Hamline Journal of Public Law and Policy Symposium March 9 2007: Laboratories of Democracy? Innovations in Health Law and Policy at the State level.
Linda N. Hanson: You just mentioned that some of you are here for CLE credit. So, the teacher says, "Good morning!"
[laughter]
All right, all right. Our students are just as concerned about credit, too, believe me.
It's wonderful to see so many of you here today. As I look out over the courtroom here today. I certainly see some students with some familiar faces, and community leaders, and legal experts, and people from health care, and I'm sure from our public policy side of the House, and to all of you who have come from near and afar-welcome. Welcome to Hamline University.
You know, thinking about daylight savings time just around the corner, I wish that we were just about maybe four to five weeks out because you wouldn't be looking out at two feet of snow, you would be looking out at our beautifully landscaped Hamline University campus. So, if this is your first time to visit, I do hope that you'd come back sometime when it is beautifully green and immaculately manicured because that is something that we take wonderful pride in here-is our welcoming curbside appeal, if you will.
It's just a real pleasure to be able to participate with you in kicking-off what from the looks of your program-I was reviewing this just as I came over this morning-it looks like an extraordinary, rich, and exciting day for you.
We were chatting just a few minutes ago with both Cindy Jesson and with Joe Nevins about the pioneering Massachusetts health care reform legislation. It so resonated with me because Hamline University has always referred to itself as a 'pioneering university.' We were the first university. I have an ongoing back-and-forth with the University of Minnesota because they say regularly that they were the first in the state of Minnesota, and the rejoinder from our side is, 'Well, we were here before Minnesota was a state, and we had the first two graduates of an institution of higher learning, and by the way, they were two women, the Sorin sisters.' So, we have a little fun with that.
Methodist pioneers founded this institution and I think it really does embody the spirit of Hamline which is that we are a progressive university, and that we are always looking for new ways, for new knowledge, for new ways to interact and to be on the frontline of, 'How can we improve our society? How can we be part of building a knowledge base and a practice for our graduates that really is aimed at the common good?' When we think about lies ahead of us both in health care reform for our nation, for our communities, and also what lies ahead for us with regard to families, children, the issues of an aging population-as a member of the baby boom generation, myself, and I'm sure a few of you are also in that category-it is a looming, major, major concern.
We're truly grateful to be able to have some experts here with us, some who are ahead of us here in this game in terms of trying to work both from the public policy side and also, work with our institutions of higher learning. So, we really look forward to the day, and sharing and learning what we can from one another.
So, welcome and at this time, I'm very, very pleased to turn it over to the Director of our Health Law program here, Professor Cindy Jesson. Cindy?
[applause]
Lucinda Jesson: Thank you so much, President Hanson. As a logistical matter, let me see is this on, is Professor Bach up?
Deb: She's not up yet. Do you want me to call her right now?
Lucinda: I think we should do that. Yes, OK.
My role here is to really introduce our two speakers, to let you know how we're going to start this presentation, and then after we hear from both of them, to ask some questions myself if you all don't have any. But, I'm going to assume you will have plenty of questions for both of these individuals.
Our first speaker this morning is Joe Nevins. Joe has been living history the last few years at Blue Cross and Blue Shield of Massachusetts where he is Associate General Counsel. He is responsible for regulated and senior products, technology matters, and eHelp initiatives. Before joining Blue Cross and diving into health care, Joe was a Vice President and Assistant General Counsel at Digital Equipment Corporation. He is a graduate of Bates College, has a Masters in Public Administration from the University of New Hampshire, and his Juris Doctorate from Suffolk University.
I understand that this is his first trip to the twin cities. Before he came out here, we told him that we had much less snow than they had in Boston. That was maybe a few weeks ago, however.
[laughter]
I was talking to Joe before we started and telling him that I just went up to my office this morning-you know, check your email, make sure that you're up to speed on things. The first thing that comes up on my computer is one of these updates from National Health Lawyers Association and the lead story is about Massachusetts plan, and their state approved new low cost health insurance plan. So, they're out there doing things-the legislature, the plans-even as we speak and, it's going to be exciting to hear about someone who has been part of that.
After Mr. Nevins speaks, we're going to hear from Professor Tracy Bach.
OK, I'm ready for you to dial it.
[sound of phone dialing]
Tracy Bach: Hello?
Deb: Hi Tracy, it's Deb.
Tracy: How are you?
Deb: Good. How are you?
Tracy: Good.
Deb: Everyone's listening to you so be nice.
[laughter]
Tracy: I'm sorry, I didn't hear that.
Deb: I said, 'Everyone's listening to you so...' [laughs]
Tracy: Ah, so be on my best behavior, then.
Deb: Lucinda is right here. She's going to give introductions and then, she'll be set to go, OK?
Tracy: Good. Yeah.
Lucinda: Professor Bach, I've just introduced Joe Nevins who's Associate General Council at Blue Cross, and I'm going to now tell our audience here today about you.
Tracy Bach is Professor of Law at the Vermont Law School. She specializes in appellate advocacy, health care issues, and legal research and writing. She received her BA from Yale University, but was bright enough to actually come back to Minnesota where she received her MA in Public Affairs from the University of Minnesota, and her JD from the University of Minnesota Law School. From 1984-1990, she worked on health care finance and management for a mid-sized New York City consulting firm and a large Mid-Western hospital chain, and also served as a self-employed health care consultant.
So, we really are happy to have you here, even though we are a little jealous that you are in France and we are not.
[laughter]
So, what we're going to do here this morning, Professor Bach, is to hear first from Joe and then hear your presentation. Then, we're going to invite questions from our audience for both of you.
So with that, Joe, I'll turn it over to you.
Joe Nevins, Associate Gerenal Counsel, Blue Cross, Blue Shield of Massachusetts: Well, thank you very much. It's nice to be here today. If some of you have read the original printed program, these remarks were originally going to be delivered by Sandy Jesse. Sandy Jesse is a tall, blonde woman. I am not.
[laughter]
Sandy Jesse is very comfortable speaking in front of crowds and can do wonderful things with very little material and sound brilliant. That's not necessarily the case here either.
[laughter]
But what I can offer is that I have been working on the health care reform in Massachusetts for the past few years. So, I do have more than a passing familiarity with it. And, what I can tell you is that I check the newspaper everyday because we are living an ongoing saga-that many things are happening as we speak.
[laughter]
But, what I am going to talk to you about today is how the law came to be, the role that Blue Cross played as a company, we also have a foundation that was instrumental in some of the policy development, and to tell you that, and to remind you that it is a work in progress.
The second thing I want to lead with is -- if you attended the dinner last night -- I have to say that everything Professor Jacobsen said is true. That's probably not the best thing to do if you are a law student. You have to distribute the professor, but as a practitioner I can tell you that there are tremendous shortcomings in the state trying to implement some of these changes. There are advantages in having a federal approach, but there is very much a mix that's needed if we are going to have true health care reform.
