With this state’s recovery outpacing the nation’s, Governor Patrick is riding high. Sixty-one percent of likely voters say the state is heading in the right direction, according to a new Suffolk University poll — and almost the same proportion have a favorable opinion of the governor.
That shows something impressive: The state’s congenial, consensus-oriented CEO has become a successful, well-regarded governor in tough times. But though it’s no doubt a delight to be Deval these days, the governor also faces a ticklish policy problem in the weeks ahead.
That’s health care cost containment, an issue that involves a sector vital to the state’s economy, includes an array of powerful stakeholders and energized activists, and will play out during a national campaign, in which Republicans can be expected to saddle Barack Obama, Patrick’s presidential pal, with anything Massachusetts Democrats do.
And so far, Beacon Hill legislative Democrats want to do quite a lot. Whereas the regulatory heart of the governor’s proposal was expanding the Department of Insurance’s authority so it could reject insurer-provider contracts judged too costly, the Legislature has gone considerably further.
Both the House and the Senate want a new state authority to oversee health care. The House bill in particular is viewed as regulatory overreach. Among the broad powers it would grant the authority is the right to assess a luxury tax on hospitals whose charges are more than 20 percent above the statewide average. Meanwhile, hospitals judged to be to be disproportionately driving health care costs could be forced to reopen contracts and implement cost-cutting plans.
Although most of the health plans view those provisions favorably, the hospitals and the business community are very worried about the House bill. Four of the state’s business organizations — the Greater Boston Chamber of Commerce, the Massachusetts Business Roundtable, the Massachusetts Taxpayers Foundation, and the Associated Industries of Massachusetts — have expressed deep concerns to House leaders.
The business community and the hospitals are more amenable to the lighter, less compulsory, Senate legislation. No surprise there; whereas House leaders like Majority Leader Ron Mariano have worked closely with the plans, Senate President Therese Murray is closer to the providers, and particularly Partners HealthCare System.
Patrick himself seems uncomfortable with the course cost control has taken. During his appearance at the Boston Chamber last week, the governor made it clear he didn’t see the need for a new state authority and was dubious about a luxury tax.
In a less noticed event, the governor also took part in a recent MIT forum where Partners President Gary Gottlieb offered a well-documented overview of the importance of health care, life sciences, and — of course — Partners’s big research hospitals to the state. Noting that federal research cutbacks are coming, Gottlieb urged policy-makers not to “stifle the marketplace innovation that is taking place by over-prescribing and over-regulating.” Patrick had kind words afterward for Gottlieb’s speech, sources say.
The governor’s position is tricky. By rejecting a range of insurer premium increases and asking for more regulatory authority, he (cattle)-prodded the health care sector to focus on costs. The question now is where to draw the line. No matter how deftly done, price caps and rate regulation always have unintended consequences; a complicated, time-and-resource-consuming regulatory regime could do serious harm to the crucial health care sector.
Then there are the political considerations. The Romney campaign, eager for ways to differentiate Romney’s state universal-care law from Obama’s national one, will likely paint any regulatory move as 1) a betrayal of Romneycare’s market orientation and 2) a sign of the future direction of Obamacare. If this debate splits the hospitals and business community from the coalition that supported the state’s landmark law, Mitt Romney will have ample evidence to point to.
Avoiding those pitfalls will, at the very least, mean reining in the Legislature’s regulatory impulse enough to keep the hospitals and the business community aboard, even while placating the stakeholders and activists who want more forceful action — and doing so without appearing to sacrifice cost containment concerns to political considerations.
Now in his second term, Patrick is light years more able than he was four years ago. And a good thing, too: The challenge he now faces would put any governor’s skills to the test.