This post is offered as a brief, cursory set of principles that might logically guide a larger debate on what needs to be done to advance health care reform beyond the health insurance reform measures in the Commonwealth (An Act Providing Access to Affordable, Quality, Accountable Health Care, Chapter 58 of 2006 acts of the General Court) and at the federal level (the Patient Protection and Affordable Care Act (ACA) of 2010). Critically, the point here is to acknowledge that, on the one hand, establishing a mechanism through which access to health insurance could theoretically become universal was indispensable to the larger task of improving health care for individuals in the Commonwealth, but, on the other hand, steps need to be taken to transform the theoretic nature of health insurance reform into a reality of universal coverage and to arrest the perpetual dynamic of cost increases in health care provision, including the rising cost of pharmaceuticals. This document represents an initial effort to crystalize a set of problems and logically derived ameliorative measures, without, for the present moment, a significant elaboration on each proposition.
1. Health insurance reform, intended to theoretically generate universal insurance coverage, seeks to address problems of cost shifting/cross-subsidization from uninsured to insured patients and reduces the actuarial risk to insurance carriers by increasing the weight of premium payments by relatively young and healthy individuals relative to older, less healthy individuals. Both these theoretic effects of health insurance reform should be expected to control a single source of cost increases in health care provision, to the exclusion of other sources.
2. Requiring all individuals to possess health insurance coverage without subsequently undertaking a broader analysis of innate problems arising from the structure of health insurance markets, however supplemented by the institution of health insurance exchanges at the state and/or federal level, is unlikely to address other important problems, contributing to cost increases in health care provision and in the inflation of insurance premiums/deductibles/copayments/co-insurance requirements.
3. Employer sponsorship of health insurance coverage, as a default mid-Twentieth century ameliorative against a broader government involvement in health care, is the biggest problem in the American health insurance marketplace and one of the biggest sources of increasing labor expenses impacting the competitive position of American employers in diverse global markets.
4. The fact that both the Massachusetts health insurance reform law of 2006 and the federal health insurance reform law of 2010 (ACA) rely on employer sponsorship of health insurance as the default mechanism by which a majority of American individuals and households would obtain health insurance coverage, including penalization of employers above threshold employment levels for failure to provide health insurance sponsorship, is a major fault of both laws that needs to be rectified in order to liberate American businesses from the burden of negotiating health insurance markets.
5. Underwriting disadvantages for small businesses seeking to provide health insurance coverage for employees represent an important impediment to the affordability of health insurance coverage to employers and their employees, and, as such, contributes to inequalities of access to high quality basic health care between individuals employed at small businesses and individuals at larger private or public sector employers.
6. In reference to both the imperatives of theoretic economics (i.e. labor market flexibility) and practical concerns about continuity of high quality health care provision, the central problem of employer sponsorship of health insurance arises from the non-portability of coverage. Any further reform measures with respect to health insurance coverage need to ensure that individuals can maintain continuity of coverage as they transition between employers. As such, the most reliable way to maximize the portability of health insurance coverage for individuals is to eliminate employer sponsorship as the primary means by which individuals obtain health insurance coverage.
7. If Massachusetts is to eliminate the institution of employer sponsorship in health insurance markets, then we need to make suitable amendments to Part I, Title XVI, Chapter 111M and other applicable provisions of the General Laws of the Commonwealth in order to displace health insurance coverage by means of employer sponsorship. Such steps need to include the elimination all possible penalties to all employers for failure to sponsor health insurance coverage and the elimination of employer sponsorship of health insurance for employees of state, county, and municipal government jurisdictions in the Commonwealth.
8. In regard to the statutory requirements of the federal Patient Protection and Affordable Care Act (ACA) of 2010, the Commonwealth's Executive Office of Health and Human Services should seek to negotiate a waiver with the U.S. Department of Health and Human Service (HHS) on all penalties to Massachusetts employers for failure to sponsor coverage for employees under the terms of the ACA.
9. In lieu of federal tax charges to employers to penalize failure to sponsor health insurance coverage, the Commonwealth should reinstate and generalize fair-share contribution payments across all private sector employers, with minimal size limitations, at rates determined in reference to the average annual premia on mid-range (Silver tier) Connector insurance policies, to be contributed to a special fund for collective health insurance expenditures, such that employers will be held responsible to supply a partial (not more than fifty-percent of annual premium values) offset to expenses incurred by the Commonwealth for substantial increases of subscribers insured under subsidized Connector insurance policies.
10. The point of replacing employer sponsorship with fair-share contributions is to minimize and generalize the responsibility of employers to contribute to universal health insurance coverage without incurring excess labor costs for underwriting of businesses in small employer pools and to make insurance coverage for individuals fully portable, enabling individuals to leave particular employers at will without major disruptions in health insurance coverage or in continuity of care (e.g. forced switching of primary care physicians with change in insurance coverage). In general, such a reorganization of contributions for health insurance coverage would generalize the principle that financing of health insurance coverage should take on a tripartite structure in which employers (through explicit taxation in fair-share contributions) and state government (through general fund expenditures) collectively bear a portion of the burden and individual subscribers (through exchange/Connector-based purchases) individually bear the remainder, commensurate with their individual needs.