Some of these material will be somewhat dense, Tom. Hopefully, I won't be, and we will try and get through it. If you have a question as I am going through, I will be happy to answer it.
Three or four years ago now, in October, there was a announcement made at the Blue Cross-Blue Shield Foundation, which is a independent organization. It is a subsidiary of Blue Cross but has it's own Board of Directors. There was consensus we actually need a roadmap for health care reform. The problems that exist today - increased cost, greater number of uninsured, dissatisfaction of members, dissatisfaction of providers; that there is certainly a problem.
So the foundation said we need a roadmap, and then spent the next three years helping facilitate a roadmap, that didn't necessarily come up with a solution, but provided facts, provided a path to answer some of the thorny issues that were raised, so that the solutions could be devised by other bodies, the body of Massachusetts, the state legislature.
Three years later, and if you have read -- the papers had tremendous coverage that this health care reform law was passed in Massachusetts. Wonderful coverage, and we just hope it is all true, but the New York Times, the Boston Globe, everyone... What we were left then, from April 2006 up till now was actually making it happen. So there is a great deal going on.
If you have been involved in health care law, you know that the law is one phase, the regulations, the standards, the implementation is quite another, and often the devil is in the details, and that is what is going on right now.
It was passed overwhelmingly in the state legislature, the Senate, the vote was 37 to nothing. In the House the vote was 155 to 2. This was very unusual. Massachusetts, even though we have a heavily Democratic state, to have that sort of consensus that is so comprehensive, was quite unusual. It is quite a contrast to what happened a few years ago. Again, if you listened last night to the speech from Professor Jacobsen, in 1988, there was also a universal health care reform in Massachusetts that was passed.
That was not successful and the reason was there was no real political consensus behind it. There was some support from the legislature, because Michael Dukakis was running for President, and they wanted to be supportive. But there was widespread opposition because there was an employer mandate, requiring employers to have health insurance; very much opposed. So the net effect was, the law was delayed, delayed, delayed, and then repealed.
We had a very different outcome now, and we will talk a little bit about how that happened. When the legislature first began to discuss the reform, there were certain issues they wanted to address. They needed to address lowering health care cost for employers, responding to increasing uninsured. They wanted to help people who are eligible for Medicaid, but were not yet enrolled, increase access to care. This was the lowest common denominator of expectations. What happened was a great deal more. The legislation actually encompassed a great deal. With inputs from the company I worked for, there were other issues that were added to the mix.
Number one issue was quality. Quality of care is extremely important, is our corporate mission. We also needed to address a very real financial issue that was coming back to haunt every health insurer and provider in Massachusetts, which were Medicare provider shortfalls. We needed to educate political leaders about the need for quality of care improvement, improvements to Medicaid, and so we expanded the agenda.
It is nice to have an agenda. It is nice to have a series of issues, but there are also other factors that are involved in health care reform. The first in Massachusetts, was the fact that we were about to lose $385 million in federal funds. That can motivate any state legislature. Only few states have this type of waiver, and basically what was going to happen was, unless we come up with a more innovate way to implement Medicaid in our state, we are going to lose that funding. No one wants to lose the funding.
So it was clearly a motivating factor, but the estimates were that even with that as a motivating factor, the chances of the health care reform bill was 50:50. But there were other factors that were going on. Number one, we again had a Governor who had political aspirations. Never underestimate the value of a Governor who wants to be President. Certainly it was an important part of the Lohmnik campaign platform. Now occasionally he even mentions it that he did it in Massachusetts, but we will see what happens as the campaign unfolds, but clearly this was on his mind. The passage of the health care reform law would be a major win for him.
So he absolutely lent his support and weight and brought much of the business community with him. There were also issues in Massachusetts. They were proposed by other questions about universal coverage that were raised by a number of advocacy groups, often without tremendous detail, but gaining momentum. There was a rise in the number on uninsured. In Massachusetts there was approximately, 550,000 uninsured. Plus there was a unprecedented collaboration between Blue Cross-Blue Shield of Massachusetts and Partners Health care System.
Partners Health care Systems is one of the largest integrated health care systems in Massachusetts. Approximately 27% of the members of Blue Cross Massachusetts get their care from Partners. For the students, I will tell you that the relationship between health insurers and providers are not always co-pathetic. To have this type of collaboration between two very large institutions who were both trying to address a problem is also a key factor in the successful passing the bill.
We also had the advantage of Senator Kennedy, who had health care on his personal agenda for decades, and the Blue Cross-Blue Shield Foundation; important policy board. That helped. You have motivation, you have desire, you always have to deal with the stakeholders in this type of situation. There are multiple stakeholders, if you are dealing with an issue like health care reform. Clearly the health care advocacy organizations, who want health care for all, Health care For All is an important Massachusetts organization; organized labor, health care has always been one of their primary considerations; the business community, which was not united.
Many of them realized that there needed to be some solution, but they were clearly not in agreement of what the solution could be. The large employers were concerned because they were being asked to pick up costs for people who were uninsured, the way the Massachusetts system worked. The smaller employers were very concerned about having to absorb even more costs. So there were a number of competing interests. The faith-based groups were out. So we needed a way to bring all of those things together, and to satisfy the needs of all of those constituencies, not the least of which would be the appointed and elected officials.
What we did was help to leverage some of the issues through both the Blue Cross-Blue Shield Foundation, and the corporate capabilities that Blue Cross as an institution had. The Foundation became the catalyst for reform. The Foundation was founded by Blue Cross. It has a Board that is independent of Blue Cross. It has many people on that Board that represent government interest, that represent the advocacy groups, not always in line with what Blue Cross as an institution or insurer may be supporting, but certain a widely respected -- a number of academics are on this Board.
What they did, with their charter and initial grant of $55 million, was to work on finding ways to expanding access to care in Massachusetts. In order to do this, they came up with a Roadmap to Coverage. The Roadmap to Coverage was developed with the help of many policy people--we're rich in politicians, rich in policy, and rich in academics in Massachusetts, and we managed to leverage all of them.
They issued three reports--the most influential of which was the Roadmap to Coverage--which pointed out a number of issues, provided data, and provided facts that certainly helped. The fact that they were able to provide detail behind the problem... First they looked at: who are the uninsured?
In Massachusetts, what we found is that a number of the uninsured were in the 19 to 26 year-old population. And I'm sure there are some 19 to 26 year-olds in here; and like most 19 to 26 year olds, health insurance is usually not first on their minds. We often refer to them as the 'young invincibles, ' because nothing is ever going to happen to them, and they don't really need it, and it's very expensive. So there needed to be a way to make them realize the importance of health insurance, and also present it in a way that was affordable.
We also needed to come up with what the real costs were. A motivating factor is that uninsured populations cost money, and the care for those uninsured people gets absorbed--it gets absorbed either through the state legislature, it gets absorbed through the providers who must provide that care because they don't turn people away when they're at the gate. It also is absorbed, in Massachusetts, by some of the large insurers and employers who are given, essentially, a tax to help cover the costs for covering the uninsured. So, people who had insurance, right down to the member level, were actually helping to pay for people who didn't have insurance.
