US watching Mass. fight on health costs

By Robert WeismanGlobe Staff / November 5, 2010

While the White House seems destined to spend the next two years fending off attacks on President Obama’s health care law, the administration of Governor Deval Patrick of Massachusetts will push forward with the next stage of health care overhaul: trying to contain the escalating costs of medical care.

That is likely to thrust the state back into the forefront of the national health care debate even as chastened Democrats skirmish with resurgent Republicans in Washington over implementing steps already taken here to expand access to health care.

“Just as Massachusetts has been several years ahead of the country in health care reform, we are several years ahead in the problems of health care reform,’’ said John L. Sullivan, research director for health care investment bank Leerink Swann in Boston. “Now Deval Patrick is going to have to figure out how to pay for it.’’

The task will be difficult, the stakes will be high, and the country will be watching. “If he succeeds,’’ said Sullivan, “he’s a hero.’’

As the governor’s lieutenants draft a bill on payment overhaul to submit to the Legislature in January, representatives of medical care providers, insurers, employers, and consumers met yesterday to try to craft a workable cost-control plan. The group was convened by JudyAnn Bigby, state secretary of health and human services, even before Patrick was reelected to a second term Tuesday.

Bigby said yesterday that the stakeholders group has yet to reach consensus on issues such as whether a board is needed to oversee a new payment system, what authority such a panel would have, and what outcomes it would monitor. The group is also debating a regulatory framework for how health care providers can form alliances, called accountable care organizations, under a new system.

“The biggest area of concern is over whether to regulate the price of health care,’’ Bigby said. The disagreement on the payment committee, she said, is “between those who don’t want the price of health care to be regulated and those who say you can’t make sure health costs are controlled unless you regulate the price.’’

Bigby said she plans to host a public hearing on recommendations next month before introducing the bill.

Medical spending in Massachusetts has climbed about 7.5 percent annually in recent years, far outstripping the rate of inflation. One reason for the increases is that a large share of care is provided in Boston’s academic medical centers rather than less expensive community hospitals. But the annual increases have placed a burden on businesses and individuals trying to cope with the severe economic downturn and slow recovery.

“Massachusetts is in the best position of any state to take the next step,’’ said Boston health care consultant Jon Kingsdale, former executive director of the Commonwealth Health Insurance Connector Authority, the online insurance exchange created by the state’s 2006 universal health care law to help people obtain coverage. “There’s still a lot of pride in the Massachusetts achievement of increasing access, and a recognition that the only way to preserve it is to deal with the costs.”

But in Washington, the tone is sharply different. Incoming House Speaker John Boehner pledged yesterday to “lay the groundwork’’ for repeal of the health care bill signed into law by Obama in March. One lesson to be drawn from Tuesday’s midterm elections across the nation, Boehner said, was that “the American people were concerned about the government takeover of health care.’’

Few congressional watchers believe Republicans, who won control of the House of Representatives on Tuesday, will have enough leverage to repeal the law. But they may spend the next couple of years sniping at it in hearings and challenging its constitutionality in the courts, forcing the legislation’s supporters to defend the landmark overhaul in the run-up to the 2012 presidential election.

“There will be a lot of heated rhetoric,’’ said Arthur A. Daemmrich, faculty member at the Harvard Business School Healthcare Initiative. “But I would be surprised if Republicans in the House would be able to roll it back. The Senate has blocking power.’’

Daemmrich noted that while lawmakers have the means to defund government programs, most provisions in the federal health care law that take effect in the next two years — like allowing children up to 26 years old to remain on their parents’ insurance — don’t require government funding. Many measures that do require public funding, such as setting up Massachusetts-style insurance exchanges in other states, won’t be implemented until after the 2012 election, he said.

Still, with Republicans challenging every element of the new law, the Obama administration is likely to be handcuffed in its efforts to expand the revamping of the health care system. That will leave it to the states, especially Massachusetts, to pioneer new ways of delivering health care services without driving up costs. Patrick capped health insurance rates for individuals and small businesses earlier this year — a move that sparked months of acrimony — but said it was a temporary measure to give customers relief until a long-term plan could be readied.

After defeating Republican gubernatorial candidate Charles D. Baker, a former chief executive of insurer Harvard Pilgrim Health Care, Patrick is ready to move forward with a “global payment’’ plan that is supported in principle by most of the state’s health care companies, though they have yet to agree on the elements.

The plan, in broad form, would put hospitals and doctors on an annual budget for each patient’s care. Providers would be expected to assemble into partnerships — known as accountable care organizations — to coordinate care and distribute payments. It would replace the current “fee for service’’ system in which providers are paid negotiated fees for each visit and procedure.

James Roosevelt Jr., chief executive of Tufts Health Plan in Watertown and a member of the panel weighing payment overhauls, said Massachusetts has the chance to be a leader in reining in costs.

“The big question about the national bill, just like ours, is how we’re going to be able to afford it,’’ Roosevelt said. “And while they’re bickering about it in Washington, we’re doing something about it.’’

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