11. In principle, the replacement of mandated employer sponsored health insurance can be achieved through one of two systems of universal health insurance coverage: a system of mandates for the individual purchase of health insurance from a marketplace of insurers (private and/or public), or a single-payer system of tax financed collective health insurance coverage.
12. Theoretically speaking, a single-payer system of health insurance coverage would be the most efficient means of providing health insurance coverage with regard to minimization of transaction costs from administrative expenses and with regard to the superior bargaining power of a single, monopsony purchaser of health care services relative to diverse health care provider agents in the negotiation of compensatory payments for health care services. In the latter sense, a single-payer system can more efficiently ration health care in order to control the inflation of health care expenses and prevent substantial cross-subsidization between various categories of health care consumers/patients/health insurance subscribers.
13. In practical terms, the establishment of a single-payer system in the Commonwealth of Massachusetts would face prohibitive political opposition, if only because the institution of such a system would immediately displace the entire private health insurance industry. It would, further, institute particular forms of health care rationing that might diverge from the preferences of particular individuals across the broader public - if all health insurance must practice rationing of health care services, then selection across multiple health insurance plans that practice different manifestations of rationing may enable individuals to find plans more amenable to their individual circumstances (e.g. plans with higher premiums but lower deductibles, plans with better prescription coverage, etc.).
14. A system of mandated purchasing of subsidized insurance coverage from a marketplace can approach the cost advantages of a single-payer system if individual insurance carriers are capable of achieving subscriber bases of sufficient scale that they can achieve a degree of bargaining power relative to health care provider organizations (e.g. at the highest level, hospital systems). In the absence of such offsetting bargaining power, insurers will lack substantial capacity to constrain the inflation of health care costs, driven by the capacity of large scale provider organizations to demand higher compensatory rates for health care services and to cross-subsidize between payers with different degrees of bargaining power.
15. If the Commonwealth of Massachusetts seeks to eliminate employer sponsorship of health insurance in favor of a universal system of mandated exchange purchases, then the state should also strive to limit the number of plans on each tier of health insurance coverage in order to maximize the subscriber base of participating private insurance carriers and, thus, maximize their bargaining power relative to health care provider organizations. It should also consider the provision of competitively priced (i.e. substantially at parity with comparable private plans with respect to premiums) public option plans, at least on lower (Silver, Bronze) tiers of the Connector exchange.
16. To the extent that the federal Patient Protection and Affordable Care Act (ACA) has established conditions for minimum acceptable coverage of health insurance policies, including provision of female reproductive/family planning services, in exchange-based plans, as well as the conditions for individual exemptions, the crafting of conditions limiting sets of insurance plans on the Massachusetts Connector must be based on variations in coverage levels above and beyond minimums (e.g. discounts for health club membership, enhanced discounts for generic prescription medications, etc.).
17. Health care reform, transcending the limitations of health insurance reform, has to address the myriad conditions driving increases in the costs of health care services, including, but not excluded to, capital expenditures in various specialized diagnostic, therapeutic, and surgical instruments and equipment, pharmaceutical research expenditures, medical malpractice insurance/medical torts, and, more fundamentally, personal health and living practices, including exercise, diet, work routine, and stress management for all residents of the Commonwealth.
18. Inflation of the cost of medical services at the point of consumption is shaped by a long series of interconnected processes constituting the medical industrial supply chain. If the Commonwealth is to come to terms with rising medical expenditures and cost structures and, thus, mitigate growth in the subsidization of health insurance policies through the Connector, then we must be cognizant of how cost increases arise and are transmitted through the course of the supply chain.
19. The Commonwealth needs to work with hospital systems and other large provider units to identify supply rigidities in procurement and contracting that might be susceptible to comprehensive cost control.
20. Large scale provider units, like hospital systems, seek to maximize returns on investment in infrastructures and equipment by directing capital toward investments that promise reliable, long term cost reimbursement streams from insurers (e.g. treatment of cancers and other chronic conditions, requiring or otherwise benefiting from proprietary therapeutic methods, advanced pharmaceutical products, and/or high technology equipment).
21. The Commonwealth needs to study the availability of a range of high technology care options across medical facilities across Massachusetts in order to create a registry of advanced care investments, as a possible prelude to developing statutory/regulatory restrictions/controls on new capital investments (especially in infrastructures) in areas of the state over-served for particular care options in relation to regional needs. Such a registry would have to be periodically (every four or five years) revised to account for changes in medical technologies and, thus, enable the Commonwealth to maintain a vigorous private health care technology sector without simultaneously allowing spillovers on increasing capital costs to compromise the capacity of Massachusetts residents to enjoy high quality basic health care.
