Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



June 8, 2009

Washington Health Policy Week in Review Archive bc7562b5-d22b-4c37-80de-e3cf2a46893e

Newsletter Article


Economic Case for Health Overhaul Rolled Out at White House

By Jane Norman, CQ HealthBeat Associate Editor

June 2, 2009 -- The Obama administration issued an economic analysis Tuesday saying that a "genuine" health care overhaul would slow the growth of health costs and reduce the deficit—while not taking a stand on spending reductions or revenue increases.

"We don't try to get ahead of the legislative process and identify particular actions but to just make the case this is a realistic goal, albeit a challenging one," Christina Romer, chairwoman of the Council of Economic Advisers (CEA), said.

The hope, she said, is that the report issued by the CEA "will help strengthen the resolve of policy makers to undertake the serious changes that are necessary." The report "shows the cost of doing nothing," said Romer. It says that without change, the share of the Gross Domestic Product (GDP) devoted to health will rise from 18 percent in 2009 to 28 percent in 2030.

The report estimates that if growth for health care premiums continues at 4 percent a year, less than the historical average, premiums for family coverage will reach $25,200 per year by 2025.

Underlining a White House push to get things moving that was emphasized with the CEA report, President Obama cited before meeting with Senate Democrats on health on Tuesday afternoon conclusions from the report.

"To give you a sense of what we're looking at down the road if we don't initiate serious reform, one-fifth of our economy is projected to be tied up in our health care system in 10 years; one fifth," he said. "Millions more Americans are expected to go without health insurance if we don't initiate reform right now. And outside of what they're receiving for health care, workers are projected to see their take-home pay actually decrease if we don't get a handle on this."

Obama added that "this window between now and the August recess I think is going to be the make-or-break period. This is the time where we've got to get this running."

Separately, Senate Majority Leader Harry Reid, D-Nev., said financing of an overhaul—which could include some taxation of employee health benefits—remains unclear as two Senate committees move toward forming single bill. "That's the most difficult issue of all," Reid told reporters. "And at this stage, nothing is off the table and nothing is on the table."

The CEA report argues that throttling back the annual growth of health costs by 1.5 percentage points would increase GDP by more than 2 percent in 2020 and 8 percent in 2030. That would put $2,600 more in the typical family's pocket by 2020 than if reform had not occurred, it estimates.

In addition, the report says that slowing growth would prevent "disastrous" increases in the federal budget deficit and lower the unemployment rate. Expanding coverage to the 46 million uninsured will increase "net economic well-being" by $100 billion a year by covering the uninsured, the report says.

"Reform would likely increase labor supply, remove unnecessary barriers to job mobility and help to "level the playing field" between large and small businesses," the report adds. The theory is that people won't stick with jobs simply to hang on to health insurance, and that small business will benefit by obtaining access to better compensation packages.

Said Romer: "I am now the most passionate advocate for health care reform probably in the entire White House. . . it's making the case that doing health reform well is incredibly important for the economy."

Doing it "well" means affordable coverage must be expanded to the uninsured and costs must be controlled, said Romer.

Republicans criticized the report for a lack of specifics on how to accomplish that. Rep. Roy Blunt, R-Mo., head of the House Health Care Solutions Group, said "the bare bones details we have seen from the administration and other side of the aisle do nothing more than set Americans up for the delayed or denied care patients in countries with government-controlled health care are currently experiencing."

The report was rolled out at an event at the Eisenhower Executive Office Building that also included Senate Finance Committee Chairman Max Baucus, D-Mont., and Sen. Christopher J. Dodd, D-Conn., a top member of the Health, Education, Labor and Pensions Committee filling in for Chairman Edward M. Kennedy, D-Mass.

Later in the day Romer appeared at the Brookings Institution at a forum including David Cutler, a Clinton administration member of the CEA and Otto Eckstein professor of applied economics at Harvard University, and Douglas Holtz-Eakin, former chief economy policy adviser to Sen. John McCain's presidential campaign and former head of the Congressional Budget Office.

Holtz-Eakin said that proposals for change in system represent "an opportunity we do not want to squander" for economic growth. He praised the analysis for "quantitative and important insights," though he said trends might not be as dire as predicted. A "very optimistic" view of any health overhaul is presented in the report, he said, and the scenario presented is "very speculative."

