and equipment, drug prices, increased utilization, the
medical arms race, and unhealthy life styles. Certain providers
received disproportionate payment increases based on their market power
and used those excess revenues to gain market share. Collectively, the
industry did little to reduce harm and improve quality and garner the
cost savings that would be possible from that. Access to primary care
did not improve, forcing patients to go to emergency rooms. Those
primary care practices that do exist often functioned as triage way
stations for patients to go see higher priced specialists. For those
who thought payment reform (i.e., capitation) was the answer, little
progress was made, in part because insurers have yet to see a market for
the restricted networks (i.e., reduced consumer choice) that would
facilitate that kind of pricing regime.

So, now we are in a
situation in which everyone is blaming everyone for the problem.
Truthfully, everyone is the problem, and so this is an accurate
representation, but it is not a helpful approach. Deadlock is the

At times like this, people often look for a global
solution to sort things out. That is a mistake. There is not a
politically possible global solution. There are too many legitimate
vested interests to pass a bill or adopt a regulation that shifts
hundreds of millions of dollars of costs from one group to another. As
seen in the two stories above, it will either be legally unacceptable or
politically infeasible.

Instead, it is a time for incremental
changes that are directionally appropriate. There are things that can
garner majority support that will move the system towards a more
sustainable level.

But to agree on those, the rhetoric needs to
be toned down, both within the field and from the government. The
demonization of any particular sector destroys the kind of trust that
enables people of good will to invent solutions that create value for

Paul Levy is the President and CEO of Beth Israel Deconess Medical Center in Boston. Paul recently became the focus of much media attention when he decided to publish infection rates at his hospital, despite the fact that under Massachusetts law he is not yet required to do so. For the past three years he has blogged about his experiences in an online journal, Running a Hospital, one of the few blogs we know of maintained by a senior hospital executive.

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