Cost unconscious

On a Wednesday afternoon in late April, I went to the John W. McCormack state office building, a pillar of bureaucracy a half-block east of the State House, and found my way into a basement-level meeting room. There, 11 members of the Health Care Quality and Cost Council sat in a U-formation in the windowless room, and about a dozen observers occupied hard plastic chairs. Presiding over the meeting was Dr. JudyAnn Bigby, Gov. Deval Patrick’s soft-spoken secretary of Health and Human Services.

Until a few days before, I hadn’t realized Massachusetts had such a thing as a Health Care Quality and Cost Council. In fact, it barely does. The council was created by the universal health care law signed by former Gov. Mitt Romney in April 2006. But its authority is vague and its budget is small. It didn’t hold its first meeting until August of last year, four months after the bill-signing. And though the council estimated earlier this year it would need $1.7 million to hire a staff and conduct research, Patrick allotted it only $200,000 in his 2008 budget proposal.

The conversation that afternoon among council members wasn’t quite what I expected. There seemed to be an uncertainty hanging in the air about how to proceed. The main idea on the table was to develop a database of Massachusetts cost and quality measurements and to make the information available to the public through a user-friendly Web site. It was noted that there was no need to reinvent the wheel—New Hampshire has already developed such a site. When one member suggested a road trip might be in order to consult with the database experts to the north, Bigby responded, “Could we get them to come here?” Probably not appropriate, responded another, since they would be doing us a favor. Resolved: Let’s look into creating a Web site like New Hampshire’s.

No doubt the database will get built. It has an influential advocate in council member Charles Baker, the chief executive of Harvard Pilgrim Health Care. But to my ear, this sounded like another one of those “consumer-driven health care” approaches that rests on the idea that we can cut health care costs by getting patients to shop around for bargains. Granted, the Quality and Cost Council has to start somewhere, and the push for “transparency” in health care pricing is not a bad thing. But how will such small steps, tinkering around the edges, address the powerful economic forces that have been driving up health care costs?

If you consider the combined effect of high spending with high health cost inflation (think about driving a Winnebago when gasoline goes to five dollars a gallon), you have to wonder if a day of reckoning is approaching for Massachusetts. Spending on health care for low-income residents and for current and former state employees is eating up much of any new revenue the state brings in. Meanwhile, municipal governments are struggling under the weight of soaring health care costs. As schools cut extracurricular activities and town libraries are closed, health care is cited as the budget-buster that is crowding out other worthy demands on public dollars.

Massachusetts has drawn national attention for its bold plan to extend access to health care coverage to virtually all state residents. But the long-term, or even medium-term prospects of the plan may depend on finding ways to hold medical cost inflation in check. And in this Massachusetts is no pioneer: State government spending on health care from 2001 to 2007 went up 49 percent in real terms, according to a report released in June by the New England Healthcare Institute.


Under the state’s new health care law, more low-income people are being fully covered by Medicaid. And new low-priced insurance policies, subsidized by the state, are available to low-to-moderate- income residents who don’t qualify for Medicaid. A public relations blitz has been making sure that Bay Staters know the requirement for all residents to carry health insurance becomes effective this summer. By June, more than 120,000 people who didn’t have insurance last year were covered.

Leslie Kirwan, the state’s top budget officer,
warns, “If we do not constrain costs, the
system we worked so hard to create will

The biggest challenge for the reform law will be to sustain this new coverage umbrella over time. And this spring, some close observers began to warn that the Massachusetts experiment could fail if it doesn’t bring health care spending under control. The state’s top budget officer, Leslie Kirwan, put it in stark terms at a forum in May at the John F. Kennedy Library. “If we do not constrain health care costs, the system we worked so hard to create and implement will collapse,” Kirwan said, according to a Boston Globe account.

As director of the advocacy group Health Care for All, John McDonough has been a leading champion of the new law. And when it comes to most aspects of the way it’s working out, he is determinedly optimistic. But on the cost question, he admitted, “I’m not optimistic at all.” He worries that rising costs are to health care as global warming is to the ecosystem: a steady, gathering threat.