The prospects of job loss were explored by the trio. Cutler estimated it will take three to five years of very concerted effort before progress will be seen in slowing costs. Administrative simplification in health care could mean "you can fire a bunch of workers," he said.

Holtz-Eakin said "the first thing is getting reform and David mentioned one reason why this is so hard—because the first thing you think of is firing workers and that gets in the way of the politics of reform pretty quickly because we have all these people's livelihoods being radically rearranged."

But Romer said "remember what we're talking about is slowing the growth rate of health care costs—by all of our estimates the health care sector is still going to be growing as a share of the economy so the idea that we're throwing a lot of people out of the health care sector isn't plausible." She said that "really what we're talking about is shifting them around" within the health care industry.

Publication Details

Newsletter Article


When Being Insured Is Not Enough

By Clea Benson, CQ Staff

June 3, 2009 -- As the drive for an overhaul gains momentum, consumer advocates have been recounting horror stories of people facing devastating medical costs: a breast cancer patient struggling to pay more than $30,000 she owes her doctors; a couple losing their home to foreclosure after paying for their daughter's treatment for a chronic disease; a prostate cancer survivor having to forgo annual screenings because he can't afford them.

Though much of the discussion has centered on the need to cover the nation's 46 million uninsured, the people behind these particular stories are examples of a different problem. They're all insured; their policies just aren't comprehensive enough to protect them from potentially crushing bills.

As costs rise and employer benefits become weaker, the phenomenon of "underinsurance" has become increasingly common, patient advocates say. About 25 million Americans had inadequate health coverage in 2007, according to one widely cited estimate by the Commonwealth Fund, a foundation that supports health care research.

The problem is giving rise to one of the central questions lawmakers face as they tackle an overhaul of the system: Exactly what needs to be covered by an insurance policy, and how far should the federal government go in mandating the specific details?

"The policy issue we're facing as a country is that we've never put a floor under insurance benefits and said, at a minimum, a policy has to be broad in scope," said Cathy Schoen, senior vice president at the Commonwealth Fund. "There are still policies on the market that don't protect you from high costs. We've never done basic insurance standards."

Historically, this area of regulation has been left up to the states, with the result that insurance protections vary widely around the country. Now, though, consumer groups say the federal government should begin to play a role not only in extending health insurance to those who don't have it, but also in spelling out exactly what should be covered.

"I think it's important that Congress and the administration focus on what is actually insurance and what benefits are sufficient, and that co-pays and deductibles are reasonable for people," said Robert Restuccia, executive director of Community Catalyst, a Boston-based organization that promotes affordable health care. "We feel like people need coverage that meets their medical needs and that they can afford."

Insurers have indicated an openness to increased federal regulation, but they have also made it clear that they want to retain the flexibility to offer low-cost insurance plans with only basic benefits.

And conservative policy experts argue that such regulation is not the proper role for the federal government. Moreover, they question whether Congress is capable of coming up with a workable solution. "We've got 300 million Americans who have 300 million different opinions as to what would really qualify as proper insurance," said Grace-Marie Turner, president of the Galen Institute, a think tank that advocates a free-market approach to health care. "It's just really hubris for Congress to think that it's going to make a decision that's going to work for 300 million people."

A Growing Problem

The Commonwealth Fund has been tracking the underinsured in surveys of health care consumers every two years. Between 2003 and 2007, its researchers found, the number of Americans reporting that they had inadequate health coverage jumped 60 percent.

The group defines the underinsured as middle-class workers who spend 10 percent or more of their income on out-of-pocket medical expenses, and low-income workers who spend 5 percent or more of their income on health care.

Schoen, one of the authors of the report, believes the numbers have only gotten worse during the recession. As more workers lose their jobs and are forced into the individual insurance market at a time when health care costs are continuing to rise, the only policies they might be able to afford are those with limits on coverage and high cost-sharing, she said. Incomes are down or flat, so workers with health insurance are less able to afford their premiums and deductibles. Meanwhile, many employers who do offer health care coverage, particularly small businesses, have passed along more of the increased costs to their employees or cut back on the quality of benefits entirely, she said.

"As companies have tried to hold on to benefits, the effort to hold on to benefits has also meant trimming them," she said.

Commonwealth Fund researchers found that the underinsured were racking up personal debt by mortgaging their homes and running up credit card bills. They were more likely to skip medications for chronic conditions, and less likely to go to the doctor in the first place than those with better insurance.

