Baker’s health care moment

The state’s new leader has deeper background in health policy than any governor in Massachusetts history — and he’ll need to tap every bit of it.

THOUGH THE 2014 gubernatorial campaign lacked any real discussion of health care policy, this will soon be forgotten because Massachusetts has never had a new chief executive as steeped in health policy and politics as is Charlie Baker. Baker’s legacies affecting the Massachusetts health policy landscape span 25 years and provide clues to the directions in which he may go. Based on his history, inside and outside state government, one direction in which I am sure he will want to go is big.

What are some markers of his prior impact?

In the mid-1990s, as a state official, Baker reinvented Massachusetts Medicaid into today’s MassHealth, laying the fiscal, structural, and policy groundwork without which the state’s landmark 2006 universal health care law (aka “RomneyCare”) never would have happened.

In the early 1990s, also in state government, Baker spearheaded deregulation of the Massachusetts hospital rate-setting program through which state government tightly controlled hospital budgets for 15 years. Baker ushered in an ongoing era of competition and consolidation that included, with his blessing, the creation of Partners HealthCare in 1994.

Throughout the 1990s, Baker accelerated the closing and consolidation of state hospitals and institutions, expanding the reach and role of the now-massive privatized community health and human service system.

In the early 2000s, as CEO of Harvard Pilgrim Health Care, Baker spared the insurer from imminent bankruptcy, helping to maintain a more competitive health insurance market in Massachusetts.

Baker is unafraid of big ideas and moves. The next four to eight years will be an exciting and different era in Massachusetts health and human services, following a staggeringly innovative previous nine years highlighted by passage of the state’s 2006 health law and the 2010 federal Affordable Care Act. Today’s challenges include the need to:

  • Reshape a cluttered, complex health policy environment badly in need of rationalizing;
  • Address a tightened fiscal landscape even as Medicaid health plans scream about exploding costs;
  • Confront intertwined challenges of hospital consolidation and cost control;
  • Fix our unstable and dysfunctional behavioral health systems.

These are four key challenges for the Baker era. Let’s explore them.

TAKING CHARGE

Baker’s first and telling move came in mid-November when he named Mary Lou Sudders as his secretary of health and human services. From her stints as state commissioner of mental health (1996-2003) and as executive director of the Massachusetts Society for the Prevention of Cruelty to Children (2003-2012), Sudders has shown management chops. She also is a social worker and advocate who relishes framing, passing, and implementing new public policies such as the state’s mental health parity law. Baker and Sudders have disagreements — she loves the same Affordable Care Act that Baker claims to despise. It’s an interesting tension, and bully for Baker for not allowing it to prevent this compelling partnership.

Into his second term, Deval Patrick’s administration ran into serious lapses highlighted by scandals and management failures at key agencies such as the Department of Public Health, the Department of Children & Families, and the Massachusetts Health Connector. Unlike Baker’s mentor, former Gov. Bill Weld, whose primary governing agenda was privatization, our new governor likes to sweat small stuff while keeping his eyes on the bigger picture. His choices to run these agencies will matter. Beyond filling positions, though, is the opportunity to reimagine and reshape a cluttered health policy landscape where multiple agencies and commissions compete. Here, the all-important MassHealth, despite its size, is actually least among equals.

THE BUDGET AND MASSHEALTH

In November, Patrick announced a $330 million funding shortfall for the current $39.6 billion FY2015 state budget. The Massachusetts Taxpayers Foundation says that the gap could run to $750 million. Of the total budget, MassHealth and related health expansions will cost $14.7 billion this year, or 37 percent of all state spending, according to the Massachusetts Budget and Policy Center (though $8.6 billion of those dollars are federal reimbursements). MassHealth matters most to its 1.7 million low- and moderate-income enrollees, nearly one out of every  four of Massachusetts’ 6.7 million residents, a figure that includes 40 percent of all children and half the state’s population with disabilities.

MassHealth is the house that Charlie Baker built in the mid-1990s, and since has ballooned in size, scope, cost, and complexity. Its 2015 budget is 45 percent higher than in 2010, a 9 percent annual growth rate over that span. The agency has tackled ambitious, high-stakes ventures, including a nationally watched initiative called One Care that provides comprehensive coordinated care for needy disabled residents covered by both Medicare and Medicaid. Though providing valuable services to a chronically ignored population, One Care has had a rocky financial launch.

