House, Senate health care bills fall short

Don't address price variation, could actually boost costs

THE GREATER BOSTON INTERFAITH ORGANIZATION is a community organization representing about 50 primarily religious congregations who come together to advance social justice, including issues related to access, cost, and quality of health care. The GBIO and its member congregations have been engaged in the health care social justice struggle for almost 15 years.

We worked alongside Health Care For All and many other community groups who joined with all of the health care system stakeholders to pass our 2006 groundbreaking access to care bill. Because all of us have been so impacted by how expensive Massachusetts health care is, we stayed engaged in health care policy issues, and worked with others to help pass the 2012 cost containment bill.

As good as that 2012 legislation was in starting to address some of the ills of our expensive health care system, we and others acknowledged that among the challenges the bill did not address was the issue of provider price variation. This is a system where commercial insurance rates paid to hospital providers varies greatly, with some of our most powerful and well branded academic institutions being significantly overpaid, and some number of community hospitals often caring for large numbers of poor people underpaid. This reality not only makes it difficult to make our overall health care system more affordable, but it helps to perpetuate a system of have and have not hospitals, which often translates into a have and have-not health care system resource availability for the communities that these hospitals serve.

This is not a socially just result.

That is why we remain vigilant in wanting to address this hospital price variation issue.

This legislative session, the House and Senate have each looked to address issues relating to provider price variation in order to stabilize our lowest paid providers, but they have attempted to do so in different ways. Unfortunately, as currently drafted, neither the House nor the Senate bill will appropriately address the issue and could leave consumers with even higher costs. The good news is it is not too late to both help some financially challenged hospitals while also achieving a positive outcome for employers and consumers.

The recently passed House approach fails to address the provider price variation issue in a systemic way. The House provides one -time funding to support lower-priced community hospitals through use of a $330 million assessment that would be paid mostly by the state’s not-for-profit health insurers, and in smaller part by the highest-paid hospitals. Though the language of the bill prohibits health plans from building the assessment into premium rates, they more than likely will find a way to hike administrative fees to employers and the like. And if, instead, they fund this assessment out of reserves—a fund the state mandates insurers hold in order to protect against unanticipated claims costs—ultimately these funds will be built back up and so we premium payers will pay for this assessment but just do it over time.

The Senate bill attempts to deal with provider price variation, but in its current form does not quite hit the mark. The bill sets a minimum price for hospitals at no less than 90 percent of the state average paid by all insurers and sets an overall hospital growth rate target cap for all commercial hospital spending. While there is not a firm spending cap, the Senate bill potentially penalizes at least three highly paid hospitals if the state commercial spending target is exceeded in a given year. The Senate bill also contains two puzzling provisions to us: one which calls for all providers to get a rate increase if any one provider gets one; and language that if the overpaid hospitals do have to pay a penalty, money collected in penalties and fees are returned to community hospitals, rather than rebated to consumers.

In both the House and Senate bills, the flow of funds to the lower-priced hospitals fails to distinguish between those who truly need funding and hospitals owned by wealthy systems. Before funds are made available to any hospital, we must create greater transparency in how health systems apportion money among hospitals it contracts on behalf of, and we must better understand how money is distributed among provider groups within each system. Only if we obtain such knowledge can we be assured that we are helping the most needy hospitals in our state and not unjustly enriching others that don’t need it.

In sum, the House bill fails to address provider price variation, and won’t stabilize our community hospitals for the long term, and the assessment proposed will ultimately come from our pockets as premium payers. It should be rejected by the conference committee. The Senate construct could be made workable if there is a firm statewide spending cap for all of commercial hospital spending, rather than a growth cap so that any rate increases occurring due to establishment of a rate floor are offset by decreases in payments made to our highest paid providers. Doing it this way can best assure that premiums will not go up for employers and consumers.

Meet the Author

Burns Stanfield

President, Greater Boston Interfaith Organization
Given the fact that our state has among the highest health care costs in the nation driven significantly by provider prices, this is the only logical outcome if we are committed to doing some of the unfinished business that was left unaddressed by our 2012 cost containment bill.

The Rev. Burns Stanfield is the pastor at Fourth Presbyterian Church in South Boston and president of the Greater Boston Interfaith Organization.