Per-capita spending on health care is 33 percent above the national average.

McDonough pointed to the difference between the Health Insurance Connector Authority, which was set up as the central driver to implement universal coverage, and the aforementioned Health Care Quality and Cost Council, which was attached to the reform law like “a caboose.” “There is a real significant commitment and sense of urgency to figuring out the Connector,” he said. “And I don’t see a parallel sense of urgency in figuring out what we’re going to do about what, to me, is pretty close to a cost-control emergency.”

It’s not as if the cost question just slipped the minds of those who crafted the reform. As MIT economics professor Jonathan Gruber said in an interview earlier this year, architects of the law focused on covering the uninsured because there was a clear strategy for how to do it. But the law “punts on the issue of cost control,” he said. (See Conversation, CW, Spring ’07.) According to Gruber, this was by necessity. There’s no consensus among health care economists—or among policy-makers—about how to put a lid on costs, he said. McDonough says it’s time to forge a consensus. “I don’t know how anybody could think it’s too soon to be talking about this,” he said.


The starting place is to understand why health care—especially in New England—costs so much. A recent report by Harvard Pilgrim noted that in 2004 health spending in Massachusetts was $7,075 per capita, or 33 percent higher than the national average. Not surprisingly, health insurance premiums are higher here, too—about 26 percent above the national average.

Some of the reasons are obvious enough. Since the overall cost of living in Massachusetts is high, the health care sector tends to have relatively high labor costs. And with younger people fleeing the state, we’re left with an older population, which means a higher-spending clientele.

Harvard Pilgrim’s Charlie Baker says the state
must start collecting meaningful cost and
quality data.

Another reason is that community hospitals have been closing here, and the state’s health care market is increasingly dominated by academic medical centers. According to Baker, 45 percent of all “health care encounters” in Massachusetts are at academic medical centers or with academic medical center-affiliated physicians, a far higher share than in most states. Costs at these teaching- and research-oriented hospitals, he says, are about 50 percent higher than at community hospitals, even after adjusting for the severity of illness of patients. But the academic medical centers have a good deal of political influence in setting health care policy in Massachusetts—and growing market clout to set health care reimbursement rates.

In short, Massachusetts has more expensive hospitals and higher-paid doctors (including lots of specialists). It also has patients who are used to getting top-notch health care, with all the latest technology.

But that, in capsule form, describes the American way of medicine—Massachusetts is simply on the high end of a high-end health care system. A report published by the McKinsey Global Institute in January found that the United States spends more of its national wealth on health care than any other country in the world. The report notes that in 1960 we spent 5.2 percent of GDP on health care; by 2004 that figure was up to 16 percent. By comparison, the median figure in 2003 for the 30 free-market democracies that are members of the Organisation for Economic Co-operation and Development (OECD) was 8.5 percent.

‘Lots of powerful interests do nicely with things just the way they are.’

The McKinsey study looked at detailed health data for 13 of those OECD countries (including Canada, Mexico, and most of Europe), adjusted for national wealth, population, and disease mix, and found that we spend about $477 billion a year more than we would if we spent at the level of those other countries. In 2003, U.S. health care spending was about $5,635 per capita. The figure would be $3,990 per capita if our system were in line with the baseline OECD countries. The report notes that the excess costs in the system represent a bad bargain for taxpayers, as federal, state, and local governments spend more than they should. But the other ultimate payers for insurance—private- sector employers—are also dragged down by health costs.

The “overriding cause” of high U.S. health care costs, the authors write, is the failure of the American system to hold down demand-side pressures (from patients) and supply-side pressures (from hospitals and clinics, doctors, pharmaceutical companies, and insurers). Yes, that about covers it. As Washington Post business writer Steven Pearlstein wrote in summing up the McKinsey report in a February column, “The reason the system has been so resistant to change is that lots of powerful interests do very nicely with things just the way they are.” And any effort to wring excess costs out of the system, Pearlstein noted, will face “determined opposition from well-financed lobbies.”