While some of the underinsured were aware that they would have high costs when they bought their policies, others reported that they only discovered how limited their plans were after they got sick and needed care.

To advocates such as Schoen, that's why the federal government needs to set basic standards for health coverage much the way there are standards in other industries.

"When we buy a car, none of us would expect to come home and find it didn't have any brakes or a steering wheel, but we never really said there's a basic standard for health care," she said. "Doing it on a federal level would protect consumers if they moved across state lines."

But that's where opponents of government involvement disagree. Mandating what insurers must cover will only drive up costs, they say. One of the factors driving health care inflation, they say, are the requirements for coverage that have been put in place in many states.

Turner, of the Galen Institute, has a car analogy of her own: "We say you have to have health insurance for all your health care needs, but if you had auto insurance that covered every time you got your gas tank filled up, your car washed, and your oil changed, the price of the policy would be much higher," she said.

Setting Limits

The question, then, is where to draw the line between guaranteeing that benefits will be adequate and requiring so much coverage that all policies become more expensive.

The insurance industry is staking out middle ground, acknowledging the need for basic standards but also suggesting that Congress should avoid getting too specific.

"Yes, you have to have essential benefits like prevention, chronic care management, and catastrophic and acute care," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans, the leading industry trade group. "It might be something that Congress doesn't need to outline what a specific benefit is. It could be that a separate commission is set up to take the politics out of this."

But insurers are insistent that they need to be able to offer stripped-down plans with high cost-sharing that enable small employers to provide insurance. "It's hard for small businesses to afford coverage as it is, because they're bound by all these state mandates," Zirkelbach said.

Consumer groups, meanwhile, say they want an end to insurance products that don't cover hospital stays or drugs and include deductibles that are so large that they discourage families with modest means from ever going to the doctor.

"We think there's a baseline level of benefits, adequate premium support, and limitations on co-pays and deductibles," Restuccia said.

Restuccia and other advocates point to the benefits in the Massachusetts overhaul, where, according to a report last year from the Urban Institute, the percentage of people who are underinsured dropped from 4 percent to 3 percent. The state, which requires nearly all residents to obtain health care policies, mandates that plans meet basic standards for coverage of hospital stays and other essentials and cover preventive care without charging a deductible. The system offers three benefit packages at different costs.

Senate Finance Chairman Max Baucus' May white paper on health care suggested setting up four benefit options ranging from low to high and requiring all insurers to offer coverage in each category. All of the options would include preventive benefits, primary care, emergency services, hospitalization, physician services, and prescription drugs. Plans could not include annual or lifetime limits on coverage.

Other members have expressed their support for setting a national floor on benefits for the first time.

"The question of the right balance between underinsurance, which can lead to individual financial risk or avoidance of needed health care and the resulting poor health outcomes that come from that, and overinsurance, which can drive up health care costs, is a difficult one, but one that obviously needs to be addressed if we're going to do comprehensive health care," Sen. Jeff Bingaman, D-N.M., said at a recent hearing on the issue.

Publication Details

Newsletter Article


Senate Finance Awaits CBO Cost Analyses of Health Care Options

By Alex Wayne, CQ Staff

June 4, 2009 -- The Senate Finance Committee has reached no consensus on major provisions of a health care overhaul, in part because members still lack a clear picture of what different policy choices would cost.

The indecision has raised doubts that the committee can meet the goal of Chairman Max Baucus, D-Mont., to vote on a bill this month.

The Congressional Budget Office (CBO), which estimates what legislation will cost the taxpayers, is scrambling to analyze hundreds of policy options the committee is considering.

"We're all frustrated because this is so complicated, and we've tried to schedule a fairly tight deadline," Baucus said after a meeting Thursday.

Russell W. Sullivan, Baucus' chief of staff, added, "Part of it is we have so many options we've given them [CBO] because members haven't decided what their top priorities are."

Sen. Olympia J. Snowe, R-Maine, said a markup in mid-June seemed "less likely" at this point, though she added that the timing was up to Baucus.

