Wednesday, April 26, 2006

After the Party: Sober Questions About the Massachusetts Health Plan

No doubt about it, the party a couple of weeks ago at Faneuil Hall launching the new Massachusetts Health Plan was a rousing success, giving rise to all sorts of images of a new American Revolution -- this time in health care.

But, bummer, the bright light of the Faneuil Hall festivities, Governor Mitt Romney, has skipped town to run for President. Left behind in his 2008 presidential campaign dust is a health plan widely hailed as revolutionary if it works, that is.

But that's no longer Governor Romney's worry. His last action on the health plan was to veto eight provisions, including the key $295 per employee annual fee to be paid by employers of ten or more who opt out of offering health insurance to employees.

His vetoes were all overridden by the Democratic-controlled State House, shown here, which is very much following the revolutionary tradition of rebels who plotted against the British in the Old State House over two centuries ago (the tiny old building).

The Governor is out of here. Having come up with an-out-of-the box health plan, along with his health and welfare commissioner Timothy Murphy, he leaves Democrats and the next governor to figure out how to make it happen. Heading off to the 2008 hustings, he wishes them the best of luck.

They will need it, I'm sorry to say.

Along with many other people, I think the plan is truly a breakthrough and I would love to see it succeed. It reaches for near univeral access to health insurance by bringing on board all the major interests: government, individuals, employers, and private health insurers.

Following sound principles of insurance risk, it requires the participation of the healthy and the well-off so they can't opt out or self-insure. If they do, they face significant penalties at tax time.

Conservatives get an individual mandate, private insurers, and, supposedly, no new taxes. Liberals get an employer mandate and subsidies for the poor. In a time of ferocious partisanship and hopeless gridlock on health-care reform, the plan is an all-too-rare exercise in bipartisanship. Everybody gives, everybody gets, nobody is completely happy.

But many important questions have been left unanswered. Will the funding really be there? Even with subsidies, will the working poor be able to afford a $200 to $300 monthly premium on top of buying food, paying rent, and buying $3.00 gas to get to work? Will private insurers be able -- or willing -- to develop plans that provide real coverage at a low enough cost?

Massachusetts heavily regulates health insurers and requires them to insure the sick, including those with pre-existing conditions, and not just the healthy. This makes it hard for insurers to make a buck and keeps the state's health insurance premiums among the most expensive in the country.

Private insurers the plan counts on are willing but are saying, "Show me the money." Getting their wholehearted participation is likely to take state financial sweeteners costing much more than anybody realizes.

The Wall Street Journal tried to price health insurance coverage in Massachusetts through on online insurance brokerage, eHealthinsurance, and came up empty. The Journal contacted the CEO of eHealthinsurance, Robert Fahlman, and asked him why. "Guaranteed issue" was his quick reply. That is the regulation requiring insurers to sell to all comers, even those who wait until they get sick to seek coverage.

The plan's solution is a new "Connector" organization to act as a marketplace where individuals and workers in businesses with 50 or fewer employees can buy personal, affordable, pre-tax, and portable health insurance coverage. The brainchild of Edmund Haislmaier of the Heritage Foundation, the Connector in effect rounds up health-insurance customers, collects premiums and passes them on to chosen insurers.

But as of now, the Connector is a dream. A pipe dream? The Wall Street Journal thinks so, saying that Massachusetts' "experiment in compulsory, subsidized health insurance" is going to turn into an "employer mandate and a vehicle for increasing the role of government." If Governor Romney thinks care for the uninsured is expensive now, the Journal wrote, wait until Massachusetts taxpayers see how much his government-heavy "solution" costs.

The plan also imposes financial obligations on businesses that make the $295 penalty small potatoes. Say you have a restaurant and don't provide health coverage. If a cook or his wife or child is rushed to the hospital and can't pay because there is no insurance, guess who pays? You, the employer.

And you are responsible for 100% of the care received by the cook or a member of his family. The plans authors do not speak of this onerous provision and others. Nor do they speak of something else that is curious about the plan: Union shops are exempt.