That will undoubtedly be the case in Massachusetts if state leaders get serious about controlling health care spending. The state’s largest network of hospitals, Partners HealthCare, and its largest insurer, Blue Cross and Blue Shield, were intimately involved in crafting the health reform law. No one will need to be reminded that health care is not just a cost center in the New England economy, it’s an engine of innovation, employment, and economic vitality. That’s one of the reasons to wonder whether an aggressive statewide effort to hold down spending is possible in Massachusetts if that effort comes at the expense of big players in the state’s health care world. Another is a basic fact of political life: Where there is no clarity about the problem, there is no chance of a solution.

“One of the problems we have in this state is
that there are not enough primary care
doctors,” says Beth Israel’s Paul Levy.

It isn’t hard to make a long list of factors that drive up health care spending. It’s hard to come up with a short list (or, at least, one that major players could agree on). Insurers say hospitals have too much power to command constant price increases. Hospital leaders say insurers don’t pay the right amounts for the right things—and the state doesn’t pay enough to cover care for the poor and the aged. And no one has a coherent theory of when expensive technology helps and when it hurts, or which procedures are worth the money and which aren’t, or how to respond to overly demanding patients —not to mention how such questions should be decided.


After the Quality and Cost Council meeting broke up, I repaired to the nearby cafeteria, just down the hall, with Charlie Baker. It seemed that if anyone could provide the high-altitude overview of Massachusetts health care spending, it would be Baker. He had worked in the Weld administration as secretary of health and human services in the 1990s. Later he was the state’s chief budget officer as secretary of administration and finance. And since 1999 he’s been running Harvard Pilgrim, one of the largest health care plans in New England.

Baker calls attention to ever-increasing prices charged by hospitals and clinics.

As Baker settled his 6-foot-6-inch frame into a cafeteria chair, he said that he has his own ideas about where the excessive costs are in today’s health care system. But that doesn’t mean other stakeholders see things the same way. Talking about costs and prices is different from talking about “access”—who is covered and not covered. There is plenty of good data about the human side, and general agreement about what the data mean. “Then you get into a conversation about what is it that’s driving up the cost of health care,” Baker said, and “you get 20 different answers—I mean, literally 20 different answers if you talk to 20 different people.”

Baker’s answer was what you might expect from someone who is in charge of paying medical bills. In a blog he started in April (, Baker has articulated what might be called the “payer’s perspective”: What’s driving costs is ever-increasing prices charged by hospitals and clinics. In one recent posting, he noted that payments to physicians have been rising by double-digit percentages each year, as have both outpatient costs (due in part to high-end radiology, lab services, and outpatient surgeries) and inpatient costs (as hospitals charge more for every bed in use). In each case, Baker said it is the “unit cost” that is mostly responsible for the rise in overall costs—higher prices per service, not overall higher use of services.

He had posted that data to make the point that an oft-cited reason for medical inflation—high priced pharmaceuticals—is not currently the major factor. Spending on drugs at Harvard Pilgrim over the last three years has been rising at only 5 percent annually.

Baker does concede that heavier use of high-end medical services is also a factor driving health care spending. Technology can be “a double-edged sword,” he said. Take new methods of cataract surgery as an example. “One of the things that’s happened over the last 10 years with cataract surgery is the technology has gotten more sophisticated and less invasive, and as a result the unit price of that service has actually come way down,” he said. “What’s changed is the number of people who can access that service has gone way up.” This is the other side of the spending picture. Though Baker argues that higher use of services isn’t the chief cost-increasing factor, it’s part of the whole. Even when innovation and efficiencies reduce the unit price of something like a CAT scan or an MRI, overall costs can go up when the new techniques become popular.

