Health Care Dominates Massachusetts Governor’s Race

Four years ago, when Massachusetts enacted a health insurance plan that became a national template, state leaders deferred any serious discussion about controlling health care costs, with predictable results. While the law succeeded in insuring nearly all residents, the state had to raise taxes and trim benefits to preserve its essential contours.

As with the new federal plan, leaders of both parties here agree that expanded coverage cannot be sustained without arresting the growth of spending. But in what may be another preview for Washington, the campaign for governor has stirred a debate over how best to do that.

Three years into his first term, Gov. Deval Patrick, a Democrat, has jolted the health care industry by proposing an aggressive, albeit temporary, solution.

Using untapped authority, he has directed his insurance commissioner to deny proposed health insurance premiums that are deemed “unreasonable or excessive,” starting April 1. Mr. Patrick, who took office just in time to implement the health care overhaul here, also has submitted a bill to allow state regulation of the fees that hospitals and doctors command from insurers. That is seen as an audacious move in a state where prestigious academic medical centers hold heavy sway over pricing.

Mr. Patrick’s assertiveness is widely interpreted as a shot over the bow of his chief rival, Charles D. Baker Jr., a Republican who, as it happens, spent the last 10 years as chief executive of one of the state’s largest insurers, Harvard Pilgrim Health Care.

Emboldened by the January victory here of another Republican, Senator Scott Brown, Mr. Baker has been raising record sums, much of it from the health care industry, and has drawn nearly even with Mr. Patrick in recent polling.

As Mr. Baker gains standing, the governor has worked to remind voters of his opponent’s role in an industry roundly vilified by the Obama administration. He asserted in an interview in his office that Mr. Baker had done little to control escalating premiums during his tenure at Harvard Pilgrim.

“It is actually somewhat dismaying the number of people who stand on the sidelines and root for failure, who could lift a finger, but don’t, to help,” Mr. Patrick said of Mr. Baker. “You have to make powerful interests mad if you want to change the status quo. And I have never, ever seen any evidence from Charlie of a willingness to do that.”

Mr. Patrick said his emergency measures would bring quick relief to individuals and small businesses as the state tries to spur its recovery. He said the price controls would be a bridge until the legislature could consider a second phase of restructuring.

Mr. Baker, who has long called for more transparency in health care pricing, questioned why Mr. Patrick waited until his re-election year to tackle the problem.

“He’s really late to the game,” said Mr. Baker, formerly a top aide to two Republican governors. “That’s a long time to sit on your hands.”

The Massachusetts race has taken shape in the shadow of the national debate, which produced a law that Mr. Patrick supports but Mr. Baker derides as “a bad deal.”

The contest has been complicated by the candidacy of the state treasurer, Timothy P. Cahill, who left the Democratic Party to run as an independent.

Appealing to Mr. Brown’s voters, Mr. Cahill charged this month that the Massachusetts health plan had “blown a hole” in the budget and warned that the federal changes would “bankrupt this country within four years.”

In 2006, Mr. Patrick’s Republican predecessor, Mitt Romney, joined with Democratic lawmakers to enact legislation that required most residents to have insurance, offered subsidized coverage to those with low incomes, and set up an insurance exchange to encourage comparison shopping. But to preserve a fragile coalition of powerful stakeholders, state leaders put off the painful work of cutting costs, and the slumping economy made the problem worse.

This year’s state budget is out of balance by $295 million, partly because of rising health costs, meaning more cuts may lie ahead. Insurance premiums continue to grow far faster than inflation. State regulators are thinking about exempting more people from the insurance mandate because they cannot afford to buy policies.

Despite Mr. Patrick’s threat to deny unreasonable premiums, health insurers are seeking approval of increases from 7 percent to 34 percent. Mr. Patrick said he would use a medical inflation rate of 3.2 percent as a rough benchmark. “It’s a soft cap,” he said. “We’re not going to be jerks about it.”

Any relief would give the governor and legislature time to design and enact a “global payment” system that would reward doctors and hospitals for keeping patients healthy, rather than reimbursing for each office visit, test and procedure. That plan, recommended by a state commission, is designed to remove incentives for needless treatment, and would take five years to implement.

Health insurers and providers predict market chaos if Mr. Patrick follows through and rejects rates. They warn that existing contracts with doctors and hospitals will be broken, leading to lawsuits.

“Our concern,” said Jay McQuaide, vice president at Blue Cross Blue Shield of Massachusetts, “is that this be an actuarial review of the rates, not a political review of the rates.”

Two of the state’s four largest insurers lost money in 2009, and the others, including Harvard Pilgrim, posted only modest profits. Premium increases at Harvard Pilgrim generally have tracked the Massachusetts market during Mr. Baker’s tenure, typically hovering around 10 percent a year. Mr. Baker, who made $1.7 million in his last full year, is widely credited with pulling the company back from the precipice of financial ruin.

As secretary of health and human services under Gov. William F. Weld, a Republican, Mr. Baker oversaw deregulation of the health care industry in 1991, ending the state’s last experiment with price-setting. Like other health insurance executives, he argues that Mr. Patrick’s singling out of health insurers, a strategy plucked from the White House playbook, is misdirected.

He points to a recent investigation by Attorney General Martha Coakley that identified doctor and hospital prices as the main drivers of health care inflation. Ms. Coakley concluded that wide variations in prices paid by insurers to hospitals and physicians were related to providers’ market leverage, but not to quality.

Mr. Baker said he would demand that hospitals and doctors disclose their prices, and would generate savings by converting the state’s Medicaid program to managed care.

With Mr. Baker faulting Mr. Patrick for inattention to the cost problem, the governor has set out to convey a sense of action. The doomsday talk from the industry is unfounded, he said.

“I think people are exaggerating to protect the status quo,” he said. “It’s about time they got off their duffs and came in here and tried to solve this with a sense of urgency.”

via nytimes.com

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