Argument

The stars and moon may be aligning, making this the year to fix health care. Employers and employees are finally balking at the high and rising cost of health insurance. State budgets have been squeezed to near breathlessness by ballooning Medicaid costs. And, most fortuitously, Massachusetts is blessed with world-leading public health and medical institutions renowned for pioneering innovative solutions.

Even the political will is building, on both sides of the aisle, and not for the first time. Over the past two years, where other critical issues loomed, we have seen the beneficial effects of cooperation and collaboration: reforming archaic construction rules, accelerating school construction, reforming transportation, expanding scholarships for students, establishing landmark housing policies, and balancing lopsided budgets without higher taxes. Health care may be the biggest challenge of all, but legislative leaders have indicated that they are as eager to work on it as I am.

My proposal for reforming health care, which I call Commonwealth Care, is a starting point. For more than a year, members of my administration and I have been working on Commonwealth Care. We have worked with academics, providers, insurers, advocates, and experts. But much more work is ahead. New legislative proposals, public and institutional perspectives, and further industry input will certainly go into the final legislation.

Commonwealth Care has two primary objectives. First, to help bring health care costs under control. Second, to insure the uninsured.

If our sole objective were to insure the 460,000 Massachusetts residents who are uninsured, the job would be easy: just raise taxes by hundreds of millions of dollars and hand out insurance cards. But that would place a greater burden on our hard-working taxpayers, and it would do nothing to slow the rapid growth in health care costs. I propose instead to balance the cost of insuring more citizens with savings from changes in care, technology, and transparency and with new revenue from the federal government, from employers who will now be able to afford their employees’ health insurance, and from the newly insured themselves.

Savings: When individuals seek treatment in a setting that is not properly matched with their needs, they may rightly complain of delays and runaround. But mismatched care is not only inefficient, it is expensive. Providing the appropriate care in the appropriate setting saves money and enhances quality. Managed care, community clinics, and preferred provider networks can improve Medicaid and care for the poor as they do for those with private insurance.

Bringing modern technology to backroom functions such as billing and patient records will save lives as well as millions of dollars. Reforming malpractice will unburden our health system from the wasteful costs of excessively defensive medicine.

We can balance the cost of coverage with savings.

Transparency can be another source of savings. Information about the cost and quality of alternative providers leads individuals to the right provider for their needs. And, as co-payments rise, everyone who seeks treatment in our health care system becomes increasingly interested in value: Buyers favor providers where equal or superior quality is available at lower cost.

But nowhere is the need to generate savings through reform more pressing than in Medicaid, which has grown well beyond anything its authors could have imagined. One of every seven people in Massachusetts is on Medicaid, their care costing taxpayers more than $9 billion annually. With any program of this size, abuse, conflicting incentives, and fraud inevitably arise. We must attack the excess in the current system; it can be an important source of finance to care for the truly needy. Detecting and penalizing fraud, limiting asset transfers, redefining household income, imposing appropriate work requirements, and other measures are overdue. As with welfare reform, “healthfare” reform will be met with dire predictions. But just like welfare reform, people will move from dependency to greater self-sufficiency. And we will be able to do a better job helping those who need help most as a result.

Revenue: Approximately 168,000 people in Massachusetts with household income above $56,500 per year choose not to buy health insurance; 100,000 of these have incomes above $75,000. They say insurance is too expensive or too hard to find, and they know they will be able to get treatment whether they have insurance or not. We need to get these people insured, for their benefit and for the benefit of the rest of us.

I propose that we authorize our health insurance companies to offer a policy called Commonwealth Care Basic. Currently, the state mandates that all policies cover a long list of special treatments, such as in vitro fertilization. These policies cost more than $500 per month. A basic policy could cost less than half that amount. Other states like New York and California have established similar insurance products.

Commonwealth Care Basic would be attractive for those who are currently uninsured, because it would provide the security of coverage for the most common medical needs at a reasonable price. It would also offer small employers a plan they could afford to offer their employees. Additional carrots and sticks would further encourage participation. As these people become insured, they contribute new revenues to the health care system, freeing resources for the truly needy.

The objection to permitting insurers to offer a basic policy has traditionally been that the coverage would not be as good as the current “all bells and whistles” version. Perhaps, but Commonwealth Care Basic would be far better than what the uninsured have now. And shouldn’t we leave it to citizens to decide whether a policy like this would meet their needs?

There are other ways to bring new revenue to the cause of insuring the uninsured. Some 106,000 of the uninsured actually qualify for Medicaid. Our new one-stop portal and sign-up programs, created in the process of reorganizing human service agencies over the past two years, will move these people into insurance coverage. For these people, the cost will be shared 50-50 with the federal government; every dollar we spend giving these individuals the care they need will draw a matching dollar from the federal government. The state share of this expansion of the Medicaid rolls is included in our proposed ‘05 and ‘06 budgets.

Other parts of Commonwealth Care will make our health care dollars go further. Another 36,000 people who are unemployed will get coverage by using our current Medical Security Trust to purchase Commonwealth Care Basic rather than today’s high-cost COBRA coverage.

Meet the Author
The recommendations above represent solutions that apply to two-thirds of the uninsured. The remaining one-third are those who earn too much to qualify for Medicaid but less than three times the federal poverty level ($36,000 for a family of two). For these individuals, I propose that we create a program called Safety Net Care. It includes some of the best features of managed care and requires those covered to pay according to their means. Today’s providers to this population will play a central role in shaping and defining this health care product. Safety Net Care will be financed by the savings and revenues described above and by resources freed up from today’s Uncompensated Care Pool by having two-thirds of the currently uninsured (those who can afford to buy, those eligible for Medicaid, and the unemployed) no longer reliant on it.

The proposals in Commonwealth Care can bring health coverage to all our citizens. Just as important, they will help slow down the rising cost of health care. Commonwealth Care does not call for a tax levy or increase, does not place a mandate on small businesses, and enhances consumer choice. More and better ideas may come forward over the next few months. I welcome them.

Mitt Romney is governor of Massachusetts.