But nobody has a full view of how such factors add up across the entire system. This is why Baker is an ardent proponent of “transparency” in health care pricing—and why he believes a state effort to collect meaningful cost and quality data is the best place to start. “Unless we have decently available and understandable data on costs that’s pretty provider- and procedure-specific, it’s pretty hard for anybody to draw any conclusions about what’s driving up the cost of health care,” he said. “It’s just a big amorphous blob.”

But suppose Massachusetts follows the lead of New Hampshire and makes all the latest cost and quality data available to the public on a consumer-oriented Web site? How will people use that information?

The key factor isn’t how consumers will use it, Baker said. What he wants is to shine a public light on how providers—from the largest hospital groups to the smallest community clinics—compare with each other. One group that would benefit from having meaningful information in the public domain is the state’s policy-makers, he contends. “I mean it’s pretty hard to make policy about what to do about health care costs and quality if you don’t have any baseline information to measure whether we’re doing better or worse in a particular area year over year,” he said.

“So when people say to me, ‘Well, publishing that data won’t matter, folks don’t own a piece of the cost of the care,’ that’s true. Except that I could easily see situations where state legislators might choose to have hearings on this data every year, where they would bring people in and they’d say, ‘Gee, the average cost of a particular procedure in Massachusetts is x. And you deliver this service the same as everyone else, your outcomes are no better, and your cost is 2x. Why is that?’ People would not enjoy that. They wouldn’t enjoy the publicity associated with it, they wouldn’t enjoy the possible policy ramifications from it, they wouldn’t enjoy the public discussion about it, and they would, in my opinion, do something about it.”

What Baker is talking about is a problem economists began to notice decades ago about health care. Not only do insured consumers have an insensitivity to prices, there is no such thing as real price competition among those who provide health services. Indeed, while consolidation in other sectors of the economy leads to price declines driven by economies of scale and other factors, there has been no Costco effect in health care. “[The] leverage of larger players in health care doesn’t drive down prices for purchasers, it drives them up!” Baker wrote in a lively exchange on his blog in May.

There is no such thing as real price competition in health services.

In Massachusetts, he wrote, this has been because large provider networks, led by Partners HealthCare, have been able to push prices on insurers, who feel they cannot compete for subscribers if they don’t agree to contracts that cover care at the state’s marquee teaching hospitals.

But, I asked Baker in a later conversation, why should we believe public information on prices will change this dynamic in the health care marketplace? How does “transparency” address that kind of economic power? Baker noted that he’s not just talking about information on cost, but on quality as well. He envisions a comparative database being actively monitored by hospitals and clinics—which will not want to see their cost and quality ratings slip in relation to their competitors.

There’s a leap of faith involved here, as Baker admits. But in his view, providing more information about the health care system is the logical next step. “If you look at most other industries where a lot of information has found its way into the public domain, the use for that information goes way beyond what anybody could have possibly imagined,” he said. He pointed to the way price information on the Internet has changed the airline and hotel industries. Health care is different, he said, but “I’m working on the theory that in a no-information market, we shouldn’t be surprised that nobody knows how to define value.”


On the first day of May, I ventured into that dense agglomeration of health care institutions in Boston known as the Longwood Medical area. I had an appointment at the Beth Israel Deaconess Medical Center—fortunately not with a doctor, but with hospital president Paul Levy. He has a modest second-floor corner office that looks out onto Brookline Avenue and the entrance to the hospital’s underground parking garage. On one of his shelves is a foot-long section of an old water main with hardened, encrusted crud on the inside. It’s a “tuberculated” pipe dug up years ago in Brookline, he explains, a relic of his earlier career as a public works manager. Levy earned a reputation as a brash, out-of-the-box player when he ran the Massachusetts Water Resources Authority in the 1990s, and he has lived up to that billing during his new career in health care.

Like Baker, Levy started a blog several months ago ( If he wasn’t already seen as something of an outlier in the world of hospital administration, his blog-writing confirmed it. Starting last winter, he began publishing regular reports on the rate of hospital-acquired infections at BIDMC, challenging other hospitals to do the same. None took up the challenge.

