The Bay State does another first in health care reform. First with a state-based health insurance exchange and a mandate that everyone have health coverage. Now the first state to attempt to bend the health care cost curve by force of law, albeit a paper tiger according to the story.
Here’s an excerpt from the story by WBUR and Kaiser Health News:
Under the new law, hospitals and doctors will have to cut their rate of cost growth about in half. So, instead of going up 6 to 8 percent per year, costs would only be allowed to rise 3.6 percent per year.
“No other state has tried to tie health care costs to the state’s economy,” said Massachusetts Association of Health Plans President Lora Pellegrini. “This is going to be really revolutionary and very important and I’m sure the nation’s watching.”
Michael Widmer, with the Massachusetts Taxpayers Foundation, says he thinks the health care industry will embrace the bill’s spending goals, even though they are what he considers aggressive.
“But on the other hand the legislation does not include triggers or punishments if the targets aren’t met,” he said.
Sedentary (and obsolete) office/commuter culture drives epidemic of obesity and diabetes, pushing up health costs
Today’s Sacramento Bee has an article spotlighting a public health crisis that has been developing over the past two decades: rising levels of diabetes that are in turn driving up medical costs — and the cost of health insurance. As the article point out, whether or not people develop diabetes (with particular note given to the large cohort of aging Baby Boomers approaching 65) is largely within their control through healthy diet and regular exercise:
The good news is that unlike type 1 diabetes – an autoimmune disorder often with onset in childhood – type 2 diabetes often can be prevented by healthy lifestyle habits: walking 30 minutes five times each week and eating a balanced diet.
It’s a simple solution to the epidemic. But by the millions, people don’t do it.
“We have more sedentary jobs now,” said Dr. Debra Bakerjian, a UC Davis Nursing School adjunct professor and president of geriHealthsolutions, a long-term care consulting firm. “We work long hours, and many people commute.
“It’s hard to work exercise in there — most of us don’t have jobs that allow us to be mobile. And with the time crunch, we lean toward fast food.”
The obvious implication for the health cost crisis is combating it will require changing how information work gets done. Smarter, not longer. And reducing the time spent commuting to and sitting in cubicles and offices in order to free up time for exercise and healthier eating habits. With the near ubiquity of Internet connections, commuting to an office to get Internet access is not only becoming obsolete — it also has negative public health implications.
In today’s business world, there are plenty of things to be sick about. Urgent deadlines (even when some aren’t urgent), constant interruptions (how many times do you need to hear about Steve’s weekend?!), way too many meetings, endless politics that waste precious energy that could be aimed at the actual work – not to mention an all-around lack of sleep. These reasons, and so many more, can lead to workers who are just plain miserable.
So when we say that the workplace is full of “healthcare” issues, we mean a bit more than benefits. The health of any office is tied to a number of factors beyond the doctor’s office, and it would seem that even the best insurance plans can’t protect against the evils of limited vacation time or long commutes.
ROWE presents a true workplace wellness program that can get real results, reducing health care utilization. It goes beyond gym membership subsidies (not beneficial if people don’t have time to go there) and symbolic gestures like award certificates for serving healthy snacks at meetings.
This San Francisco Chronicle story is a retrospective on how omnibus Massachusetts health care reform enacted by the Romney administration in the middle of the previous decade became a template for California in 2007 and 2008. When the California reform effort under then-Gov. Arnold Schwarzenegger faltered in the Legislature amid opposition to the individual mandate and concerns the state could not afford it, the Obama administration subsequently adopted Massachusetts model in crafting its Patient Protection and Affordable Care Act.
Had the U.S. Supreme Court not left the law largely intact last month, California may well have picked up where it left off in 2008 with leading policymakers voicing support for the individual mandate. However, financing subsidies would have likely proven problematic just as four years ago as the Golden State continues to grapple with chronic budget deficits and high unemployment.
Last week’s Supreme Court decision on the constitutionality of the Patient Protection and Affordable Care Act (PPACA) and specifically the so-called individual mandate turned on the penalty for not having minimum essential coverage under Section 1501 of the PPACA. While the court ruled the government cannot compel all Americans have health coverage, the government may require payment of a penalty for not having it as a permissible exercise of Congress’s power to levy taxes. The penalty gives the mandate real teeth. Without it, the mandate would be a paper tiger.
The individual mandate in turn is designed to work with upfront tax credits to subsidize the cost of coverage for those who earn above 133 percent of the federal poverty level and are thus ineligible for Medicaid. The penalty for not having coverage is the disincentive or stick and the tax subsidy to defray plan premiums or fees is the incentive — the carrot. Insurers and health plans also have a mandate to sell coverage to whoever is willing to buy it starting in January 2014 regardless of their medical condition.
Together, the carrot and stick built into the individual mandate along with the requirement insurers and health plans accept all applicants (per sections 2701 and 2704 of the Act) is intended to save the individual and small group health insurance market segments from the black hole of adverse selection and ultimately market failure. The acceleration in adverse selection in recent years occurred in the individual market due to increasingly selective medical underwriting standards in states where payers are permitted to screen out people likely to incur high medical treatment costs. Adverse selection also threatens the viability of the small group market due to poor spread of risk among employers of 50 or fewer employees— and particularly numerous micro businesses with five or fewer workers.
In order to preserve these market segments and to also reduce rising premiums in the large group market due to the shifting of medical treatment costs incurred by those without coverage to the insured population, the PPACA has created an alternative and far more compulsory health insurance market than existed prior to its enactment in early 2010. Daniel Weintraub, a veteran Sacramento print journalist with deep knowledge of the health care market, described the new market landscape that will fully emerge in 2014 as one in which insurers and managed care plans will effectively become a “quasi-public utility.”
The question going forward is whether this government-drawn and enforced market can achieve sufficient savings and spread of risk to ward off market failure in the individual and small group market segments. In addition, given that health insurance functions as a pass through mechanism, whether the chronic disease prevention provisions of Title IV of the PPACA will meaningfully slow the relentless rise in medical costs driving up premiums.