Using all of that and being able to calculate what the true costs were certainly made a big difference. And what the foundation was able to do is that they were able to provide a catalyst for reform; they basically brought people together. They held forums. And they came up with what is now probably the most widely publicized aspect of the Massachusetts health care reform, which is: one way to get individual coverage is to mandate it, and basically, there is an individual mandate that requires every adult in Massachusetts to purchase health insurance, with very few exceptions.
That was combined with an employer mandate that the employers in Massachusetts were required to offer health insurance. Combining those two concepts certainly helped come up with the final package. What it then required was building a collaboration between the legislators and the governor--both houses in Massachusetts have their own version of a bill, and the governor had his own version; there were advocacy groups; there were payers. So there were a number of constituents that all had to be brought together.
So, one of the ways, as a private sector, that Blue Cross as a foundation helped to do that was convening leadership summits. Word to the wise: if you want to get something done, invite a politician to speak. If they are going to speak on a topic, they will become informed on it. You can help inform them. It helps move the process along; it gives them a forum. And the Blue Cross Foundation was able to sponsor several of these. It also gave a forum for the leading proponents--the Senate leader, the House leader, and the governor--to deliver what they felt were most important to health care reform, and engaged the political leaders in a way that was extremely helpful.
The company--aside from the foundation, the health insurer company in Massachusetts: we are a single-state, not-for-profit Blues plan. One of the key elements in our mission was to reduce the number of uninsured. And we knew that it was important, and we were in a unique position to be able to do so. And so, while the foundation laid the groundwork with a number of policy works, Blue Cross the company in Massachusetts assumed a role as a corporate citizen, as opposed to just a health insurer. And absolutely worked with the legislative leaders and the advocacy groups in a way that wasn't just promoting the self-interest of a particular insurance company.
We did that in several ways. White papers were provided. Instead of testimony at hearings, factual white papers were delivered. There was analysis of various issues, as opposed to advocating for a certain position. As the law is being implemented, we clearly, as a company, have positions on what we'd like to see; but in order to bring consensus, we provided data.
The chief actuary for Blue Cross became a key leader in this process. She provided detailed analysis to the governor's office, to the state legislatures... Whoever wanted information, we would provide it. We didn't take sides. We had a Republican governor and a Democratic leadership, everyone interested in publicity and getting their name associated with a bill. But I think it was important that we were able to provide the research and experts to the legislative leaders as this bill was being developed--financial analysis, product experts, all from a perspective of: this is what the market is.
This is what the factors can be. And providing education. It was something that the company was able to do, and it became very valuable.
We thought it was important that we continue a bipartisan collaboration that, if we were to advocate just for one version of a bill, or one particular agenda, it was not going to work. So the technical expertise went to areas such as market reforms, the availability of low-cost products, and a number of implementation-related issues. We live this, we know what the implementation issues are going to be, and we provided that data. The data wasn't always accepted and wasn't always agreed with, but we were able to provide it.
Again, I think one of they key things that we were able to do was to collaborate with Partners Health care, Mass. General Hospital, Brigham Women's Hospital, five other hospitals, 5,000 physicians. That is a powerful combination, if you have that group working with a large insurer. And it certainly was effective that we showed a united front, that there was a need for health care reform, there was a need to address the uninsured, there was a need to come up with a way to provide lower-cost products.
So what we did as a company, we played the role of facilitator. We have a government relations team that I don't think slept for a year. They worked through all of the stalemates; and there were a number of them. If you read the local press and listened to the buzz immediately before April, it was: 'No, this is never going to happen. There's no way this is ever going to happen.' But working in, sometimes, a plodding way, we tried to play the role; and these people did in providing expertise as the role of facilitator--here's the positive, here's the negative--as opposed to: 'This is what we need in order to help our business.' And I think it helped. The law was passed, and we are now in the process of trying to implement it.
We did have a few particular areas of interest that we advocated and we added to the mix. The first was quality; we focused on paying for performance. We thought it was critical that the bill... If you're going to reform health care, you address quality issues. And you can do that by focusing on pay for performance.
We thought it was important that you address implementation issues. Some of the earlier draft proposals may have looked wonderful on paper, but they didn't really work in the real world.
We thought it was critical to improve and change the Medicaid provider reimbursement. It was too low and it was not going to the right places. This is what brought the large providers to the table: they were getting 80 cents to the dollar for every time they provided care. So we had a lot to work with. I think there was a contribution made by Blue Cross. In addition to facilitating the process, it was adding this to the mix.
One of the things that we advocated was the merger of a non-group in a small group market. For those of you not integrally involved in health care, a non-group market is essentially individual--an individual that goes to buy health insurance, and what they will pay. Versus a small group. In Massachusetts, that definition is 50 or less. So an employer group is a small group.
The costs are dramatically different if you're buying in as an individual. Or, if you can take advantage of a group to help reduce rates. One of the positions that we proposed was that you merge those two markets, so the individuals get the advantage of the merged market. We also thought the only way that was really going to work was if you had some re-insurance to cover what was going to be, or could be, an increase in the costs. For the small groups, that didn't happen. So, we'll see what the increases are going to be when the products get rolled out.
We also thought it was critical that health insurers be able to offer low-cost products. We thought that if there was a product that was available that costs less, more people would be willing to buy it. Affordability was certainly a key issue. We also didn't want to add bureaucracy; we didn't want to add unnecessary costs.
And so the compromised plan ended up including the following elements. We have - increased coverage, there are certain market reforms, there's individual mandate, there's an employer's assessment if you don't contribute, there are metrics to improve quality and costs, and there's a different way of handling provider financing.
So, I'm going to talk a little bit about these various areas, and how they're being addressed now. The entire bill when it was passed was about 115 pages. Characterized in many ways by - here's what we want, and it will be later clarified with regulations, details, and more to come. And that has been happening over the past year, and it's made for an interesting process.
The first element was - Expanding Coverage. The eligibility for Medicaid coverage is now expanded to people up to 300% of the federal poverty level. We restored some services that have previously been cut. We had restored some programs that had been in existence, but had been cut back in the past because of budget cuts.
There was actually a great deal of effort - people wanted to go further, certain people wanted to go further. But, again, that $385 million in federal funding came to play, and the federal administrators made it clear that they were not really interested in expanding Medicaid eligibility beyond the 300%. And since that was putting the federal waiver in the money at jeopardy, the coverage expansion was limited to this amount.
So, in terms of Professor Jacobson's speech, working with the federal government was critical to us in understanding how far Medicaid was willing to go, being able to leverage the resources of Senator Kennedy. But, in many ways, this is a state-funded initiative, state innovated program. There had been another program for partnership that Blue Cross had participated in with small businesses with subsidies - that was also helped.
There was, you know as with any good legislation, another group created. And the group is called, "The Connector - The Connector Authority." The Connector Authority - it's a quasi-public entity. It makes several key decisions. It selects products that it will give its seal of approval to. And the seal of approval products are products that meet a certain criteria. There is a set of products designed specifically for the 19 to 26 year-old population, that can only be distributed through The Connector.