Levy oozes self-confidence, in person and online. When asked by one reader recently if colleagues at other hospitals disapprove of his blogging, he surmised that he is held in “disdain” for it. “Of course, they have never said anything to me directly,” he wrote. “Then they would have to admit that they read it.”

Academic medical centers have become ‘community hospitals for Boston,’ says Levy.

So Levy’s views may not be entirely representative of those held by other hospital CEOs. But in this respect they are: When asked to name the most important factors driving the rising cost of health care, he did not begin, as did Baker, with the power of hospitals and clinics to charge more for services. Instead, Levy pointed to three trends. First, the elderly are living longer, and that has obvious effects on the system, since older patients need more health care and get more expensive treatments. Second: “The Baby Boomer generation, of which I’m a part, is the most narcissistic, entitled generation to come through America. We expect to have everything we want, when we want it. And we’re not even really that old yet.” The third factor, which will kick in over time, is that “the next generation is highly at risk” because of increasing obesity rates, a lack of exercise, and a high incidence of diabetes.

Levy said prices at his hospital are in control. That is, they are rising at the general rate of inflation “plus a little.” The total amount spent at BIDMC has gone up steadily in recent years, he said, because more patients are getting care—and as noted earlier, academic medical centers “in essence are the community hospitals for Boston.” Levy added, “What you’re seeing is greater utilization of the system, and the utilization that is occurring is toward the high end of the spectrum, the more expensive procedures and therapies.”

At the same time, Levy offered a technology tale that illustrates the commercial pressures hospitals face. A new robotic machine has been developed to assist in prostate surgery. It’s marketed as something that could improve surgical outcomes, but Levy said there’s little evidence it does. “That’s a million-dollar machine,” he said. “It has no clinical advantage over human hands. It’s in use in many hospitals around the country because the manufacturer has convinced the doctors, and the doctors and hospitals have convinced the patients, that unless you have a robot to take out your prostate it won’t work as well. And it’s not true.” Yet nearby Boston Medical Center has purchased the robotic technology and may well lure more patients because of it, he said.

Meanwhile, he said, the payers are consistently putting the incentives in the wrong place. “The whole reimbursement system is designed to provide a better return to hospitals for the high-level procedures, compared with the kind of doctoring where you do evaluation, measurement, thoughtful consideration of the patient,” Levy said. “One of the problems we have in this state is there are not enough primary care doctors. And here’s the irony: It’s because they’re not paid well enough by the insurance companies. So people are choosing not to be primary care doctors.” Instead, he said, they’re turning to specialization.

Patients in New England are part of the problem too, according to Levy. “If you talk to primary care doctors, they will tell you that their patients often demand to see a specialist in Massachusetts,” he said. From the viewpoint of the primary care physician (PCP), it’s a common scenario that a diagnosis is delivered and a treatment recommended, whereupon, said Levy, “the patient says, ‘Well, don’t you think I should see a cardiologist?’ And the PCP says, ‘Well, no. In essence, I know what I’m talking about, and you don’t need to.’ ‘Well, I insist.’ And so, you’re the PCP and you say, ‘Well, if you insist.’ You’re going to say yes, because you don’t want to be sued in case something goes wrong.”

Does that mean that Levy thinks patients need to be made more aware of costs by paying more out of their own pockets? In fact, he doesn’t emphasize that approach.

Like Baker, Levy wants more attention put on quality of health care. He favors a system of “risk-adjusted metrics” that would show which hospitals are delivering the best care, so that health plans could use incentives to steer patients to higher-quality providers. “If the insurance company is paying the hospitals relatively different amounts based on the results, we’ll see people respond. You’ll see patients respond, and you’ll see hospitals respond,” he said.

