Patrick bashes Baker over health care costs

Published on Wednesday, March 10, 2010

STATE HOUSE NEWS SERVICE

Gov. Deval Patrick delivered his most cutting criticism yet of Republican rival Charles Baker on Wednesday, March 10, using a State House press conference to skewer the former health insurance CEO for not doing more to rein in rising costs in the industry.

After straightforward testimony to a legislative panel in which he urged prompt action on legislation that would impose on care providers the same “soft cap” he has applied to insurers through regulation, the governor told reporters in a State House hallway that Baker had “been in the middle” of system-wide double-digit annual increases and participated in efforts to delay cost-curbing efforts.

Patrick, who has selected carefully his opportunities to go on the offensive against Baker himself, last month allowing a question about Baker’s role to pass virtually untended, said he wanted Baker to testify before the Legislature about trends in the industry.

Patrick told reporters, "My frustration has been, in the last three years, is that all of those players in the industry have come in and sat around my table, over and over again, and they've sat around other tables in this building and in conference rooms all over this town, and they talk about why it is they can't help but charge double-digit increases every year to small businesses and families. And those small businesses and families don't have a voice at that table. They have my voice at that table."

Prompted by a reporter, Patrick said, "Charlie Baker is one of those people who came up, and frankly, you know, I'd like to see him express himself and show some support here. I'd like to see the other candidates show up on this subject. There's a lot of talk in this campaign, and in this town to tell you the truth. We need some action, and we need it now."

In response, Baker campaign spokesman Lenny Alcivar said, “The Governor’s angry, personal attack on Charlie Baker was beneath the dignity of his office, and marks an inevitable end to his re-election campaign to tax and spend taxpayer dollars for yet another four years. Voters deserve better than an angry Governor who blames others for his own decisions. Deval Patrick blames Charlie Baker for his own tax increases. On healthcare costs, he blames Charlie Baker. If Governor Patrick spent less time blaming Charlie Baker for his own misfortunes, he would not find himself in the corner he’s in today – an isolated, out of touch tax and spender who has lost the confidence of the people of Massachusetts.”

Alcivar said Patrick had “buried” an administration report released last month that identified price as the largest factor in cost spikes, with spending per day on inpatient hospital care accounting for over 90 percent of growth in inpatient hospital care spending. The report also identified wide swings in prices private insurers confront for the same services offered by different providers across the state, with variations of as much as 18-to-1 for high-volume outpatient facility services.

Alcivar also pointed to Baker’s calls for increased transparency in health care billing.

Inside the hearing, which ran all day, other health care stakeholders told lawmakers they had concerns about the bill, a doctors group saying that government intervention could discourage doctors from practicing here, insurers saying the charges they levy are a function of the ones providers aim at them, and a leading business group pushing lawmakers to temporarily limit reimbursements to doctors and hospitals to the median cost for individual medical services in 2009.

Patrick’s press availability turned his otherwise staid discussion of a thorny and layered policy matter into a campaign-flavored event. "While we've been dealing with this crisis, at least one of the candidates in this race has been in the middle of this industry and hasn't offered any solutions yet. I'd be interested to hear what he has to say," Patrick told reporters.

For months, Patrick has appeared largely content to allow Lt. Gov. Timothy Murray to function as the administration’s and campaign’s lead critic of Baker. Wednesday’s question-and-answer session marked Patrick’s most thorough engagement yet with his closest rival.

An automated poll the News Service reported Tuesday found Baker closing on Patrick, who still led with 35 percent of the vote. Baker garnered 32 percent, while unenrolled Treasurer Timothy Cahill took 19 percent. With convenience store magnate Christy Mihos as the GOP nominee, Patrick registered 34 percent, Cahill improved to 30 percent, and Mihos won 19 percent. The Rasmussen Reports survey of 500 likely voters carried an error margin of plus/minus 4.5 points.

Democrats have looked to tie Baker to expensive health care and problems with the Big Dig, a project whose financing plan was developed while Baker was the top budget official in GOP administrations during the 1990s.

Baker and other Patrick critics have assailed his handling of the state budget before and during the recession, saying excessive spending and tax increases have harmed the state.

“Governor Patrick last month buried a report by his own Division of Health Care Finance and Policy on health care cost trends which echoes what Charlie Baker has said from day one of this campaign, and since his career in the private sector – that price is what’s driving increases in health care spending and there is a troubling lack of transparency into what those prices actually are,” Alcivar said in an email.

Inside the Hearing

Patrick has worked to position the bill as a populist issue, calling out insurers and pitching the plan as a boon for small business owners. Patrick described the plan as a "bridge" to permanent measures aimed at reforming the health care delivery system.

Under Patrick's legislation (H 4490), beginning in July, insurance carriers in the state's small group market would need to provide at least one product within a reduced provider network featuring premiums at least 10 percent lower than those for the full network plan.
Patrick is also looking to impose a moratorium on new mandated insurance benefit requirements until July 2012. The governor's plan also creates two annual open enrollment periods for people who purchase their own coverage, aimed at discouraging them from buying insurance only when they need it.

Associated Industries of Massachusetts, the state’s largest employer group, said they approved of the reduced network provision and the cap on new mandated benefits. According to written testimony from AIM president Rick Lord, AIM wants one open enrollment period per year, with exceptions for changes in circumstances. Instead of backing the cap explicitly, Lord’s testimony said, AIM said insurers “should justify why administrative costs are not coming down as a percentage of medical loss ratio when the insurance costs are rising at a rate that exceeds general inflation.”