"Next week we'll have the opportunity to start looking at some real proposals, real provisions, more substance on the legislative language," she said. "But obviously it has to work in tandem with CBO so we know what we are dealing with moving forward." Rushing the bill to a markup would decrease the likelihood of winning any Republican support, said Sen. Pat Roberts, R-Kansas. "If we have those kind of marching orders and we go to a markup, it's going to be much more difficult to achieve bipartisan support," he said.

The committee is attempting to draft an overhaul to expand health insurance coverage to millions of Americans who lack it, while also improving health care quality and reducing its costs. CBO must analyze not only individual policy options, such as a proposal to create a government-run insurance plan to compete with private insurance plans, but also the interactions between provisions of the bill. Snowe aide Bill Pewen estimated that there are more than 1,000 such interactions.

"When you add the combinations, that's the problem," he said.

Finance Committee Republicans are not the only GOP members warning Democrats not to rush to a markup.

Sen. Michael B. Enzi of Wyoming, a Finance member and the ranking Republican on the Health, Education, Labor and Pensions Committee, said, "I am disappointed in the focus that some Democrats have placed on meeting arbitrary deadlines over getting the legislation done right."

The HELP Committee, chaired by Edward M. Kennedy, D-Mass., is moving on its own track to mark up a health overhaul, though the two chairmen say they are confident they can produce a single bill for consideration by the full Senate.

Publication Details

Newsletter Article


Obama Open to a MedPAC With Teeth, DeParle Says

By John Reichard, CQ HealthBeat Editor

June 3, 2009 -- White House Office of Reform Director Nancy-Ann DeParle said Wednesday that President Obama is open to making recommendations of the Medicare Payment Advisory Commission mandatory unless opposed by a joint resolution of Congress.

DeParle, a former member of MedPAC herself, said "this idea is similar to a process that's been used effectively by a commission charged with realigning military bases and it could be a valuable tool to help achieve health care reform in a fiscally responsible way." Her remarks came in a speech delivered to a conference sponsored by CQ HealthBeat.

MedPAC often issues payment reductions far tougher than Medicare payment levels ultimately agreed to by Congress. In its recent report to Congress, the commission called for freezes on payments next year to home care and skilled nursing facilities, for example. It also urges the elimination of the differential in payment levels between managed care plans and providers in the traditional Medicare fee-for-service program. Making payment levels equal would save over $150 billion over 10 years, according to a recent Congressional Budget Office (CBO) estimate.

DeParle's remarks came in an address that forcefully made the argument that spending money on a health overhaul is the fiscally responsible thing to do in an era of rising deficits, rather than the reverse. Whether enough members of Congress will buy that assertion is key to the administration's success or failure in engineering an overhaul, and the White House shows no signs of backing away from it while some on the right ridicule it as upside-down, inside-the-Beltway logic.

DeParle noted that according to a CBO estimate, if health costs continue to grow rapidly, by 2018 one-fifth of the nation's economic output will be in the health care field. "That will limit the other investments and priorities that we need to make as a nation," she said. Investing money now in a health overhaul will save money in the years ahead and hold down a deficit that otherwise will become untenable because of the uncontrolled rising of health spending, she said. "The long-term cost of doing nothing far outweighs the cost of doing reform."

Obama will insist that an overhaul is "fully paid for," DeParle said. In his meeting with Senate Democrats Tuesday, the president "was very clear that health care reform in an era of rising government debt can only be accomplished if it doesn't add to our deficits," DeParle said. "That's why health reform must be deficit-neutral, and that's why we must attack the root causes of these skyrocketing health care costs," DeParle said.

Earlier in the day, health care lobbyist Dan Boston told the conference that the 10-year cost of an overhaul estimated to be well in excess of $1 trillion would make full offsets out of the question—unless lawmakers directed the Congressional Budget Office to score savings for changes it does not now recognize as reducing health care spending. In a speech Tuesday, Senate Finance Committee Republican John Cornyn of Texas noted with amusement "the typical Washington proposal that really what we need to do is to spend more money in order to save money. Only in Washington, D.C., do people actually believe that, where 17 percent of the gross domestic product is not enough" spending on health care, he said. "I want to see the evidence that would justify that kind of blind faith in cost savings based on tremendous increases in taxes," Cornyn said.

President Obama in a letter Wednesday moved closer to positions he avoided in his presidential campaign, such as the idea of requiring individuals to carry health insurance and "appropriate proposals to generate additional revenues," a reference that apparently could include the idea of capping the amount of employer-paid health care premiums that are tax-free. He also said he is committed to offsetting the cost of an overhaul by trimming Medicare and Medicaid spending by $200 billion to $300 billion over ten years.