This approach upends the experiment led by health maintenance organizations in the 1990s, when cost increases were temporarily held in check but patients and doctors felt the quality of care was compromised. Levy argues that by starting with quality—such as by cutting the rate of hospital-acquired infections, to use his favorite example—you save not just lives but money. Higher-quality care should equate with less expensive care.

In fact, the kind of cost and quality rankings that Baker and Levy are talking about are already being used by the Massachusetts Group Insurance Commission, which supervises health care for almost 270,000 state employees and their families. Under the leadership of Dolores Mitchell (who is also a member of the Health Care Quality and Cost Council), the GIC three years ago pushed insurers who cover state workers to rank hospitals by quality and cost data. That led to a system of “preferred providers,” with patients paying smaller co-payments when admitted to hospitals that are ranked as more cost-effective. Last summer, the GIC set up a system for ranking the performance of doctors. Patients who choose doctors from the low-cost, high-value tier make lower co-payments. Not surprisingly, those being put under the cost and quality microscope have been less than thrilled—and have raised objections to the GIC’s ranking criteria. The state’s doctors “are not saying I ought to win the Nobel Prize,” Mitchell told a trade publication last year, “but the level of discourse has been civil.”


When former Gov. Romney got behind the reform effort in 2005 and 2006, he insisted that insuring the uninsured would “help bring health care costs under control.” (See Argument & Counterpoints, CW, Winter ’05.) The idea was to balance the higher costs of universal coverage with changes that would end up saving money elsewhere. But now the promise of universal coverage without additional state spending, as Romney envisioned it, has given way to nervous tracking of the state’s rising health care tab.

In the first week of June, I paid a visit to Leslie Kirwan, who was appointed by Patrick in January as secretary of administration and finance. We met in her spacious office on the third floor of the State House. Kirwan knows the office well; she worked as Charlie Baker’s chief of staff when Baker was the A&F chief in the Weld administration in the mid 1990s. But in one important respect, the job has expanded since Baker’s day: The A&F Secretary is also the chairman of the 10-person Health Insurance Connector Authority. Upon taking the job, Kirwan was immediately immersed in the details of health care reform.

As we sat at a conference table with four of Kirwan’s spreadsheet-wielding aides, I asked whether she was worried about the future of the health care reform law now in place. “It’s absolutely worrisome,” she said. Health care services already take up about half the state’s budget. When health costs rise faster than everything else, something’s got to give—and in recent years that situation has led to sizeable cuts in higher education spending and in state aid to localities. “It’s pushing on a lot of things, and to the extent that revenue’s not going up very fast, it’s tending to squeeze other things in the budget at the state and the local level,” Kirwan said. (The administration has tried to offer some health care cost relief to cities and towns through a proposal to allow municipal employees to join the large state GIC, where sizable health care cost increases have nonetheless been much lower in recent years than those faced by local governments.)

When health costs are rising faster than everything else, something has got to give—like education.

To grasp the way health care inflation affects state and local government, consider the big picture. The Commonwealth is spending about $7.8 billion in Medicaid this year and is projecting about $8.1 billion for 2008—almost a third of the entire state budget. Costs this year associated with health care reform are almost $1.7 billion (including about $308 million in new Medicaid spending). Health insurance for state workers costs another billion dollars (for 2007) on top of that. Then there is the $61.5 million in health care costs paid by the Department of Corrections. And a good deal of the almost $5 billion in state aid to localities goes to help municipalities pay for their health care costs. Very quickly, one sees how close to half the state’s almost $27 billion budget is gobbled up by health care expenditures. And health care could consume an ever-larger share of the budget if costs increase, say, 10 percent a year, while state revenue growth remains in the low single digits.

With the costs of expanded Medicaid services and the subsidized plans for low-to-moderate income residents, Kirwan says the new health care law has added $300 million to the state’s bottom line—money that comes out of the General Fund. Based on the governor’s budget, that number is expected to grow to $413 million for fiscal year 2008.