22. Investments in medical research represent one of the great success stories of free market enterprise and the harnessing of charitable impulses. Capital in medical research is invested on a model of theoretically-informed trial and error, with extreme levels of risk that particular projects will ever realize potential marketability. As such, successful research projects, capable of being integrated into therapeutic methodologies or pharmaceutical regimens, command high potential returns, generating spillover costs as providers seek to cross-subsidize by demanding higher compensatory payments from insurers for other, lower cost services.
23. The idea of restricting or otherwise controlling medical research expenditures in the Commonwealth would generate an enormous loss to both economic growth, in a knowledge-based economy, and the satisfaction of human needs arising from the continued prevalence of a wide range of acute and chronic ailments. In our regulation of rising medical costs, the Commonwealth needs to separate expenditures on basic research and the wider development of globally marketable medical research products (e.g. pharmaceuticals) from the integration of such products for regular utilization by health care providers in the Commonwealth.
24. With regard to the integration of proprietary pharmaceutical products into treatment regimens for patients in the Commonwealth, the Commonwealth needs to give serious attention to both retail direct purchasing of prescription medications by patients from drug manufacturers via online intermediaries (in lieu of retail purchases through pharmacy chains reimbursed by insurers) and the potential for direct intervention into the pharmaceutical supply in order to establish a public clearinghouse for wholesale pharmaceutical purchasing and distribution under contract to pharmacy chains. Assuming either of these methods holds the best potential for controlling costs in the purchase of pharmaceutical products, especially advanced, proprietary patented medications, not benefiting from generic replication, we need to evaluate where one methodology holds the greatest potential benefit for patients for each pharmaceutical product. In general, the Massachusetts Executive Office of Health and Human Services should be commissioned by statute to investigate how best to manage cost structures in the purchase and distribution of prescription medications.
25. The scale of provider units in relation to the larger marketplace for health care services constitutes a problem to the extent that the bargaining power of large providers undermines cost control at the retail end of the medical industrial supply chain. The formation of hospital systems, as such, is only a problem to the extent that the bargaining power of each hospital system, in relation to its larger regional market, overwhelms the capacity of health insurers to exercise meaningful cost control in negotiating reimbursement rates for specific services. On the other hand, the presence of hospital systems on the retail end of the supply chain certainly bolsters the bargaining power of providers against upstream suppliers of medical equipment and other medical industrial services, holding the potential for certain cost savings on the retail end. In general, the scale of provider units can be a two-edged sword for cost control.
26. The best way to deal with the degree of bargaining power of hospital systems relative to insurers on the retail end is to generalize individual mandates for purchases from Connector plans and to truncate the number of available plans per cost tier in order to bolster the size of subscriber pools in particular regions, effectively increasing the bargaining power of insurance carriers relative to providers without undermining the capacity of providers to negotiate cost savings from upstream medical product/service suppliers.
27. Reform of legal criteria for recovery of damages in civil suits for medical negligence remains a key component of health care reform agendas among political conservatives, for whom any measure undermining the capacity of trial lawyers to profit from cases of alleged medical malpractice is a positive benefit. The capacity of tort reform to control cost inflation in health care services is undoubtedly overestimated, but, to the extent that certain, sensible reforms of rules limiting compensatory damages on non-economic (i.e. pain and suffering, rather than lost wages/supplemental medical costs) grounds could minimally impact the rights of patients to legal recourse for malpractice while reducing premiums to physicians for liability insurance, it would be worthwhile for the Commonwealth to consider enacting such reforms.
28. In conjunction with statutory reform of rules for recovery of damages in medical torts, health care provider units in the Commonwealth should consider serious, sensible, and easily implemented procedural reforms to reduce the prevalence of secondary injury or infections from medical procedures or other sources commonly resulting in malpractice litigation. Such reforms might be as straightforward as disciplined utilization of checklist practices in surgical procedures or improvements to communication between nursing shifts at intensive care units. To the extent that reductions in the cost of malpractice for health care providers must be a two-sided cooperative endeavor between providers/provider organizations and the legal community, a palpable effort by health care providers to reduce the probability that particular health care procedures will result in grounds for litigation will similarly motivate a reduction in insurance costs while improving patient safety.
29. In the end, the most significant and meaningful possible measures to achieve health care reform, as opposed to health insurance reform, in the Commonwealth of Massachusetts are located within the behaviors of individual households. Health insurers are doing their best, through the development of policy provisions, to motivate subscribers to join health clubs and to adopt healthier lifestyle choices in diet (lower consumption of saturated fats from red meat, fried foods, and other sources; reduced consumption of added sugars in processed foods) and everyday routines (further reductions in tobacco use and moderation of alcohol consumption). However, the development and sustaining of such lifestyle choices requires a commitment by individuals that transcends the capacity of health insurers to motivate or, certainly, for the Commonwealth to enforce by statute or regulation. Emphatically, true health care reform, in this manner, is not a subject for legislation but for movement building!
30. Two thoughts for health care movement building:
a. Weekly neighborhood or workplace workout sessions/gym days/nights.
b. Backyard "victory garden" agriculture and neighborhood growing and distributing cooperatives for neighborhood grown fruits and vegetables (a healthier diet can be bolstered by locally grown produce).
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