Jon Kingsdale reflects on three years of health-care reform
As executive director of the Commonwealth Health Insurance Connector Authority, Jon Kingsdale has more responsibility for the implementation of the Massachusetts health-care reforms than arguably anyone else in the state. And since the basic structure of the Massachusetts plan is similar to the structure of both the House and Senate plans, Kingsdale's experience in the Bay State is as good a guide as national reformers can hope to draw on. I reached Kingsdale over the weekend.
In the last week or so, there's been a lot of concern over the individual mandate. What's been your experience with the policy in Massachusetts? Has there been a sharp backlash?
I have a large plaza in front of my office and we have no security. I haven't seen a single pitchfork.
Is the mandate necessary, though? What would have happened if you'd implemented the Massachusetts reforms with a mixture of insurance regulations and consumer subsidies?
The mandate is absolutely essential. The first reason is it's essential to get people's attention and get them enrolled. You and I may master the details of who's eligible for the penalty and how much it is, but most people have a simpler takeaway: There's a penalty for not having insurance.
That brings the young invincible into the risk pool. As a result of merging the small group and non-group and bringing in the young invincible, we saw a substantial decrease in the monthly premium. That's important for the long-term price stability. We saw a 20 to 25 percent decrease in the cost of coverage in the non-group market.
How did the mandate actually work in practice?
The mandate went into effect in July of 2007. A bunch of things happened leading up to that. We developed a new, subsidized insurance program for folks who didn't have Medicaid or employer-based insurance. This was Commonwealth Care, which is the equivalent of the federal subsidies. Employers were also given the option of providing insurance or paying a very reasonable assessment. So you had these pieces falling into place in anticipation of the mandate. Then there was a lot of education and advertising that began happening, too. A lot of outreach and promotion.
Between July 1st, 2007, and December 31st, there was no penalty in the mandate. Then there was a modest penalty of $219. One of the big challenges during this period was to make sure people would participate in the tax part of the program, where they report their insurance status on their tax forms. And 98.6 percent of the 3 million filers filed correctly. That was remarkably high.
In 2008, the penalty became half of the lowest price premium, and it became monthly, unless you made 150 percent of the federal poverty line.
What are the trends in it? Have more people been choosing to go without insurance as the program wears on, or are more people following the mandate?
The number in the first year, if I remember correctly, was more than 60,000. In the second year, 2008, it was 46,000 or so. We'll know 2009 next year.
Have the Massachusetts reforms controlled costs effectively?
This is a fairly complicated question to answer accurately. One answer concerns the people newly insured by the program of reforms. The cost for them has been very modest. Our subsidized program has seen its premiums going up at less than 5 percent a year. The whole thing has been a bit over 1 percent of the state budget. Significant, but not a budget buster.
In terms of the $60 billion Massachusetts spends on health care more broadly, Massachusetts is the most expensive state in the country in the most expensive country in the world. The reforms did nothing to exacerbate or control overall health-care spending. What they did was force the country's most serious conversation over controlling costs. The legislature is now talking about moving from fee-for-service to capitation. I'm not confident we'll get there, but it's the most serious effort I've seen in 35 years in this business.
Is that a failure of the plan or a failure of the plan's design? That is to say, did the plan contain cost controls that didn't work, or was it just an effort to expand access?
Our reform was about access with a head fake on cost containment. The Connector, which is our exchange, has been an effective prudent purchaser. Costs have been going up at less than 5 percent. And we're now inching our way forward on cost control.
In 2008, the legislature passed a bill about quality improvement and cost containment and that paid for electronic medical records and had a loan forgiveness program for primary care doctors and set up a commission to look at payment. And that's the report that came back in 2009 with a unanimous vote from doctors and academics and legislators and insurance executives and said we should take five years and move from fee for service to captivated payment.
Do you buy the argument that that conversation is the product of the reforms?
Absolutely. We basically have one national cost containment policy. Every time we have a recession, we throw another 5 to 10 million Americans on the rolls of the uninsured. I think that this legislation closes off that option and makes it Congress's problem to deal with cost containment and builds a constituency for it.
How do you think the national reforms compare to the Massachusetts reforms on cost control?
There's way more cost control in the House and Senate bills than there was in the 2006 reform in Massachusetts. The reductions in reimbursement for home health and some of those benders for Medicare are important. The prudent purchasing. Empowering MedPAC is important. Promoting experimentation in providing Medicare reimbursement.
It's not absolutely clear what will reduce the cost trend. We need some experimentation. But I'd say the federal legislation has a far more ambitious effort than in the original Massachusetts legislation. But Massachusetts had some uncommon advantages, too. All but two Republicans in the legislature, and a Republican governor, supported reform, so we didn't face the hostility of a major political party determined to prove reform a failure. This will play out nationally in a very different way than we experienced in Massachusetts.
December 21, 2009; 10:37 AM ET
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