The plan does nothing about the ferocious rise in health-care costs. Nor does it take rapidly rising costs into account in future funding. Instead, it assumes that federal funding, a financial foundation of the plan, will be there when realistically it may not be. The $385 million in federal funds given for developing a plan to reduce the ranks of those without health insurance cannot be counted on in future years.

Lastly, after the initial excitement, after all the publicity and PR, I found myself wondering whether a Mass health plan that is all about compromise and what is politically possible can really serve the common good. Does it succeed more in meeting the special interests of the big players than in meeting the needs of all of the people for access to affordable and quality health care?

I feel sheepish about raising these questions because I know how hard and long so many people have worked to develop this plan while I have done squat. John McDonough of Health Care for All , who is also on the faculty at the Harvard School of Public Health, been working for two decades to get Massachusetts to this point.

Ron Pollack, Executive Director of Families USA, says that the plan "should be widely acclaimed as a breakthrough." He says that it shakes loose from the gridlock and acrimony that has permanently gripped Washington D.C. "Waiting for Washington, D.C. is like waiting for Godot," he said, and so a state had to take the lead and that state is Massachusetts.

Massachusetts House Speaker Salvatore DiMasi has stepped up and bet his career on the plan for which he was a major architect. A week after Governor Romney signed the bill at Faneuil Hall, Mr. DiMasi appeared at the National Press Club in Washington, D.C. along with John McDonough and Ron Pollack and others. He said that working on the bill had "taken most of my life, my skills, and my patience."

Of course, everything has been done in the name of the people. What do they think? Following are comments from Massachusetts residents:

Rachel Faugno wrote in the Worcester Telegram and Gazette:

Massachusetts legislators who are busy congratulating themselves on health care reform could benefit from a dose of reality. What they have done is prop up a broken system on the backs of the working poor.

Any legislator who believes that someone earning $30,000 a year can afford monthly health insurance premiums of $325 should take a remedial course in math. Add up the cost of rent, heat and car insurance (all among the highest in the nation). Then add the cost of transportation, clothing and food, and you'll get a net loss.

To add insult to injury, our governor's concerns lie solely with business owners who contribute a pittance ($295 a year) to their uninsured employee's health care. Sounds like a bargain, one that will encourage business owners to cancel whatever insurance they currently offer and switch to the new system.

Ric Gerace of Falmouth wrote in the Boston Globe:

Let's see if I understand this new healthcare plan. Business can now pay $295 a year per employee instead of a couple of thousand, so they'll do what? Drop good plans, pay the cheap fee, and come out way ahead.

Individuals, mostly working people, get forced to pay a bunch more money for fourth-rate plans that won't cover much of anything, when they're already squeezed with fuel prices and all the prices that are rising because of fuel prices. And a bunch of insurance companies will get rich doing not much of anything. And doctors will go nuts trying to keep all these plans straight ....

How about some insurance to protect us from the people who think up this nonsense?

Dr. Peter G. Hill of Boston Copley Square Chiropractic believes that much more needs to be done to control costs. In a letter to The Boston Globe, Dr. Hill wrote:
The entire system needs to be consolidated by combining many of the myriad healthcare systems into one. Workers' compensation, private insurance, Medicaid, Medicare, Veterans Administration, student health, and other systems have overlapping administrative and advertising costs. These need to be coordinated and consolidated to remove excessive costs and direct resources to patient care. Until this is done, many costs will still be allowed to spiral out of control, putting pressure on everyone involved.

It also needs to be said that near-universal health insurance is not the same thing as near-universal health care. There are many in Massachusetts who want nothing less than universal, single-payer health care. Benjamin Day, executive director of Mass-Care, a coalition of groups working toward a single-payer healthcare system for Massachusetts, wrote:

This bill is actually a vast castle of promises and new bureaucracies built on thin air -- a plan that claims, in a state that spends $59 billion a year on health care, that it will offer quality coverage to its 748,000 uninsured without trying to cut costs, and by raising a sum from employers and other sources so small ($170 million per year) that it could not subsidize a small portion of the uninsured.