The Connector also administers subsidies to facilitate the subsidies for people that are below 300% of federal poverty level. It also grants a waiver - has the ability to grant a waiver to people who can't afford health insurance. The Connector's Authority has evolved over the past year. Basically, The Connector has the legislative authority to dictate what benefits are going to be in the products that it offers, and it gives its seal of approval.
One of the issues that we're struggling with right now is something called, "Minimum Credible Coverage." There's an employer mandate, just an individual mandate, which says, "Massachusetts, you have to buy health insurance." The Connector's about to decide what the minimal level of that health insurance is, what the elements of the benefit plan are. And once it makes that determination, if you have health insurance that contains all those benefits, you're not penalized in any way. If you don't - you could end up losing your federal income tax deduction, or paying a penalty.
And so there's an interesting debate going on right now - it's a policy debate as to what is going to be subject to the Minimal Credible Coverage. And it's interesting because, we're trying to solve a problem for uninsured - it is possible we could create an additional problem of under-insured. If the Minimal Credible Coverage level is set too high, then people who are currently buying health insurance may be penalized. If it is set too low, it may lower the bar for what critical element of health insurance is for the entire state population. So, it's a battle that is an ongoing battle - it is a battle. And now, because they're very different interests going on.
And The Connector has not decided yet. We're looking for as you know, by March 20th. But, it certainly - it's a whole matter of trading benefits for costs, and it gets right to the heart of health care reform.
The Market Reforms - one of the Market Reforms as I mentioned before was the merger of the small group and the non-group. We supported that only if there was publicly funded reinsurance that didn't happen. So, we're going to wait and see what happens now in terms of how the rates actually end up being set.
There was a report that was commissioned, and they issued a report. And there estimate was that as a result of the merger the small group and the non-group that the rates for individual health insurance could go down 15-20%. And the rates for small businesses, small groups could go up to 2%. You know, we're not living it yet, so we'll see if those estimates end up being accurate.
One of the issues that came up, the very policy issue that sort of can show the difference between reality and theory - has to do with the low cost products. Everyone agreed that they should be low cost products as part of the Health Care Reform. There are only a couple ways to have low cost products - you change the benefit structure, or you offer fewer benefits.
In Massachusetts we have a number of mandates. And originally there was a thought that some of the mandates that are required, would not be required in some of these low cost products. That hasn't come to pass, so the insurer's who participate in this market are stuck. We have to offer the mandates, or convince the regulators that maybe not offering some of the mandates would be a good thing to do if you truly want a low cost product. So, it's a struggle that's on going.
And right now the only product that has been developed that isn't subject to every possible mandate, is the low cost product for young adults - and even that product has most of them, so it's a little hard. The individual mandate, probably the most famous of the Massachusetts reforms, I think California is starting to adopt something similar, and other states - as of July 2007, everyone over 18 has to have health insurance.
And the way it's going to be - how you going to enforce that? The way you're going to enforce it is through Department of Revenue, and the State Income Tax Filing. That all the insurer's will be submitting a form that basically said, "Joe Nebins had health insurance during the course of the year. Joe Nebins can take the Personal Income Tax Deduction. If that form is not submitted, then the first penalty is loss of Income Tax Deduction.
A great deal of administrative work to make this happen. There is great speculation about whether the penalties will be delayed. So, we're going to wait and see, but it's certainly getting a lot of attention. Other reformists talked about is that we also increased Dependent eligibility.
The law allowed Dependants, and the students in the room may be interested in Massachusetts anyway, that you can be carried on your parent's policy up to age 26, or two years after you've lost the Dependence status. So, another way to capture the younger, healthier population, and give them an opportunity for health insurance, is at the age in which you can still have the Dependence status that's been increased.
The Fair Share Assessment - employer's required to offer health insurance, and to make a fair share contribution. In other words, a controversial aspect of Health Care Reform. So, if you're an employer in Massachusetts, and you have 11 or more employees, unless you offer a health insurance program, you'll be subject to a penalty of about $300 per employee. Also, you could be subject to a penalty if you have an employee that seeks care from the uncompensated care pool. Which means, they go to the hospital, they don't have insurance - and there's a bill associated with it, you could actually be billed back a certain amount if you don't comply with certain aspects of the law.
So, there are two ways to get at employers, to sort of encourage them to offer health insurance. The first - is a fairly modest fee; the second - is the potential for other added billing if some of their employees who don't have coverage seek care, the state has to pick up that care - they could end up being billed back at a certain level.
There's a requirement that 125 Plans be adopted in Massachusetts. 125 Plan - the federal plan that allows you to make contributions toward a health plan on a pre-tax basis. So, essentially it costs you less money to buy a health plan. So, to the extinct that the employer's of Massachusetts don't have 125 Plans set up, they're being asked to set it up right now. And if the employer's don't, they leave themselves open to a surcharge.
Improving quality. Some of the people I've talked to in other states and other areas it's certainly a major issue and how to best accomplish that. One of the aspects of the health care reform law in Massachusetts was the creation of a health care quality and cost council. The cost council has specified members and it's one part of the legislation that I think Blue Cross of Massachusetts takes greatest pride in, in that quality is one of the issues we're trying to address and we think it's important that it be addressed and the health care quality council is a way to do that independent of a particular insurer, independent of a particular provider, so it has a mission to improve quality. It does so through requirements that certain data be collected, the imposition of certain performance benchmarks that providers must meet, establishment and facilitation of consumer sites where consumers will be able to look at quality rates of certain data output for various providers and providers being assessed, held to benchmarks.
And also the quality council is charged with coming up with a recommendation so it's very much a policy body to try and encourage measures that will improve the quality of care in Massachusetts. It's a policy board, there are no specific dates as to when they have to issue reports, again it's going to be very much a self-directed group, but it helps set the stage for requiring certain standards for establishing benchmarks, holding providers and insurers to those benchmarks. So it's certainly something that we're very happy with.
Transparency, another major issue in health care. One of the things that the council must do is establish a consumer health website that contains cost and quality information. Getting into the details again - what truly is the cost, how do you measure quality - major major touch points and much discussion. But, at least with a requirement that there be a website, that data be provided it starts the path to having quality measured in certain ways. And its designed to help consumers make more informed choices about their health care, informed choices between providers. And so, the website has started, it's not especially robust at the moment. We hope to have comparative data by January '07, and some of the things that will be reported will be statistics that have to do with obstetrical services, physician office visits, high volume elective procedures - what the success rate has been, what the complication rate has been. All geared to educating the public about what they should look for in provider care, in satisfaction.
There were some other bodies created - Medicaid, a Mass health payment advisory body, a commission to study reducing the employer contribution to the uncompensated care pool. In Massachusetts all employers have to kick in toward the uncompensated care pool. It's a fund that's set up for offsetting the cost for people who don't have health insurance. And a health disparities council, which is important to us and I won't talk too much or at all because I think Renee's going to talk about it this afternoon, but it basically, through solicitation of data, is designed to generate data so that any disparities in health care are eliminated. And one of the easiest ways to start eliminating is to make the data public, collect the data, find where the disparities are, and then come up with ways to do it.
