How will a long-time health insurance executive fix the healthcare financing crisis in a state with some of the most expensive and advanced medical care on the planet?
Starting in January, Massachusetts is going to find out. Republican Charlie Baker, the former Harvard Pilgrim CEO who saved the insurer from bankruptcy in the early 2000s and led to its growth across New England, was elected governor of the state this week.
In a very close race, Baker beat Democrat Martha Coakley, the current state Attorney General who crafted a controversial agreement letting Partners HealthCare expand its hospital ownership — one of the largest points of contention in the debate over the state’s healthcare cost crisis.
As governor, Baker is poised to offer a blend of both progressive and market-based policy ideas for a state healthcare system marked by both successes and challenges.
Massachusetts has near-universal insurance coverage, thanks to a pre-ACA individual mandate and subsidy system and full Medicaid eligibility, but a nonfunctional state insurance exchange and a Medicaid budget that has doubled in the past decade and promises to grow still.
The state has a large cluster of academic, research and advanced treatment facilities, but long wait-times for primary care and an overall fragmented experience. It also has a legislatively-mandated healthcare spending cap indexed to inflation and provider price disclosure requirements, but so far little in the way of consumer-friendly healthcare shopping options (being one of four states that bans direct-to-consumer lab tests).
[See also: Harvard Pilgrim tops NCQA plan ranking.]
While Baker’s ideas may or may not find traction among state legislative leaders and the state healthcare industry, his resumé straddling healthcare leadership in both the public and private sectors suggests he will try hard to make changes.
In 1992, as a 34-year-old with an MBA and family connections to the state GOP, Baker became the secretary of Health and Human Services under Republican Governor William Weld and oversaw a major overhaul of state-funded mental healthcare, with the closure of nine state-run psychiatric hospitals, a privatization of Medicaid-covered mental health services, a new emphasis on community-based treatment and more limited eligibility.
The changes ended the problems of institutionalization with more home- and community-based services and saved the state millions (in part by garnering more federal funding). But it also led to concerns about access to treatment at privately-run clinics and the loss of hundreds of state jobs.
In 1994, Baker also signed off on the creation of Partners HealthCare, through the merger of the Massachusetts General and Brigham and Women’s hospitals, a decision he later described as “having the grenade that you throw on one end of the boat roll back down and blow up on you when the boat shifts.”
The rest of Baker’s government record is just as mixed and controversial. In 1997, state finance secretary Baker helped design the financing plan for the Big Dig, the scandal-plagued underground rerouting of Interstate 93 in downtown Boston that cost some $15 billion, well over the $3 billion initially estimated.
Health insurance leader
Baker’s tenure at Harvard Pilgrim, though, is probably his largest success story and a foundation of his health policy platform as Governor.
Founded in 1980 through the merger of Harvard Community Health Plan and Pilgrim Health Care, Harvard Pilgrim Health Care was losing tens of millions and on the edge of bankruptcy in 1999 when Baker took over as CEO.
His response included workforce reductions, the sale of office space, outsourcing claims processing and IT, reorganizing mental health services (using the same company, ValueOptions, hired to provide Medicaid mental health services in the early 1990s), renegotiating physicians contracts and raising premiums.
By the time Baker left in 2008, the company had grown membership from a low of 750,000 to more than a million and generated profits for six straight years. Today, the nonprofit insurer is rated among top health plans by the National Committee for Quality Assurance and is expanding into Connecticut, and into Maine and New Hampshire’s exchange markets.
While Harvard Pilgrim’s turn-around did not tap into state subsidies, it was helped by what Baker called a private-public “collaboration.” The company had protection of bankruptcy, thanks to temporary state receivership, and got a $80 million tax-free bond from the state Health and Educational Facilities Authority bond to sell and then lease back its Boston headquarters.
As for translating that turnaround into Massachusetts health policy, Baker’s platform has called for improvements in the areas of transparency, primary care and regulation. Regulation of healthcare in general needs to be “rationalized,” he said,
The “wide variability” in healthcare prices, Baker wrote on his website, is “due to prices being negotiated based on the relative leverage of providers and payers, out of the public eye.”
Global risk-based payments have not eliminated pricing discrepancies and a new state agency, the Center for Health Information and Analysis, “provides only vague and outdated data around the relative cost of providers that is not actionable and not understandable by the general public,” Baker argues. As governor, he's promising to require providers to make their average prices for the most commonly provided services available to the public by January 2016.
For the problem of primary care access — it takes an average of 45 days for a Massachusetts resident to see a primary care doctor, the longest wait in the nation — Baker is promising to seek a federal waiver to raise Medicare payments for primary care providers and craft state incentives for PCPs to serve as coordinators for patients with complex and chronic conditions.
Baker is also promising to pursue federal waivers to simplify the state insurance exchange and subsidized individual market, the botched revamping of which has left 250,000 Bay Staters temporarily covered in Medicaid.