Given this obvious departure from Romney’s original no-net-cost-increase idea (and not just his: when the legislature passed the law, it projected a positive balance for 2007), I asked Kirwan what happened. Her answer suggests that the idea of expanding access without increasing state costs was wishful thinking, at best. “There’s potentially a couple hundred thousand [people] to be covered in Commonwealth Care, the subsidized products,” she said. “It’s sort of hard to imagine how that would be completely cost-neutral.”

Here one could almost see Kirwan take off her green eyeshades and speak as a member of the Connector authority, which has labored long and hard to create better health insurance options. “I still think there would be a very good story to tell if you were providing better care to people for somewhat more money,” she said. “You’re potentially giving people a chance at better health, at avoiding financial ruin if they should get into a situation where a family member got sick or injured.”

Speaking of the decisions made by the Connector board, Kirwan said, “We have made it through some of those tough decisions by reminding ourselves that we are doing something without really knowing what all of the outcomes are going to be.”

As for the $300 million impact of the new law this year and the projected $413 million next year, I asked Kirwan how soon that kind of increase could become unsustainable. “Really quickly,” she said. She admitted that she spent her first few weeks on the job in January “being very cranky about this.” Looking at the prospects for upcoming budget years, she said, made her feel that “Somebody’s going to hang a shingle outside the State House that says ‘FOR SALE, TO PAY FOR HEALTH INSURANCE .’”


The law that created the Health Care Quality and Cost Council says it is expected to set goals “to promote high-quality, safe, effective, timely, efficient, equitable and patient-centered health care,” all the while serving as the center of the state’s cost containment strategies. It’s a tall order.

Though the governor’s budget called for only $200,000 to fund the council, both the House and Senate versions of the budget more than doubled that amount this spring. In April, the council hired its first staff member: Katharine London, who previously worked on health policy in the attorney general’s office, is now the executive director. Discussion continues about how to compile a useful database of quality and cost information. Charlie Baker says it could take a couple of years before it’s up and running.

In the meantime, more than a few observers are talking about the need for Phase II of health reform in Massa- chusetts—in which cost control, the political football that economist Gruber says was “punted” last year, is brought back into play. And for all the complexities that are involved in the economics of this question, it’s the politics of it that makes even an experienced reformer such as Health Care for All director John McDonough say, “I’m not optimistic at all.”

“I think at this point the Quality and Cost Council is not envisioning steps which would make a noticeable difference,” he told me in a conversation in June. “To create a serious cost-control agenda would require a higher-level political intervention, which could be legislative. It could be the governor, as well.”

McDonough’s group is backing legislation that includes 17 proposals to help control costs. Some of the planks would be sure to be opposed by the hospital lobby. Others would meet disfavor from insurance and pharmaceutical lobbies. McDonough, who spent 13 years in the Legislature, doesn’t pretend otherwise. To enact a comprehensive plan would take a leadership alignment that is not now apparent, he said. “I don’t see right now the necessary summoning of political will to address the level of systemic change that we think would make a meaningful difference,” McDonough said. That could change, but “it will take some kind of significant event.”

Meet the Author

Dave Denison

Founding Editor, CommonWealth magazine
Then he raised perhaps the most daunting challenge of all for reformers who promote “systemic change.” With so much of this region’s economic vitality tied to health care, policy-makers have to find ways to control spending without “throttling the only sector of the economy that’s giving you any real growth.” Any strong medicine that state leaders propose is going to be met with reminders from health care lobbyists about how many jobs depend on a thriving health sector. How to find the mix of serious measures—on the supply side and the demand side—that could survive the political process? “When you ask yourself that question,” McDonough said, “you come then to the Pogo pronouncement: We have met the enemy and it is us.”

Does that mean we’d be better off accepting the fact that modern health care costs a lot and there’s not much to be done about it? That’s not a long-term option, according to McDonough. “It really is like global warming,” he said. “Every year it gets a little hotter. And when do you reach a point when people say, ‘This can’t go on’? I don’t see us as being there, at this point. That isn’t to say we couldn’t get there in a hurry.”