So it's an interesting topic and I think it's more than an add on to the health care reform, I think it's a critical aspect of health care reform, and if you establish benchmarks and hold people to those benchmarks it's a great way of using a policy method to actually effect great change. Pay for performance - if you've taken even one health care class you know that it's a major topic and so in Massachusetts now Medicaid rates are going to be based on certain pay for performance metrics. It's a way to start the process so that quality is improved. And it forces the establishment of benchmarks, it forces the establishment of standards, which is also a very difficult thing to reach consensus on, but if you have a state law that's requiring it, it certainly helps.
We also increased the payments to certain hospitals, the Medicare payments for those hospitals in certain state hospitals that are riding a safety net are getting more funding, so it's a very large and complex issue and so 112 pages of legislation tries to hit at least all aspects of it, this is one way of doing it - by giving hospitals who treat the uninsured more money.
Since the bill was passed there have been two technical corrections bills. There had been some vetoes by the governor that had been overridden. The technical corrections bills - some were technical, some of them were verged on substantive in terms of delaying the implementation dates, and the delaying of the implementation dates had less to do with a change of heart on the part of the payers, more it reflected the realities of trying to implement some of these changes, and also there were some inconsistencies between what employers had to do and what individuals had to do.
We have a new governor, a Democratic governor, who is very supportive of health care reform, has funded it in his recent budget proposal, so we think we're still on track. We issued a study on the merged markets, we don't know exactly what's going to happen, but the study on the merged markets indicates that they did think there would be a two percent increase for small groups and up to a 15% increase in premiums paid by individuals, and it has afforded health plans an ability to look at more flexible product design. I think probably less flexible product design than the health plans had originally hoped for, because again there's a tension between the regulators wanting a certain minimum and the health plans wanting some flexibility. There is an entire new market segment that's going to have its own set of products.
I've been looking at the advertising for that products, and it's a very different appeal to a 19-26 year old than your traditional insurance buyer, so that will be an interesting market to watch. And we're looking at some ways to change the cost shifting from, so that the providers are not stuck at the end of the day providing care to people without insurance and having way of recovering those costs. I think that overall the health care reform allows some opportunities to advance the quality agenda, through pay for performance, transparency. It affords some opportunities for aligning the interests of the health insurers and the providers, all the various constituencies.
In many market reforms there is resistance, provider resistance in particular. The providers were aligned, or at least a large [unintelligible] were aligned with Massachusetts in this one. So I think it certainly helps that they understand the issue and they were a key player in trying to make it work.
We're not sure what the impact is going to be on us, to be quite honest. We're not fully convinced about that the numbers are right about whether there will be that much reduction in individual market or that much increase in the small group market. Large employers are already starting to react. We're getting closer to the dates where employers have to do this and we're hearing from them. We're hearing from our accounts as to what the impact is on them and what they have to do to change their plans. Some people, some large employers now, they offer insurance now, they see this as possibly punitive, so there are some issues. We're starting to face them, and I read about them in the Boston Globe if I don't see them in my mailbox when I come to work in the morning. There are a lot of battles being fought in the press, there's still a lot of political posturing that's going on, a lot of policy advocacy groups, it's all part of health care.
I think that in Massachusetts the reform may not be replicated very easily. We have a unique situation, we have a low percentage of uninsured, about ten percent. We have some existing regulations that cover the market. We had a political alignment that allowed this to happen, you know, we had a Republican governor who wanted to run for president, and this is a huge feather in his cap. We had a Democratic legislature who wanted to respond to their constituents, and moved it to the top of their legislative priority.
So, some aspects we think of these reforms can be replicated in other states, others may not be because of our unique situation, but it certainly has opened a forum for discussion, I know that I get calls, I know that our government relations people get calls from not only blues plans, but other insurers in other states and regulators because they're all struggling with the same issue - higher costs, dealing with the uninsured, and improving performance. So all you can say, I think, is that health care reform is coming, it will take a variety of different shapes, depending on the particular circumstances. I think it is only going to be successful with a combination of federal and state plans. We haven't seen the end of it in Massachusetts.
There are suggestions that there will be a rash of challenges which haven't happened yet, but may happen as we get closer to the actual implementation and individuals really begin to focus on having to sign up to buy health insurance at the costs that are being established now. The employers have to deal with offering the same premium contribution across the board, which they may not be doing right now. There are a number of issues, and policy issues, and political pressures that are still going to come to bear.
But it makes for an interesting job, in an interesting time. I am happy to answer any questions and listen to what's happening in the other states; because, I think, for the students, if you continue in health care, it will be a fun time, that will be quite interesting. For the practitioners, the challenges just keep increasing. Thank you.
[applause]
Cindy: Just before we return to you, Professor Bach, I do have to ask you one question. Because you are standing here for the first time in a state that actually has a lower percentage of uninsured population than Massachusetts. You have a Republican governor, Democratic legislature. Thinking about what you were saying, three or four years ago we had all these competing proposals out there, I just have to ask you, What is your advice for -- since in Minnesota, short of having our governor run against your former governor?
[laughter]
Joe: That certainly helps. I think the advice is that, if you can provide a vehicle for facilitation; there are competing interests. There also are an alignment of interests. You can get people to focus on the alignment. If you have an independent body -- in our case it was the Foundation, that was able to generate statistics, do analysis, provide a data that was believed to be objective. It was not advocating a people's position.
I think if you can provide that sort of independent data and also facilitate bringing groups together, in a way where differences can be addressed, not always resolved, I think that is the best way to sort of make it all happen.
Cindy: Thank you. I know you are going to be around after this to answer people's questions to the extent that we can get them answered in the next half-hour, right?
Professor Bach, are you ready?
Tracy: I am.
Cindy: OK. I think Christine is going to be here and both of the slides. So, as you speak, we'll focus your words...
Tracy Bach, Professor of Law - Vermont Law School: If it is OK with you, I'll just cue you on each slide. How's that?
Cindy: That sounds great. I would just ask you too, maybe at the beginning or sometime during your presentation, we would love to have your comments about what Joe was telling us about - where you agree or you disagree, or you just want to add something.
Tracy: Well, I was taking lot's of notes while he was talking; so I can find a reference to something across the way.
First of all, let me just check in. Can everybody hear me OK? OK. Great. And the pace is OK, not too fast, not too slow? OK. Well, the reason I asked in particular Joel and Joey their pace of speaking. He is an East Coast person who then moved to Minnesota, and learned to say, "yesh", or "you betcha." Go to school with a lot of great Minnesotans. I learned to speak more slowly over the years, especially now as a teacher. I remember several professors talking about their evaluation and things, "You speak too quickly." So, I'll work on that.
