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HEALTH-US: State’s ‘Model’ Reforms May Be Anything But

Adrianne Appel

BOSTON, Sep 18 2009 (IPS) - As all factions of the U.S. Congress continue a bruising debate about how to change the U.S. health system, one state, Massachusetts, seems to point the way clear, but activists say the Massachusetts plan is already troubled and doomed by skyrocketing costs.

All the major plans in Congress are mirrored after the reforms in Massachusetts, including the requirement that everyone purchase insurance at market rates – which grow yearly – or face a hefty fine. The fine is up to 1,000 dollars in Massachusetts.

“Once failure to buy health insurance is a federal offence, what’s next?” Steffie Woolhandler, a Harvard physician and member of Physicians for a National Health Programme, recently told a Congressional committee.

The Massachusetts reforms were crafted three years ago by Republican Governor Mitt Romney, the venture capitalist and presidential candidate.

“The Massachusetts plan is not sustainable. It contained no cost control and raised no new revenues. We’re basically just spending money,” Benjamin Day, executive director of MassCare, which campaigns for a single-payer system, told IPS.

On Wednesday, the influential U.S. Senate Finance Committee released its health care proposal, and it is the closest yet to the Massachusetts plan. It would force nearly everyone to purchase health insurance at market rates, or be fined. The government would provide some subsidies to low-income people.

It dashes the idea of President Barack Obama that the government sell low-cost insurance, and instead creates a managed marketplace where people and businesses can buy insurance and compare plans – but at market rates that in Massachusetts continue to spiral out of control.

The 880-billion-dollar Senate Finance plan, shunned by liberal members of Congress because it does not include the public option and Republican members who oppose the cost, throws a juggernaut into the health debate and makes it uncertain if Congress will be able to pass any substantial reform at all.

If Congress had only taken a close look at the problems in Massachusetts, the lawmakers may not have started down this road, activists say.

Also on Wednesday, insurers in the state announced that they were going to raise their premium costs by 10 percent next year.

“The intentions were good but success is all about cost control,” and that can only happen with a government-run, single-payer plan, Day said. “That’s the lesson from Massachusetts.”

The Massachusetts reforms are attractive to Congress because the state outlawed abuses by insurers and cut in half the number of people without insurance, meaning that 97.4 percent of residents were insured, the highest percentage of any state.

But, “Skimpy, overpriced coverage like this left one in six Massachusetts residents unable to pay their medical bills last year,” Woolhandler said.

The requirement that all residents buy health insurance or be penalised is a centrepiece of proposals being debated by Congress, though it has proved highly unpopular in Massachusetts and surprisingly unsuccessful.

About 352,000 people in 2008 chose to be fined rather than pay 4,000 dollars or more per year for health insurance, according to figures just released by the U.S. Census.

The Massachusetts reforms were enacted two years ago to try to decrease the hundreds of thousands of people showing up at hospital emergency rooms desperate for health care and with no money to pay for it.

There was a system in place to cover this care, a tax on wealthier hospitals that was redistributed to poor hospitals that provided most of this free care, and it was working well. But the wealthy hospitals asked for reforms.

“The individual mandate is a huge boon for insurers. And hospitals got a huge rate increase,” Day said.

“Patients are not an organised group and they had no voice, much less uninsured people. It’s not quite the ideal political experience,” he said.

“We had a free care pool for the uninsured and for many people it was better than what we have today,” Day added.

The poor now have to purchase drugs that previously were free, and pay every time they see a doctor or go to the hospital.

Poor people continue to seek free care at hospitals and clinics, but under the reforms the hospitals are no longer compensated for this care. The clinics and hospitals are buckling under the stress, and have had to cut staff and programmes.

Boston Medical Centre, which treats anyone regardless of ability to pay, is reimbursed just 64 cents for every one dollar it spends, it says. It is suing the state as a last resort.

Health reform “should not and cannot be financed on the backs of the poor. We hope our suit serves as a cautionary tale to federal policymakers as they take up national health care reform,” said the hospital’s CEO, Elaine Ullian.

Massachusetts allows just six health insurance companies to operate here, and the companies continue to charge the highest rates of any state. The reforms brought them business from 432,000 additional people, with the state paying all or part of the market price for 165,000 lower-income people.

If an employer offers health insurance, and most do, workers must purchase it no matter what their income or face a fine.

In Massachusetts, a 30-year-old can buy a plan for 220 to 600 dollars per month. At 220 to 282 dollars per month, they must also pay for the first 2,000 dollars of health bills. Afterwards, every time they see a doctor they must pay 25 or 40 dollars, plus fees for drugs, and up to 20 percent of hospital costs.

“The high-cost premiums force people to buy a high-deductible plan. This may mean you can’t afford to use the health care you buy,” Day said.

The reforms enacted two years ago did not include price controls and insurers have continued to raise their rates. Individual patients, even those subsidised by the state, purchase drugs on the open market at retail prices.

Most of the insurers made a profit in 2008, despite the recession, though they earned less than in 2007.

In 2008, net income at Harvard Pilgrim Health Care, the state’s second-largest health plan, was 48 million dollars, an increase of three million from 2007.

Tufts Health Plan earned net income of 18.8 million dollars in 2008, and it earned a hefty 110 million dollars in 2007.

“During such a challenging period, we are pleased to end the year with a positive net income,” says Umesh Kurpad, chief financial officer, in a statement.

Meanwhile, the state spent more than a billion dollars on the reformed plan in 2007, more in 2008 and still more in 2009. Those increases combined with the recession have already sunk the plan.

This spring, Gov. Deval Patrick announced that beginning Jul. 1, the state would cut a variety of benefits it covered for the poorest in the state. In addition, it would end any subsidies to 28,000 legal, new U.S. immigrants.

After an outcry, Patrick instead created a stripped-down plan that will insure most legal immigrants living in the U.S. for five years or less, starting in December. This means the state will subsidise a lower-rung system for some taxpaying residents, and a full plan for everyone else.

“The current realities of uncontrollable health care costs and the state’s budget crisis, begs the question, /will Massachusetts health reform survive its fiscal storm/?” wonders Elmer Freeman, director of the Office of Urban Health at Northeastern University, in his blog. /

Rep. Dennis Kucinich is circulating a petition that calls for a government-run health system. He believes that a plan will pass Congress based on private insurance and that health costs to families will continue to skyrocket.

“It will take four years for the new legislation to go into effect. During that time we are going to build a constituency of millions in support of real health care, a constituency which will be recognised and a cause which is right and just: health care as a civil right,” he says.