That's where the MedPAC idea could come into play. Sen. John D. Rockefeller IV, D-W.Va., has introduced legislation that would make the commission an independent agency to keep its recommendations from being watered down by health care lobbies.

There's ample reason to think those lobbies will strongly resist a move to make MedPAC recommendations mandatory absent congressional intervention, although they responded politely to the idea Wednesday.

American Hospital Association spokeswoman Elizabeth Lietz said "an independent commission to help Congress make difficult choices on health policy has merit, but its role must be carefully defined and limited. For example, we would be concerned about Congress ceding its important responsibilities for determining Medicare and Medicaid payment rates. MedPAC makes a lot of recommendations that Congress sometimes accepts and sometimes they don't. Lumping the recommendations together into one up-or-down vote would be problematic because it doesn't take into account the unique health care needs of each community."

The Federation of American Hospitals offered no immediate comment.

Robert Zirkelbach, a spokesman for America's Health Insurance Plans (AHIP), said that "we're still taking a look at that." He noted that AHIP has called for the creation of a public-private advisory group to address rising health costs but whether MedPAC should be that entity remains to be determined, he said. AHIP's view is that an advisory group must have broad "stakeholder participation," Zirkelbach said. He added that the association hasn't gone so far as to say that the recommendations of the advisory group should be mandatory.

Publication Details

Newsletter Article


Obama Reiterates Support For Public Health Care Plan

By Drew Armstrong, CQ Staff

June 3, 2009 -- President Obama in a letter to two key Senate chairmen reiterated Wednesday his support for their inclusion of the government run "public plan" option in a health care overhaul.

In a letter to Finance Committee Chairman Max Baucus, D-Mont., and Health, Education, Labor and Pensions Committee Chairman Edward M. Kennedy, D-Mass., Obama calls for a "hardship waiver," that would exempt some people who could not afford it from any mandate to buy insurance, another option Democrats are considering.

Until now, Obama has gone no further than outlining broad principles for a health care overhaul, letting lawmakers handle the policy. But Wednesday's letter marks a shift in strategy for this White House—and a signal that the president may be playing a more active role in dictating what type of bill he would eventually like to see.

"I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans," Obama writes. "This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest."

Kennedy has been for the idea, as has Baucus. But the issue has turned into a hot button for Republicans, who have by and large refused to support any legislation that has a government-run insurance option as part of it. Baucus, for his part, has been seeking a compromise with Republicans, working with outside policy experts on a solution that at least a handful of Republicans might vote for.

Obama's letter also touches on the idea of an insurance mandate—a requirement that everybody would have to buy some form of insurance. Under a number of proposals being considered, the government would provide subsidies to help people do so, insurers could not deny coverage, and there would possibly be restrictions on how much insurance companies could vary premiums for people.

There are concerns, though, that any mandate might put an undue hardship on poor people who have little money to spend on insurance.

"If we are going to make people responsible for owning health insurance, we must make health care affordable," said Obama. "If we do end up with a system where people are responsible for their own insurance, we need to provide a hardship waiver to exempt Americans who cannot afford it."

Obama also said that small businesses should be exempted from the requirement, a move that could build support among them, since they have in the past complained that such a mandate would force them to cut jobs.

Obama also said he was open to taking some of the responsibility for setting Medicare rates out of Congress' hands and giving them to the Medicare Payment Advisory Commission, an independent board that makes recommendations on Medicare rates. Sen. John D. Rockefeller IV, D-W.Va., has already proposed such a solution, saying that Congress does not have the expertise to make proper decisions on complex Medicare payment rates.

Publication Details

Newsletter Article


Massachusetts: A Model, or Cautionary Tale?

By Josh Goodman, CQ Staff

Three years into Massachusetts' grand experiment in overhauling its health system, it's hard to argue that the law has failed to meet its objectives. Today, according to estimates, more than 97 percent of the state's residents have health insurance, easily the highest rate in the country.

No one is calling it a perfect setup. Massachusetts is just starting to confront the fact that the high cost of health care, combined with the state's own fiscal problems, could swamp the program. State officials are scrambling to find ways to cut costs.