First of all, I want to thank everybody for making my presentation possible. I had submitted a proposal to this conference before I was invited to teach here at the University of Paris. So I found out my proposal was accepted. I had to talk to Jennifer Mitchell, and I said, "Well, what do you think? March in Paris or March in St. Paul?
[laughter]
Well, I love Minnesota and I love St. Paul, and I really didn't want to come back. March in Paris went out.
What I thought I would do today to start off, or what I had planned originally was discuss how well, perhaps with Professor Jacobson's comments last night, about the tension between federal and state approaches to improving access to health care services to US citizens. What I am going to start out first with, is more of a big picture idea of what happened before we get to where we are today with state innovation to improve access and specifically in New England.
So let me just cue the next slide, if you can. I am doing the same thing here. I should describe to you, I am sitting in my apartment, log windows, it's about this time of the year, about 4:30 in the afternoon. I wanted to report that I was drinking red wine, and eating cheese and chocolate. But in fact I am just sitting in my bedroom, because that is the place where I have one outlet, where I can do both the phone and the computer at the same time.
All right. So hopefully you are looking at a slide of Hillary Clinton, she was a leading an important health care reform in 1994. Really what I want to start off with is, before we start focussing on what states were doing, we really have to take a look at where the federal government has been, both in recent history in 1994, which was the failed attempt to do national health care. In particular, not a single tier which was what it was often labeled as. But really, more HMO, modified competitive market approach to get everybody insured throughout the United States, particularly being at the federal level.
I would just note, I think Joe talked about the last time major health care reform was tried in Massachusetts. That was the old fashioned Senator Kennedy event. Always labeled as a policy wonk. But it was around the same time - yes, Dukakis, thank you. Of course, right now I am picturing him in that tank, the picture of him in the tank with the helmet.
But also '94 was Vermont. '94 was also my last year in law school, I was in Minnesota at that time. But I was following events in Vermont, which attempted to do a single payer system in '94 kind of on the coattails of the Clinton health reform.
Well anyway, we will go to the next slide, what we see is historically if we look back a little further, often we forget, because we tend to be so focused on health care being a province of state government. Of course, shall we think of, Jacobson being of Massachusetts. There are a number of Supreme Court cases that state very clearly that regulation of health care and health care services is one of the social welfare pieces that was kept by the state, that was not a delegated power under the Constitution of the federal government, and that's where we keep it. So most federal regulations occurred, until the 70's, when we had a particular number of health care statutes. But most would think after that date.
I think historically what we forget is that, pre-World War II and then again post-World War II, there were initiatives to federalize health insurance; to make health insurance a national entitlement. So this picture that you see of FDR, I don't think announcing the proposal; but up there is a lectern. This was a proposal that was pretty much like what you see in European countries. It is basically health insurance and entitlement.
FDR was lambasted by the medical associations, in particular the American Medical Association, as being a socialist, and having socialist initiatives. So it died on the line before it got going. Then again if we go to the next slide, Truman attempted to resurrect the post-World War II. And if you think about plenty of amazing trends right now... I am sorry?
[somebody speaking from the back of the hall]
Thanks for letting me know. Is that better? OK. I am also probably speaking too quickly. So let me slow down.
Cindy: Professor Bach.
Tracy: Yes.
Cindy: The speed is not a problem. You just need to speak up, that's all.
Tracy: OK. Is that a little better? I'll try and yell just a little bit more.
So, you have Truman, President Truman, post-World War II, again trying to propose a national health insurance system; and again that is a period that we often forget, we being the current generation, and in particular look at the quote, the reasoning is pretty in line with most other developed countries do. The idea of associating wellness with what worker output, so by preventing illness, by assuring access to needed to community and personal health services and by protecting our people against the loss of sickness we strengthen our health, national defense, and national productivity. So that link was clearly there, but again among other organizations, he was denounced or this program was denounced as a socialist initiative by the AMA. All along there has been provider resistance in part because of some things that I think Joe mentioned early. We have a very developing insurance system at this point. A payer system that was very advantageous for providers. They were not open to changing it.
If we go to the next slide, where we get is the period in the United States where health and in particular health care insurance is beginning to look more like a right than a privilege. And that of course is with advent of Medicare for the elderly, Medicaid for the poor. In 1965, all around the time of the civil rights acts. So what we see developing at the point is a system for insurance Medicare being federal, Medicaid being that joint federal state, but with mostly federal funding insurance program. Which gained access, it's hard for us to believe today, given the political power of seniors in our country, and you combine that with the baby boomers in aging, the sheer number of folks who are becoming eligible for Medicare and with the recent changes to include prescription drug coverage this is a very powerful portion of the population that is relatively wealthy.
That's one of the interesting things about Medicare traditionally not being means tested, that it's available to all at a certain age, it's an interesting thing because pre-1965 the elderly population, without access to health insurance or a health insurance product like that, were some of the poorest members of our society. In particular I want to point out overall, taking the big picture in that historically there have been many periods in our history where for a variety of reason we've sought to create or vest in the federal government the responsibility to provide access for all citizens but that until and again in '94 what is largely resulted is a health insurance right for elderly, health insurance right for those under a certain income level that are poor, and then rest is optional basically.
So going to the next slide, of course the question is, and I suspect that Professor Jacobson talked about these numbers last night, the issue is why change, and of course some people want to say the system isn't broken (notice I put system in quotes because I'm not convinced it's really a system), but here are the big antagonists for taking a hard look at what we're doing. First, the number of people of who have some level of insurance, usually a major medical, but unable to get to it because of a large deductible then the uninsured is the number we looked at, some people say 16%, some people say 17%, but it's a large figure and that's the national figure.
Finally, we bring the group people who largely when you think back to even Truman and FDR's approaches and president Clinton's, folks who've been opposed to a national health insurance scheme, those being manufacturers and large employers. Why? Because they are going to be hit for a certain amount of contribution. Well, they are already being hit because as we know about 50% of U.S. citizens receive their health insurance through their employment, that being a world war two phenomenon, when health insurance was offered as a non wage benefit while wages were being frozen at that period.
That's how it all started, but it snowballs to the point where a recent Health Affairs article that was Feburary 21st article that got so much tension at the end of last month, right now we're predicting health care spending is going to double from today 2006 the number is at 2.1 trillion to 4.1 trillion in a decade. And employers are picking up a large piece of that, a recent number from GM (which is having troubles for other reasons) is about $1,500 of every car that they make is attributable to the health care costs that they have to pay for their workers. And this stands in stark contrast to their competitors in Japan where there is a federal system.
We could look at Germany, which has what we often think of it in the states, a federal system, but it's a really interesting employer based system as well, but with federal mandates for coverage. The bottom line is that our for profit competitive system, the main players being manufacturers and other employers, concede that our current system is not working for them and is making them non-competitive in the global marketplace.
So why go to the states? Let's go to the next slide please. Back to the drawing board. Of course, we see the famous quote, Justice Brandeis's quote, from his dissent from the New Ice case. I always forget the name of the case. It's the New State Ice Company vs. Liedman, a 1932 case, but it had nothing to do with health insurance, but it did having something to do with the state having the ability to do something a little different than other states. And this is the quote that in fact the theme of this conference is built on, is one happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory and try novel social experiments without risk to the rest of the country.
