IN THE STATES: Cost and Coverage In Massachusetts

President Obama has made it clear that he supports health reform this year. As we work on achieving that goal, naturally the key issues include containing costs and increasing coverage. If you want to see real world experience in addressing these problems, look no further than Massachusetts.

In 2006, Massachusetts passed its landmark legislation requiring that everyone in the state have health care coverage. How are they doing? Current estimates show that more than 97 percent of Massachusetts residents now have health insurance.

While they have made significant progress on coverage, Massachusetts reformers are now working on a solution to the next problem—controlling costs. Massachusetts officials are considering a few different options. Governor Deval Patrick has stated he will regulate insurance premiums if hospitals and insurers fail to exercise restraint. A review board is considering revising payment incentives to encourage more focus on preventative care. In the summer of 2008, Massachusetts passed legislation to promote cost containment, transparency and efficiency in the delivery of quality health care.

Massachusetts reformers have some words of caution for Congress and the White House, both of which are concerned about controlling costs in the economic downturn. They caution that holding off the decision on cost containment was the only way they were able to bring together the broad coalition of doctors, hospitals, insurers, businesses and consumers necessary to agree on the coverage expansion. 

"The concept is to sequence reform in some way to do the really hard thing, which is expanding access, before we do the nearly impossible thing, which is containing costs. We don't want to end up holding 50 million uninsured hostage to cost containment," Jon M. Kingsdale, director of the Commonwealth Health Insurance Connector Authority, which oversees the new Massachusetts subsidized coverage program, told the New York Times. That sequential approach of course may not be the right solution, in terms of politics or policy, for the country as a whole. We have often noted the linkage between cost, coverage and quality. Plus, of course, the federal government (in part because of Medicare's clout in the market) has more power to bend the cost curve and change the delivery system than a single state can. But as Kingsdale noted, it was the option that worked in Massachusetts.

The bottom line is that covering everyone and containing costs is not an either/or. Providing coverage to all Americans can help lower costs by improving the efficiency of markets for insurance and health care and improving the health of individuals.( A recent analysis by the Center for American Progress Action Fund estimated that an insured U.S. family pays about $1,100 extra in premiums each year because of the  cost-shifting that arises from inefficient ways of caring for the uninsured). More broadly, the national commitment to covering everyone serves as a catalyst, forcing policymakers to do the hard work of reducing costs by reforming the way we pay for and deliver health care. Those changes take time, but coverage expansion brings with it a continued commitment to bending the curve. 

Through both its triumphs and its tribulations, Massachusetts provides an excellent guidepost for national reformers. The problems facing the health care system today are complex, but as Massachusetts shows, they are not impossible to address. As Massachusetts works to facilitate both cost containment and coverage for all, national reformers should remember what they've learned—cost and coverage are deeply intertwined, and they must both be addressed as we work together to fix our health care system.