The Massachusetts model, as it is known, nonetheless remains central to the debate in Washington because the state successfully incorporated two ideas that have been proposed on a federal level: health insurance exchanges that make it easier for customers to shop for plans, and a requirement—known as the individual mandate—that everyone have health insurance.

Perhaps the biggest reason health care overhaul optimists point to Massachusetts is to demonstrate that it can be done at all. The state created a political consensus in favor of its new law that included everyone from business leaders to universal health care activists.

"There was no anti-campaign," says Robert Blendon, a Harvard professor who studies public opinion on health care. "There was no 'Harry and Louise.' There was nobody." The lesson, Blendon says, is that the political acceptance of a health care overhaul requires different stakeholders to share whatever pain the law creates. In Massachusetts, businesses had to provide insurance or pay a fee, everyone had to abide by the individual mandate and all of the state's taxpayers had to contribute to the cost of subsidized care.

The big question now is whether Washington's entrenched health care interests can do the same.

Something for Everyone

Massachusetts' landmark health care bill made a series of changes to its health care system that included the unusual and the unique. The state established the individual mandate, and it created the health insurance exchange, known as the Commonwealth Connector. It also expanded Medicaid, assessed a fee to employers that did not provide health insurance and created a new regulatory body with broad powers.

Under the individual mandate, people who don't have health insurance face large penalties when they file their taxes, with very limited exceptions. Requiring that everyone have health insurance helped smooth out some demographic variations in the system. Many healthy young men—who tend more often than any other demographic subset to think they don't need insurance—have decided insurance is worth the price. That's good news for health insurance plans, which benefit from having more low-risk customers.

Such a mandate would, of course, have created a rebellion if the state didn't help low-income people afford insurance. So the state, with federal help, expanded Medicaid and created a new subsidized program called Commonwealth Care. Plus, Massachusetts set up the Connector.

The Connector allows people who don't receive health insurance through work and who aren't enrolled in Medicaid to shop among health insurance plans. Backers of the concept say there are several advantages to this managed marketplace.

For example, the state takes advantage of economies of scale to negotiate for lower prices. The differences between the plans are far more transparent than is typical in the health care world, making it easier for consumers to compare them. Plus, individuals in the Connector get to pay with before-tax money, which helps level the playing field with employer-based health insurance. The plans move with the individual, even if they change jobs or lose a job.

It is in these features of the Massachusetts plan where the political compromises are apparent. Conservative ideas are present in the strategy in that the individual mandate emphasizes personal responsibility and the Connector makes use of market forces. Yet the result, more help for people to obtain health insurance, is something liberals say they can cheer.

Massachusetts officials aren't just happy with the increase in the number of people with insurance. They're also happy with how they became insured. Nearly 200,000 of the state's newly insured are in unsubsidized private plans, a sign that more generous public programs haven't crowded out the private sector. One reason is the individual mandate—people who were eligible for employer-based insurance but never bothered to accept it are now doing so. In addition, the Connector has strengthened, rather than supplanted, existing health insurance providers.

That's important in the context of the national debate because drivers of the overhaul, including President Obama, have said they want to build on the system we have. "The main lesson," says Jonathan Gruber, an economist at the Massachusetts Institute of Technology, "is that you can do health reform within the existing economy."

Gruber, who worked on the Massachusetts overhaul, is now advising the Obama administration and has made himself available to informally advise senators as they design an overhaul. While insurance on a national level will be more costly, Gruber says, the needed policy prescriptions are similar in many ways.

"It's just like Massachusetts," he says "with three more zeros."

The Cost Question

The question is whether the same strategies would really work on a national level. Creating a national health insurance marketplace is challenging, in part because health care prices vary significantly between states. It's possible that Congress would opt to create a series of regional or state-specific exchanges, instead. It's also worth noting that Massachusetts created an exemption to the individual mandate for anyone who the state determined wasn't eligible for any affordable health insurance plan. For a federal (or state) individual mandate to provide truly universal coverage, the government would have to take on the costly task of subsidizing everyone who couldn't afford insurance.

That gets at a bigger point: Implementing a Massachusetts-like plan on the national level isn't the primary challenge. Affording it is.

Massachusetts had financial advantages that other states lack. Even before the new law was enacted, Massachusetts had an unusually high rate of people with health insurance. The state is also unusually wealthy, with a median household income $10,000 above the national average. Plus, in a state with liberal inclinations, controversial ideas such as the individual mandate met broad acceptance.

