Massachusetts Update

I have written several times about the ongoing saga between the state administration and the health care insurers in the state concerning premiums for small businesses and individuals. Over the last several weeks, several insurers have reached settlements with the Division of Insurance. At least one has not and has prevailed at the appeals board because the rates forced upon it by the state were not actuarially sound. Where settlements have been was reached, they were not based on actuarial principles: They was based on a desire to get past this impasse and provide some stability to customers.

Here’s a quote from one company official:

Blue Cross spokesman Jay McQuaide said the organization agreed to accept “less-than-adequate rates’’ — which he said are too low to cover its costs — to resolve the uncertainty for customers.

The disturbing aspect that remains is a lack of understanding by some state officials of the issue. There appears to be a presumption that hospitals and doctors are somehow taking advantage of the situation to raise their costs. But that is at variance with what hospitals are actually doing and facing.

Here, for example, we see one hospital facing huge losses and another one laying off staff in the face of financial pressures.

There are sophisticated observers of the scene, however, who continue to offer thoughtful views. Here is an op-ed in today’s Boston Globe by Robert Pozen entitled “A bitter health care pill.” An excerpt:

[T]he perfect is often the enemy of the good in health care. Instead of taking a decade to move from fee-for-service to a capitation system, the state should implement two relatively significant cost-saving measures: Reduce the number of mandatory coverage items and charge higher co-payments for using the highest-cost providers.

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 underMassachusetts 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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