House Bill 2084, “An Act Relative to Keep People Healthy By Removing Barriers to Cost-effective Care,” joins the list of well-intentioned, but ill-conceived healthcare reform ideas in Massachusetts. No one likes paying money when they visit the doctor, and certainly those with chronic conditions should be able to receive the care they need, but is making some services “free” the answer?
While I give the non-profit Health Care for All (HCFA) credit for trying to think creatively about how to make care affordable, they missed the mark with this bill. It ignores basic economics and fails to fix the problem it claims to address.
The bill received a hearing last month in front of the Joint Committee on Public Health, and should not advance out of committee.
Summary of the Bill
The bill would set up an “expert” panel “to make recommendations to the Department of Public Health regarding which high value and cost-effective services and medication should not be subject to out-of-pocket cost sharing, like co-pays, deductibles, and co-insurance.” -HCFA summary.
Sounds good, right? Well…
There is No Free Lunch, and Consumers Pay the Difference with Higher Premiums
The bill could mean little to no out-of-pocket expenses for these services at the doctor’s office…but higher insurance bills for consumers, which seems counterproductive.
Supporters argue that this bill will save money long term, and will only cost insurance companies more in the short term. However they seem to ignore the fact that patients will be the ones picking up the extra expense in the short-run in the form of higher premiums. Non-profit insurers in Massachusetts making a 1-4% profit and dealing with ACA changes, are unlikely to eat the difference in cost. To think otherwise is naive.
Mandates increase costs. Regardless of how good an idea is, the reporting requirements on carriers and hospitals, as well as any additional analysis by state agencies cost money. I recently spoke with a senior official at a hospital system in the state, and was told that over the last year they have spent north of $1 million just to respond to information requests by state agencies. Who do you think ends up paying for that cost?
Furthermore, regardless of what companies or their employees can afford or desire in a product design, this bill would increase their premiums and limit their choice of plans, based on services that their employees might not even utilize.
As a historical side note, this same standardization of product design was the cause of the dysfunction in the individual marketplace by legislative tinkering in the 1990’s. RomneyCare had to partially deregulate that market, and merge it with the small group market to untangle that knot. Why would we want to return to those days?
“Experts” Often Create Problems, Instead of Fixing Them
There is a strong belief that experts can “save” healthcare in Massachusetts. Call it the Harvard-syndrome.
A strong technocratic belief structure has proliferated, most strongly manifest in Chapter 224 of the Acts of 2012, where hundreds of “experts” will be appointed to 25+ new agencies, task forces, commissions or councils. This form of governing has many downsides (i.e. it is inherently undemocratic), but most cost relevant is that it makes special interest lobbying less transparent, and much easier with fewer people to influence.
The “expert” governing-style goes back decades in the state. Whether it is rate-setting, determination of need, the cost and quality council, or the newly formed Health Policy Commission–the Commonwealth seems to believe if we just had one more group of experts we could crack this healthcare nut. Isn’t the definition of insanity doing the same thing over and over again and expecting a different result?
As an example, H. 2084 reads, “In making recommendations, the panel may limit a recommended high-value cost-effective service as applicable only to patients with one or more specific diagnoses or risk factors for a disease or condition.”
Doesn’t this sound like a recipe for confusion, controversy, added administrative cost, and lawsuits? There has been a raging debate over quality metrics for what is “appropriate care,” and this bill would by regulation set that standard. What happens if the science changes, do we expect government to be able to change quickly?
It would be one thing to have a panel examine these issues on a regular basis and make voluntary recommendations, it is another to set in motion regulatory power in a top down approach.
Do Other Benefits Not Get Covered As A Result?
Nationally, as the United States Preventive Services Task Force has made recommendation for what preventative services should be covered, many have raised concerns about the unintended consequences on other benefits previously covered by insurers. In other words, as the “expert panel” in Massachusetts deems some procedures covered, will other unrelated common benefits see significantly higher co-pays or co-insurance, or a drop of that benefit all together?
This reaction would be erecting another barrier in the way for those consumers, and HCFA will be back in a couple years wanting to force insurers to cover those other common benefits. This will not only be an endless struggle to increase benefits, but also will increase costs as well.
Low-income Individuals Already Get Help With Cost-Sharing
Individuals making up to 250% of the FPL under the ACA face very little cost-sharing. Whether they are enrolled on Medicaid (where co-pays are mostly in the single digits) or on the Connector (where cost-sharing subsidies are being provided) this is not an issue for that population. Since the state has decided to wrap Connector policies with an extra subsidy, any increase in premiums will result in additional state dollars being spent.
A much more effective solution to this cost problem would be to advocate for consumer-driven healthcare in the form of health savings accounts (HSA). (See Pioneer’s latest report here.) Not only are these accounts triple-tax advantaged, and often paired with lower premium plans, (unlike higher insurance premiums due to eliminating cost sharing, as proposed under H 2084) but they also empower consumers to become value-seekers. The result is money is saved up to pay for all medical expenses, not just the “high-value” services that HCFA wants to make “free.”
This approach would significantly reduce the cost concerns HCFA has raised, and has the added benefit of putting pressure on hospitals to lower their prices, one of the main reasons folks don’t have money to pay for out-of-pocket expenses to begin with.
Instead, this bill as proposed, would undermine this approach and drive up costs. Next…
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