Lawmakers initially met Patrick’s proposal warmly, granting tentative endorsements of the soft cap. On Wednesday, two key lawmakers reiterated support.

“I think the leadership you’ve shown on this is very important,” Sen. Richard Moore, Senate chair of the Health Care Financing Committee, told Patrick after the governor’s testimony.

House chair Rep. Harriett Stanley, while pushing Patrick to streamline and simplify the state’s massive health care bureaucracy, also sounded a note of encouragement for the cost control measures he outlined.

During testimony, Patrick outlined his proposal, which would include a "presumptive disapproval" of any health insurance premium increases that exceed annual consumer-pricing benchmarks -- 3.2 percent this year, he noted. In contrast, Patrick cited instances in which small businesses saw their health care premiums skyrocket as high as 90 percent.

The state trade association representing doctors laid into Patrick's plan, with Massachusetts Medical Society senior medical advisor Jack Evjy testifying that "artificially containing the cost that payers may pay to practices gives us serious concern." Evjy said rate regulation "makes Massachusetts an unattractive place to practice" for physicians, which could in turn create access problems for patients.

He noted the state is already experiencing shortages of physicians in primary care, dermatology, neurology, urology and vascular surgery. Evjy said strategic implementation of state Health Care Quality and Cost Council recommendations would allow the state to meet its goal of containing health care cost growth.

The council recommended comprehensive payment reform, health insurance plan design innovations, medical malpractice reforms, administrative simplification measures, consumer engagement efforts and increased transparency, among other reforms, the medical society said.

Evjy said Bay State doctors are practicing defensively in a "pervasive liability climate" and called for passage of legislation to address that problem (H 1332/S 574).

Patrick’s plan received criticism from the Massachusetts Hospital Association, which called the proposal a “quick fix” and urged implementation of payment reform.

“It’s too bureaucratic,” said Lynn Nicholas, the president and CEO of the group. “It’s not feasible. There’s not a lot I can say to support this approach.”

Nicholas said the group would be offering up its own proposals in a few weeks. “We want to be part of the solution,” she said. “We just don’t think this is it.”

Bill Vernon, state director of the National Federation of Small Business and former Republican state representative, said his group was “reluctantly” supporting Patrick’s bill. “It’s a temporary solution and doesn’t get to the problem of cost,” he said.

“It’s affecting the economy, it’s affecting jobs,” he said of rising health care costs. “It’s one of the big costs that make it impossible to grow.”

Lora Pellegrini, president of the Massachusetts Association of Health Plans and a former Patrick aide, said the Patrick proposal does not address the state’s “broken” provider market, driven by market leverage instead of quality of care or the sickness of the population being served.

She said a proposal from Sen. Moore and Rep. Stanley (H 4452) would provide more relief to small businesses.

Bill Graham, Harvard Pilgrim Health Care’s vice president of policy and government affairs, told lawmakers that Patrick’s proposal to cap small business premiums would force insurers to raise rates across the board. That, in turn, could drive young residents out of coverage and further increase costs. The cap, he added, could “require us to lose money and spend down reserves.”

Jay McQuaide, spokesman for Blue Cross Blue Shield of Massachusetts, the state’s largest health plan, said in a statement: “We are concerned about any proposal that sets any arbitrary cap on premium rates without addressing the underlying cost of medical care, the biggest driver of premium increases. Medical costs account for 90 percent of our premiums. Focusing solely on premium increases is treating the symptom, not the sickness. We have offered policymakers a comprehensive set of solutions that start with making faster progress on changing the way doctors and hospitals are paid for their services.”

Rep. Carl Sciortino (D-Medford), who attended the joint hearing, said he hopes lawmakers pass Patrick’s bill sometime this month. “It’s a good bill,” he said. “It makes sense to get it done quickly.”

“Fair Share” Debate

During testimony on the joint hearing’s other topic - the Division of Unemployment Assistance’s collections of so-called fair share contributions - small business owners complained they were being incorrectly audited by the division and sometimes receiving incorrect information. As one example, they said they offered health plans and followed the state’s health care law, but were still getting charged penalties.

“It just drives you absolutely nuts,” said William Fields, a health care consultant who helps businesses employing between three people and 24,000 people to comply with state regulations. He has 500 clients. “The companies have no money to pay this,” Fields told the joint committees.

Fair share contributions, part of the 2006 health care law, are meant to encourage employers to contribute to employees’ health insurance or contribute to the cost of taxpayer-subsidized state insurance programs.

The complaints of small business owners prompted Rep. Stanley to tell Labor and Workforce Development Secretary Joanne Goldstein, “From what I’ve been hearing today, we are treating them abysmally.”

Goldstein defended the division’s work, saying most small businesses are not subject to “fair share” contribution regulations. About 0.4 percent, or 807, of all businesses are required to make “fair share” contributions, as of February 2010, according to the secretariat. Last September, the division’s audits found employers owed $5 million in “fair share” contributions to the state.

Goldstein, who invited those who complained to make an appointment with the DUA, added she has 14 staffers working on audits of whether companies paid their “fair share.” “Which is not a very large number for the amount of audits we have to do,” she said.