I have great respect for Jim Stergios and the Pioneer Institute he heads. The Institute has been an important force in Massachusetts public policy debates for many years. But I think Jim has the wrong policy prescription in an op-ed published in today's Boston Globe.
Citing the higher than expected costs of the Massachusetts Healthcare Reform Act of 2006, Jim proposes that there should be a reduction in payment to Boston Medical Center and Cambridge Health Alliance, the two largest hospital providers of care to the poor in the Boston metropolitan region. To be fair, Jim is not the first to propose this. Over the years, there have been periodic attacks on BMC and CHA for their special payments. Several years ago, for example, many of the community hospitals complained that they were subsidizing these urban safety net facilities.
Beyond ignoring the history of these hospitals in our city and the special role they play in the health care system, Jim's proposal puts the focus of the financial problem in the wrong place.
The reason for the higher than expected costs of Chapter 58 is pretty simple. The costs were underestimated at the start. More people than expected signed up for state-subsidized health insurance. And, lo and behold, once people had insurance, they actually used it for medical care. The actuarial estimates of the dollars per person covered were wrong.
That does not suggest that the Act was ill conceived. Not at all. It was a law designed to provide greater insured access to health care. The theory, which will play out over time, is that people with insurance will make better use of primary care and will have better health over time than when they would wait until they were really sick and show up at emergency rooms. But in the meantime, for example, those poor women who had not had mammograms in 20 years will now have them, and some percentage will be diagnosed with breast cancer and will begin treatment. In short, it is entirely reasonable to expect a bulge in health care costs among the population that previously did not have insurance.
If we want to keep this new system in place, there are only three sources of revenue for these costs: The taxpayers, the insurance companies and through them their subscribers, and the hospitals. None of these have tremendous political support, and there will be interesting political debates and compromises on Beacon Hill as this is figured out. I am afraid, though, that Jim has mistakenly chosen to avoid the first two and then focused his solution on a subset of the last one.