As a result of its landmark health reform legislation, Massachusetts has the lowest rate of uninsured residents in the nation. The percentage of uninsured fell from 6.4 percent in 2006 to 2.6 percent in 2008. However, the state is struggling to control rapidly rising health care costs, which are among the highest in the nation and are projected to grow faster than the country as a whole.
Two recent developments underscore the seriousness of the state’s cost problems. The legislature voted to cut back on benefits for thousand of legal immigrants. And Boston Medical Center sued the state on the grounds that its expensive universal health care law has driven the hospital into deficit. As an editorial in The New York Times said that “it will take great creativity and political will to hold down rising costs so that the program is sustainable.”
Jonathan Gruber, a professor of economics at the Massachusetts Institute of Technology and a board member of the Massachusetts Health Insurance Connector Authority, answered questions about the Massachusetts plan and strategies for curbing its costs.
The Massachusetts model has been touted by some as a good model for a national health care system. Would you agree with that judgment?
I think the Massachusetts model is an excellent one for what it tried to accomplish: moving to universal coverage by building on the existing insurance infrastructure. We have a number of noteworthy accomplishments:
- We have already covered about two-thirds of our uninsured within the first year of the mandate.
- We have done so on budget — our costs in the first full year of the mandate were actually a bit below budgeted levels.
- We have seen increased private insurance coverage, with employer sponsored insurance going up by 150,000 persons — that is, we have “crowd in” not “crowd out.”
- We have had near perfect compliance with our individual mandate, with 98 percent-plus of taxpayers filing correctly the very first year.
- We have strong public support, with 75 percent of the public supporting reform.
An early tension felt by proponents of the Massachusetts plan was whether to give the problem of universal access a stronger emphasis than that of cost control. The latter, a difficult issue, was thought better to be dealt with later. Was that a sound judgment in light of the more recent emergence of cost control problems?
Yes, absolutely. We never would have gotten our recent report on payment reform if we had not first dealt with the coverage problem. We have a very strong and active advocacy community here in Massachusetts that was focused on expanding coverage.
Once those gains were realized, these groups quickly turned their focus to the cost controls that are required to make this a viable long term program. That never would have happened had we not solved the coverage problem first.
How significant do you think the savings would be from the new proposal from the Massachusetts Special Commission on the Health Care Payment System to stop paying doctors on a fee-for-service basis and switch to a global payment system, which would compensate doctors for all of the care that their patients are expected to need in a give period?
Very significant. This is the most fundamental reform we can make on the supply side of medical care. Of course, the devil is in the details – but if done right this can deliver enormous savings. In particular, reimbursement must be tied to actual metrics of performance and demonstrated standards of treatments that work. The best estimates suggest that we could deliver the same level of health in the U.S. while spending two-thirds as much. If smarter reimbursement can reduce the inefficiency by even one-sixth, that is enough to pay for covering all the uninsured.
How do you think this change in payment structure will affect the quality of care?
I see no reason why this change will lower quality of care. We have experience with a variety of very striking changes in the supply side of medicine, from hospital prospective payment in the 1980s to managed care in the 1990s. There is no evidence from past experience that any of these changes have consistently lowered the quality of care patients receive.
Jonathan Gruber, Ph.D, professor of economics at the Massachusetts Institute of Technology. Gruberj@mit.edu; 617–253-1330.