Meanwhile, the business community was willing to make concessions that their counterparts elsewhere might be unwilling to consider. "Massachusetts is an outlier," says Robert Moffit, director of the Heritage Foundation's Center for Health Policy Studies, who was involved in crafting Massachusetts' Connector. "There is no other state in the union that is like Massachusetts."

Even with those advantages, Massachusetts is, in some sense, a cautionary tale as to the financial challenges associated with expanding health insurance. One lesson is that reducing the ranks of the uninsured doesn't automatically save money. The state has seen a gratifying drop in the number of uninsured people showing up at emergency rooms to receive basic health care. But emergency room visits overall haven't declined. While some hope that reducing the number of uninsured will increase the use of preventive care and forestall costly acute illnesses, that hasn't happened yet in Massachusetts.

That's just part of the bigger picture. Supporters of the plan stress that they're not over budget. The question, though, is whether their budget is sustainable. Virtually everyone agrees that if health insurance costs keep increasing in Massachusetts the way they have in the state (and the nation) both before and after the changes, the state's insurance expansions will be unsustainable. That's true despite the state's wealth and despite the fact that it receives billions of dollars from the federal government in the form of Medicaid waivers.

"The reforms in Massachusetts are a success, but they're not complete yet," says Linda J. Blumberg, principal research associate at the Urban Institute. "They're just turning to questions of cost containment. Cost containment is enormous. That's why Massachusetts put it off. It's really hard to do."

This strategy of doing coverage first and cost containment second isn't likely to be replicated in Washington. Budget pressures are pushing Congress and the White House to come up with cost reductions, even as they try to expand coverage.

As part of cost-saving efforts in Massachusetts, Gov. Deval Patrick signed legislation last year to encourage the use of electronic health records and to require insurance companies to publicly justify rate increases. The state is now studying ending the fee-for-service payment system for doctors, which many experts say leads to expensive, unnecessary medical procedures.

Cost isn't the only problem Massachusetts' plan has encountered. Physician groups have complained that with more people having health insurance, their practices have become overcrowded. To reduce the strain on doctors, the state is now moving to attract more primary care physicians and to allow retail clinics in pharmacies.

This reinforces the lesson to would-be reformers on the national level that expanded health insurance doesn't guarantee expanded access to health care, unless the health system is prepared for the change.

Creating Buy-In

What all of this suggests is that the Massachusetts model may be as much about getting stakeholder support up front as it is about policies themselves.

The support of business groups, for example, reflects the broad buy-in that Massachusetts' politicians were able to achieve. Employers, who stymied Michael Dukakis' push for universal health care in Massachusetts 20 years ago, this time flipped sides.

"The role of the business community was absolutely central to the reform," says Michael Widmer, president of the Massachusetts Taxpayers Foundation, a group funded by businesses. "Without our role, it probably wouldn't have happened."

It wasn't just the business community that got on board. The legislation represented a compromise between a Republican governor, Mitt Romney, and an overwhelmingly Democratic legislature. Virtually every major health care player in the state backed the deal. Left-leaning activists did not insist on a single-payer plan or a mandate that employers provide health insurance to all of their workers.

Today, polling shows that the support for the plan remains strong. The key groups that supported the law still do so, in large part because they've continued to compromise. The board of the Connector includes state officials, experts and representatives of the business and activist communities. When the board has decided nettlesome questions, such as just how robust health insurance must be to satisfy the individual mandate, these diverse representatives have found common ground.

On a federal level, strong opposition is much more likely—and much more likely to be highly organized. With many Republicans fundamentally opposed to the ideas under discussion, their opposition is inevitable, and they're already starting to mount their attacks.

One question is the degree to which business groups will engage in the discussions. Employers will likely be asked to shoulder a larger part of the burden—perhaps through a mandate that they provide health insurance to their workers—which may push businesses into active opposition. On the left, activists may drop their support if the bill doesn't include the option of a public plan.

Whatever mechanisms are designed to pay for expanded coverage are bound to be controversial. Even if a law passes, keeping a coalition united will be a challenge when difficult implementation decisions are made. "This was a huge achievement for the state," Widmer says, "but that pales next to what's required at the federal level."

Publication Details