...The law states that if the program for subsidizing low-income residents runs short on funds, officials simply stop accepting applicants for subsidization. But the individual mandate requiring everyone to purchase his or her own care would remain in effect. Until the state either finds a socioeconomic class that can afford to pay more or finally decides to try and tackle the rising spiral of costs, low-income families will face high healthcare premiums or punitive tax penalties on their own.

Rather than support the plan, Mr. Day has one word of advice for low-income Massachusetts residents: "organize."

As for yours truly, I'm glad that my state is in revolutionary mode on health care. Just as the Minutemen stood up to the British on Lexington Green more than two centuries ago, Massachusetts is taking the field against a health-care monster. This is a monster in the process of crushing tens of millions of us financially while denying health care en masse and making a very few wealthy beyond belief.

Considering that at least 550,000 and perhaps as many as 750,000 Massachusetts residents lack health insurance, and that the number is now 46 million nationwide, and that many millions of Americans can't afford proper health care, let me offer one salient fact that helps explain why. In the April issue of Business Week on the fifty fastest growing companies in America, Apple computer comes in first -- but the next three mega-growers may surprise you.

Can you guess what business they are in? You're right. They are all in the business of health care. They are WellPoint, the country's largest health insurer; Caremarks Rx, a huge pharmacy benefits manager; and UnitedHealth Group, another large provider of health insurance and other health services.

They are all middlemen and all are printing money. They take billions in administrative costs and profits out of the system. Take UnitedHealth Group, for example. It's income in 2005 was $3.3 billion, nearly four times the figure in 2001. The price of its stock tripled between January 2003 and January, 2006, though it has fallen back by about 20% in the last few months.

The CEO of UnitedHealth Group, William McGuire, "has amassed one of the largest stock-options fortunes of all time," The Wall Street Journal wrote in a front-page article on April 18. The Journal put the value of these options at $1.6 billion.

The story in The Wall Street Journal, not known for being anti-big business, went on:

"Dr. McGuire's story shows how an elite group of companies is getting rich from the nation's fraying health-care system. Many of them aren't discovering drugs or treating patients. They're middlemen who process the paperwork, fill the pill bottles and otherwise connect the pieces of a $2 trillion industry.

"The middlemen credit themselves with keeping the health system humming and restraining costs. They're bringing in robust profits -- and their executives are among the country's most richly paid -- as doctors, patients, hospitals, and even drug makers are feeling a financial squeeze."

What the Connector marketplace of the Massachusetts plan does is provide a cozy and heavily subsidized environment for health insurers -- middlemen -- to reap practically risk-free profits. What middlemen do is take money, gobs of it, out of every transaction between patient and medical provider while withholding as much care as they can get away with. If this does not happen in Massachusetts, it will be the miracle of miracles.

Whenever the argument is made that rising costs are caused by frivolous use of health care by patients failing to be wise consumers, I suggest as a response: follow the money. The trail leads directly to the companies named above and many others like them. In Massachusetts, one can almost feel the money beginning to flow to UnitedHealth Groups going by different names but all doing the same thing -- sucking up torrents of money.

Enough about money. I would also like to put something softer than hard cash and stalwart facts into the health-care debate, something that speaks more to the kind of human beings we are and the kind of society we want. I offer a principle. It is not mine, but that of Ronnie Bennett from her website, The principle, in Ms. Bennet's words, is this:

Health care is a human right and a public responsibility we all share. It is our moral obligation, individually and collectively, to ensure that every citizen has access to health care and if we do not guarantee that, if it is available only to the rich, we have failed as human beings and as a nation.

Despite all the traps and unknowns and daunting obstacles, may Massachusetts succeed and may other states follow suit. But if greed takes over, let us follow the money and take it back. Let us then put the money into a health-care system that doesn't make a few rich at the expense of everybody else, that treats everybody the same, and that flows from our humanity.

So long and keep moving.