In what has become an annual rite, Massachusetts will hold public hearings on health care costs in early June. This year if you listen closely, you will already hear some providers and insurers warming their engines and arguments to proclaim “cost control is working, just give us time and don’t interfere with the market through government intervention or regulation.”
For the well-heeled, the system is working. The reality is that for most providers, and more importantly, for most consumers, it is not. An inconvenient truth about Massachusetts health care system is the fact that the income profile of where you live is a better predictor of what insurers will pay for your health care than almost any other factor. This reality has not been changed by any of the payment reform experiments currently under way, nor by anything that has been recently proposed. So I remain deeply unsettled by wishful thinking that our market will solve our health care cost problem if left to its own devices.
The belief in market-based solutions is predicated on the proposition that the parties most responsible for creating a two-tiered market — health insurers — will voluntarily change course. The reality is our state’s health insurers have long been the de facto regulators of the marketplace. This means insurance companies bear a large measure of responsibility for a system that pays doctors in Brockton and Lowell 50 percent less than those in Acton and Wellesley, and that pays many community hospitals more than some of our urban academic medical centers that struggle with high Medicaid loads. In most instances, these disparities exist even though providers deliver the same services in largely the same way, with equal if not better quality. To dispute this is to argue that the extensive, groundbreaking cost and quality research done by the Massachusetts Attorney General’s Office and the Massachusetts Department of Healthcare Finance and Policy over the past few years is without merit.
While these disparities in payments are unfair to providers, the more problematic issue is they are unfair to patients. Many have suggested that global payments, in which each patient is assigned a budget to cover their health care needs, is one way to keep health costs down by encouraging providers to provide better, not just more, care. I agree that we need to emphasize keeping patients well, and it makes sense to align providers, patients and insurers toward that aim. But why should per-person spending in Massachusetts (adjusted for health status) vary by more than 50 percent from one physician group to another just because one patient lives in Wellesley instead of Brockton? There is no evidence that quality varies among physicians in Massachusetts to a degree that would justify such a discrepancy. Something else is going on here.
We got a taste of what was going on in the report issued by the Attorney General’s Office last year. In a section of the report that generated surprisingly little attention, we saw that more than 70 percent of commercially-insured patients with the lowest spending on their health care also lived in the lowest income zip codes in Massachusetts. Conversely, more than half of the people with the highest spending on their health care lived in zip codes with the highest income in Massachusetts. In other words, the rich use more expensive health care, and it is subsidized by the premiums paid by less wealthy policy holders.
As we move from traditional fee-for-service models to global budgets, we must make sure that the same disparities that have distorted our fee-for-service payment system are not enshrined in perpetuity in a global payment system. Right now, a child in a global payment plan who sees a pediatrician in his Brockton neighborhood has a significantly lower annual budget for his care than a similar child living in Newton. This sort of arbitrary variation needs to be strictly limited; budget differences should relate to quality alone. Here’s the big question: if the premiums paid by consumers and employers are equivalent (and they are) is there any justification that doctors who care for kids living in well-heeled suburbs should have budgets that are richer than those who care for kids in Lawrence, or East Boston, or Brockton?
Regulators and legislators have seen to it that nearly all citizens in the Commonwealth have insurance. Now we all need to ensure that all citizens will get budget allowances that will not perpetuate a two-tiered system that results in communities of “haves” and “have nots” when it comes to health care.