So the question is what are we doing in health care by going back to laboratory? What can we try out at the state level that: one will ameliorate the conditions in that state with respect access to health care services. Second, what kind of lessons can we gather from each state and see if they can be extrapolated either, one, to other states or, two, to some type of federal initiative?
I mentioned the health affairs article that came out that caused such a stir in the popular press a month ago. Also in the wall street journal around that time, one of the leading experts talked about what we're really doing in the United States is, what he called, creeping toward a single piece, a single pair system, in a disorganized piecemeal way. What I offer to you by looking at these three New England states is that we can, first study why health care access initiatives are occurring there.
Second, see what, actually, is the form they take. There are a lot of common denominators, many of which Joe mentioned in his talk: quality initiatives, looking at Medicaid reimbursement rates and maximizing those, maximizing the use of Medicaid or federal dollars intended to extend them like ASCHIP dollars and, in particular, market reforms. But as we'll see both Dirigo in Maine and Catamount Health in Vermont offer some unique pieces as well.
So finally the question would be, can we learn from them? And is there any way to extrapolate those lessons to the federal government, so that it maybe won't be so disorganized that we can definitely see there is definitely a piecemeal way? Maybe we might be at the launching point; that there'll be enough experience. Something I think Joe outlined well about how the reform effort occurred in Massachusetts. In particular, the role that Blue Cross/Blue Shield foundation played in providing facts, lots and lots of information, so that hopefully consensus can be built on first what the problem is, and then second with some data from these laboratories known in states around the country, maybe then being able to make small, incremental changes at the federal level based on what has worked at each state.
So let's go to the next slide, and just outline the three experiments that I wanted to talk about today.
Are you still with me?
Cindy: Yes.
Tracy: All right. Good. Is it loud enough still?
Cindy: Yes.
Tracy: Great, thank you.
So, of the three, Maine's is the grandma or grandpa, having started in 2003 -- or been enacted, I should say, in 2003, because as Joe has explained there's some lead-time between enacting a reform act and actually making it happen -- and it's known as Dirigo, and we can all pronounce it different ways, I understand that's a Latin term that means "I lead", I speak French, but I didn't learn to read Latin unfortunately. But the Dirigo Health Reform Act was largely, I understand, pushed by Governor Balducci, who is still the governor. And I shouldn't say "pushed," but he lead the effort, and that there was a fair amount of consensus from the State Legislature to support it.
Of course, then we have the Massachusetts Health Care Compact, and I like that idea. Christy [Christine] Hagar, who is Chief Health Council to Speaker DiMasi came up to our law school, the Vermont Law School, in November to present on Massachusetts health reform, and in particular she stressed to the audience about the philosophical basis that was offered as a starting point for why Massachusetts should seek to have every citizen be able to access health care. And she talked about it in terms of the social compact that is in the Massachusetts constitution, of course it doesn't say health care per se, but talked about the compact between government and its people.
So that's Chapter 58. And Joe went into... I know the number of pages, Christy actually had a slide that indicated the number of sub-pieces of law that needed to be changed, as a result of it, it's monstrous. And in a much smaller way, because we're a much smaller state, but with some interesting facets to it, we have Vermont's Catamount Health, which was passed also in 2006, some would say on the heels of Massachusetts, I have this in the order of their enactment.
So, the passage in 2006 reflects some compromise, because you'll see it says Acts 190 and 191. The first attempt in the preceding legislative session -- and I shouldn't say first attempt, I mentioned already the single payer attempt in 1994, but the most recent attempt before 2006 was 2005, which ended in a stalemate between our Democratically controlled House and Senate, and the Republican governor. So the current Catamount Health Program was enacted in 2006, after the failed attempt of 2005, and consequently includes some significant compromises, which I'll talk about.
All right, let's go to the next slide.
So what I want to do in the next few slides, and let me be clear, because Joe went into such wonderful detail and clearly has command of the ins and outs of change in Massachusetts, I'm going to get emphasize Maine and Vermont, and just lightly skip over... or lightly address, I should say, but really [laughs] my Freudian slip there, "skip over" the Massachusetts slides that I have here.
Cindy: Professor Bach, this is Cindy Jessen, and I appreciate you doing that, I just did want to let you know, just given the time difference, this session is technically over in ten minutes, we can run a little longer than that; so I think it would be great, from our audience's perspective, if you could focus on Maine and Vermont.
Tracy: Great, I'll do that, thanks.
So when we look at Maine's problems, and what they were trying to address in their reform, we see a couple key things. One, hospital cost increases. They're above the national average. Same with the health insurance premium, in particular probably more problematic than rising above the national average, it's actually rising above workers' earnings, something I've referenced earlier. They have that CPI, you have the general inflation index, but the health insurance, or the health inflation index is much higher, with outstripping what folks could earn.
Overall, uninsured: 13%, which is better than the national average of 16 or 17%, but still relatively high. And then finally, we have a decrease in the small group insurance market, a pretty significant one, that was precipitating Maine's response.
So let's go to that next slide: Maine's response. The "what does Dirigo do"? Well, it has three main objectives. If you go to its website, it's got a ton of good material; you can find the studies done by the Muskie School of Public Policy to assess it. But you have three main objectives that I think we see, we heard Joe talk about in Massachusetts, you'll see them repeated in Vermont, and you'll see them repeated in a number of states. One is to control costs; two is to expand access, and in particular they wanted 100% access by 2009; and finally, third, to improve quality.
Working backwards, improving quality, I think, is probably the least developed initiative in Dirigo. It largely centers around data collection and improving the kinds of pieces of information that can be used to measure quality. And also to focus on the technical piece of doing more electronic medical records so that there's a relatively seamless system across the state as people seek care.
Working up to expanding access, the two main ways in which Maine sought to do it was to go through a Medicaid eligibility expansion, so being more creative with their use of the Medicaid dollars by improving access to folks certain percentages above the federal poverty level, through the waiver system that Joe already referenced.
And then Dirigo Choice Plan. So that was their... the centerpiece -- that "is", I shouldn't say it in the past tense, because it's going on now. That's the centerpiece for Maine's reform effort. And Dirigo Choice Plan is intended for those who are uninsured, currently uninsured, it has a sliding fee scale. It is not associated, which is interesting, with a individual mandate, which of course then can motivate, like in Massachusetts, folks to take a hard look at putting in the dollars, the monthly premiums into a plan like Dirigo Choice, but it is on a sliding fee scale. It is intended clearly for those who are not eligible for Medicaid, and who are not eligible for insurance through their employers. So largely, it is for the working poor, but who don't have access to a plan through their employer.