Indeed, the full set of Medicaid managed care organizations that service 37 percent, or 522,000, of MassHealth members are shouting about a flood of red ink filling their coffers. Much of that ink can be tied to the introduction of expensive new medicines such as Sovaldi, which cures hepatitis C in about 12 weeks, but at a cost of $84,000 per patient. Reconfiguring MassHealth is the kind of challenge at which Baker thrives. But its repair will not be achieved with a magic bullet — and will take a thorough diagnosis and multiple interventions, such as those advanced in December by the Massachusetts Medicaid Policy Institute.

THE HEALTH POLICY COMMISSION AND PARTNERS

If MassHealth is the 800-pound gorilla on the state side, on the private side it’s Partners HealthCare. After passage of the 2006 coverage law, Patrick and the Legislature approved three multi-pronged laws, in 2008, 2010, and 2012, to address cost control and quality improvement. The 2012 law got the most attention, creating a new Health Policy Commission (HPC) and setting a benchmark for future health system cost growth. While the record low national rate of health care inflation since 2009 — seen also in Massachusetts — has kept that issue off the agenda, the commission’s ancillary charge to evaluate the cost impact of health sector mergers and consolidations has generated controversy.

The commission’s 2014 evaluation of the proposed takeover by Partners HealthCare of South Shore Hospital in Weymouth and two Hallmark hospitals north of the city triggered a unanimous thumbs-down by the 11-member HPC board, legitimizing guerilla opposition from rivals Lahey Clinic, Beth Israel Deaconess Medical Center, and the Atrius physician organization. After producing a series of hard hitting reports on Partners’ outsized prices and revenues, then-Attorney General Martha Coakley surprised observers last May by approving the acquisitions in exchange for seven years of price-increase restraints by Partners.

Though Baker initially endorsed the deal brokered by Coakley, his Democratic opponent in last year’s governor’s race, he switched to opposition in July. Meanwhile, Sudders was one of the 11 Health Policy Commission members who urged the takeover’s rejection. Will Gov. Baker and Secretary Sudders be silent as Superior Court Judge Janet Sanders pleads for input from the new governor and attorney general on whether to permit the takeover? For Baker, Partners’ market power is more than hypothetical. In 2001, he felt the sharp end of Partners’ clout when they refused to ease their payment demands on nearly bankrupt Harvard Pilgrim Health Care, which Baker was then leading. This current case is a moment-of-truth in Massachusetts health policy and the outcome will matter.

Also, at some point in the next four years, health care costs likely will begin rising faster than state economic growth, triggering the 2012 cost containment law’s mandate for unspecified remedies. Whether the state will have the political will to act will depend much on Baker’s response.

BEHAVIORAL HEALTH CARE

Right after his election, Baker announced that an early priority would be to attack the epidemic of opioid and other prescription painkiller abuse now killing more Massachusetts residents than car accidents. Sudders has long identified physical and behavioral health integration as an urgent health system priority. Has behavioral health’s moment in the sun arrived? Baker might start by reviewing results from Patrick’s $20 million anti-opioid initiative announced last June in collaboration with five other New England governors, promising upgraded and expanded treatment facilities and beds, expanded health insurance coverage, and multi-state collaboration.

Achieving meaningful integration of behavioral and physical health is the tougher challenge. Progress will require addressing funding shortfalls, lack of access to services, inadequate capacity, and fragmentation. While MassHealth is a large part of the solution, the problems are bigger. Low provider payments make capacity expansion difficult and incentivize more and more providers to abandon third-party payment altogether. Unavailable or limited community-based services prevent residents from accessing care. And the most seriously ill residents face the greatest obstacles.

Ironically, MassHealth’s new One Care program is a shining national model for integrated care. Yet it faces major financial obstacles servicing a chronically underserved and needy population. A 12-year-old parallel program called Senior Care Options has never had a thorough evaluation. Such an assessment might yield some valuable answers on the integration obstacles.

Meet the Author

The health and human services part of Massachusetts government is where some of the most important and difficult challenges for the new administration reside. This is also the place where our expectations for our new governor should be the highest. Here’s hoping he and his team can meet them.

John E. McDonough is a professor at the Harvard School of Public Health and the author of Inside National Health Reform.