By. Dr. Frank MacMillan – August, 2014
Health care consolidation is a bad deal for Massachusetts’s consumers.
Over the past two decades, our hospitals, physicians, and health plans have been concentrating market power to a degree that is unprecedented, and this trend has been stimulated and accelerated by government intervention. This has led to monopoly pricing, restricted networks, less consumer choice, and has not benefited patients or premium payers with better quality.
The trend to consolidation didn’t start with the Affordable Care Act (Obamacare), but grew largely in response to the failed so called insurance reforms in the 1990s. Mandated “guaranteed issue” insurance policies largely killed the individual insurance market in Massachusetts. Consequences of this made it necessary to enact new health care legislation under Governor Romney to address this market failure.
While Romneycare wasn’t perfect by any measurement, the former Governor did much by asserting his power to affect compromise, to restrain the market-killing impulses of some in the legislative leadership that could have made this law much worse. In fact, Romneycare was successful in expanding access to insurance and very popular in Massachusetts. This law actually bore very little resemblance to Obamacare, other than the “individual mandate,” which the Obama administration has largely abandoned anyway. Obamacare was a law written by a small clique of Senate leadership without any input from their own membership, or from the opposition. Its effect has been largely redistributive, and any gains in insurance access have proven to be arguable and trivial compared to the Massachusetts experience.
Related legislation mandating the use of electronic medical records has raised the cost of operating a medical practice or a community hospital to a level where consolidation is no longer a choice, but nearly necessary for survival, all the while creating the conditions for violating privacy and facilitating data mining by the government.
Obamacare has also largely undone any benefit from Romneycare, and has destroyed our previously functioning state insurance exchange in the process. It was also passed on a budget reconciliation vote that allowed no amendments, and only an up or down vote. Is it really surprising that the law that no one read before voting is the gift that keeps on giving? The whole mess recently reported about which persons in states with or without insurances exchanges get premium subsidies will be going to the Supreme Court at some point. Because insurance is generally regulated at the State level, expect more conflict and litigation in the future.
Back in the Commonwealth of Massachusetts, our politicians have been practiced at the art of intervening in the market place for many decades. This was also the time and political context where Partners Health System formed, and forever changed the health care landscape in Massachusetts. Former House Speaker Tip O’Neil once said, “all politics is local”, and it rings true in understanding the most recent mess. It is obviously a great temptation to politicians to insinuate themselves using the coercive powers of government, to pick winners and losers according to their own senses and needs which are political by nature, and not so much mattering on what is best, and apparently not well informed.
Increasing insurance premiums prompted action by Governor Patrick, who pushed very hard on the legislature to pass a law in the summer of 2012 commonly referred to as Chapter 224. This so called payment reform legislation involves government deeply into the business of health care in our state, among them it establishes a Health Care Policy Commission, and gives sweeping new powers to the Attorney General to examine and review all health care related mergers, acquisitions, and affiliations.
An example of Chapter 224 at work is the Partners Health System’s recent South Shore Hospital acquisition. According to the review done by the HCP, the Partners system already controls approximately one third of all hospital related payments in the Commonwealth. It is also widely known that Partners’ providers and facilities are paid on a fee schedule that is approximately 25% higher than all others. In the regulatory regime that is mandated by Massachusetts Chapter 224 payment reform law, the gain of one system is partly offset by the losses other systems.
In fact, a coalition of other systems, including Beth Israel Deaconess, Tufts and Lahey Health petitioned the AG not to approve the South Shore acquisition. Partner’s added over 500 additional providers with this merger. They are also looking to buy the Landmark system, which includes two facilities in Medford and Melrose, and several hundred additional providers. The Governor’s own Health Policy Commission estimates increased spending on the order of $15-23 million a year, and $38-49 million should the second transaction be approved by the AG. Given that all other non-Partners providers and hospitals are looking at flat or reduced payments, is it any wonder that many conclude that it is good to be in Partners?
And what about the Commonwealth’s top law enforcement officer, who also happens to be a politician, and who is a declared candidate for Governor? Could it be that because of political sensibilities and sensitivities, or that Partners is one of the largest employers in the state with over 60,000 employees, that the AG didn’t get the best deal for the consumer? A better question would be why does a politician have or even need all of this power in the first place if they are not going to exercise it impartially?
A reasonable conclusion is that every government intervention in the market place has consequences, many of which require subsequent interventions to deal with unanticipated consequences, and many of which are hard to undo. Our state legislature has a knack for quickly moving from one bad idea to another, and burying health care legislation into unrelated things such as budget amendments, that do all sorts of mischievous things, allow no debate or subsequent amendments, and are passed on party line voting. The system does not allow thoughtful debate, and does not hear all sides before deciding important matters.
It is very difficult for the public to hold its legislators accountable when items are passed on voice votes, or when the budget is held hostage. We don’t need a political litmus test on liberal or conservative views to get good legislation or good politicians, but we do need people of good character who exercise the powers delegated to them thoughtfully, courageously, and responsibly.
Dr. MacMillan specializes in Gastroenterology and Liver diseases, is a Fellow of the American College of Gastroenterology, and its Massachusetts Governor. He is Vice President of the Massachusetts Gastroenterology Association. Dr. MacMillan is a native of North Andover and practices Gastroenterology in Haverhill at Holy Family Hospital at Merrimack Valley, where he serves as the Chief of Medicine. He has been a member of the North Andover Board of Health since 2007.