Finally, on the controlling costs side, this is probably one of the hardest things to do, because it usually incurs a fair amount of provider resistance. But there are renegotiated hospital limits, like in reference to Vermont for example, we're also a CON state, a Certificate of Need state, and as a part of that process our hospitals regularly, "voluntarily" submit their budgets for review to the state, and propose rate increases that, like in a public utility review, the state either agrees, or doesn't agree and tells them to go back and rework the numbers. So Maine is seeking to have in particular hospital budget limits, or one could say charge limits.
Let me go to the next slide. Here's Massachusetts, so let's just skip over those, but I do want to underscore one key thing that's different about Massachusetts, I think, and their focus, which probably led to that individual mandate, is there is some very good research to show that the largest percentage of that 10% of uninsured were young adults. Those "invincibles", which I really like Joe calling them that. And so by bringing them into the health insurance system, clearly through low utilizers, right, that's when we all are hopefully less ill, and they help to underwrite the health care that is needed for those who are older and more sick. That was an interesting part of Massachusetts.
So lets skip the two Massachusetts slides and go to Vermont. Well, Vermont presented a different problem. A relatively low uninsured rate, although Vermont didn't find it acceptable, 10%, so under that 16% national and remains 13%. But in particular, Vermont, which is a little different than Maine, but on the same plane, and certainly different than Massachusetts, is Medicaid is our states largest insurer. Vermont is not a wealthy state, although there are pockets of wealth spread throughout it.
In particular I want to go to the last bullet point because this has been a hallmark of... Let's see Jill, you mentioned a map, that Blue Cross Blue Shield map that was developed Massachusetts map for health care, we have a blueprint. So everybody needs something for their guidepost and that is a blueprint that was come up with the state with participation with Vermont Blue Cross Blue Shield. But what it found and this is a figure that in particular the Governor was very focused on, was that there is some, a quarter of all Vermonters with chronic conditions, accounting for about 70% of all health care spending in the state. But that someone in the study had figured out that they weren't getting the right care at the right time. And that has become part of the response.
So, let's go to the next slide. So Vermont's response, not surprisingly, looks a lot, structurally like Maine's in that the three fold goals were to increase access, contain costs, and improve quality. Let me focus on a couple of things, for one, non-group and I should throw-in small group market reforms is definitely part of increasing access. Catamount's Health Plan, like Dirigo Health Plan is one intended for the uninsured with a sliding fee scale. Differently though it is not at this point anticipated to be a state health plan. One of the compromises between the governor and the Democratically controlled legislature, was for the first two years of its life, and its life begins this July, July 1, that it would actually be a publicly designed health plan that would be offered by our private insurers in the state with premium assistance by the state. So it is a slightly different way of configuring it.
On the competing cost side, one of the key things is the theoretical basis for all of these data initiative is to decrease cost shifting. And the hope is by decreasing cost shifting and in Vermont raising Medicaid rates also, that that would bring down the overall costs of health care. Again, since this is all new I will reprise a comment Joe made, 'We are in the process, we will see what happens.' And as I mentioned Vermont's health care reform efforts don't really start until July 1st. There has been lots of planning and things being put in place so there is no data yet.
Finally, on the improving quality front - the key piece here was wellness and chronic care management. And, I'll just skip over that but if people have questions I am happy to explain more what the state is doing.
So if we go to the next side and start to look at the results from the laboratories, for these novel social experiments in health care, I readily concede that it's still too soon to tell. But, here is what Maine reports, and here Joe I found this interesting given where you concluded.
One, Maine is very clear that the legislation is the opening battle. That getting the act passed was not the end but actually the beginning.
Second, an observation, and this is by a researcher at the Musky school - that in fact everybody wants universal access but no one wants to pay for it, no one really wants to pay for it.
And the third, the real problem is the rate of health care cost increases. That whether you look at it as a function of the increase in technology and the cost of technology in providing services or the increasing age, i.e. the shifting baby boomer generation using more services. Whatever it is, the bottom line is that the health care inflation rate is just untenable and it has to be rained in. And that is probably the hardest political choice, which is addressing how we structure fees and pay providers.
The last point, I wanted to point out something that, those who are interested might want to follow up on this. One of the interesting parts of Dirigos, that the legislation was that the folks crafting it agreed after a certain period of time, I think it was after two years, they would sit down and look at whether indeed Dirigo Health Plan was decreasing the overall cost. Obviously these things cost money and I didn't mention part of the way we are funding things for the Catamount Health Plan is through an increase of the cigarette tax - little ironic. But legislatures are always looking for sources of money to fund these efforts.
But part of the analysis in Maine was to say in a certain point can we see if putting this money in now and getting more people insured is actually bringing down the overall costs of health care. And they are supposed to assess that every few years in order to determine whether Dirigos should continue. They did assess that once at this point. There is a commission appointed at the state level and they found that it had improved. A group of citizens, actually I think also private employers challenged that decision and it went to federal district court where they were challenging the process basically of the calculation. And they lost that case, so it is settled law at this point that in fact the Dirigo Health Plan has achieved this first review.
So, I love this one, next slide. As go Mass so goes the nation. And I'll just let you read that on your own. In particular, it is interesting to see how the individual state initiatives are seen by folks outside of the state.
Going to the next slide, here is the question, what are the common denominators to these plans? Whether we are looking at Maine, Mass, and Vermont, or other states. One - subsidized health plan. Two - insurance market reforms. And third, which is the key thing, that really will be the proof in the pudding down the road, as we assess these things, is whether by addressing the whole bad debt charity care cost shifting conundrum, we actually do bring down premium costs, i.e. as more of us are in the system, and we are all paying for it, does it bring down the overall costs because we don't have some folks paying a lot because some folks aren't paying anything.
And then the question is what is unique to each state's situations that just really can't be replicated. Joe talked about the political will, i.e. having a Governor run for President, well that's a tough one. You can't really replicate that in all 50 states. And, I don't think that is going to play at the federal level.
The other thing is the amount of tax dollars available to underwrite starting these programs. Certainly Massachusetts is a wealthier state than neighbors Maine and Vermont. And I think that impacts the complexity of the reform.
And then finally I think as far as what really gets things going is when you have a major disjuncture between the local economy and health care inflation, i.e. Maine and Vermont's relatively impoverished status at the local economic level verses health care inflation. That motivates people to do something. And the question is, are there lessons to be learned by other courageous states and by the federal government? Well, I don't mean to just drop that ball but I think the key thing is stay tuned. I think a big piece of it is recognizing bringing more people into health insurance i.e. massive individual mandate. That we have to bring everyone from zero to whatever, whatever the age, into the health care system so that we have all those funds attached to them, in the system so as to make care available to all. So, I'll stop there and let people ask questions.
Cindy: Well, thank you so much, Professor Bach. I think what we are going to do since it is 10:05, and certainly if you are willing to stay on the speakerphone and Joe, if you are willing to stay here is go ahead and take our 15 minute break. But have you both available to answer questions, but during that break, does that suite the will of the crowd here? OK? Thank you both so much, I think this is very enlightening. And I think actually it is a great lead into our next segment on what we are doing here in Minnesota. Some of the proposals, some of the progress we have already made, and we will come back in 15 minutes and hear about that. Thank you all.
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