Behind the Closed Doors of Health Care Reform

What happens when you bring one of the health care industry insiders who helped create health care reform in Massachusetts—with its precedents of individual mandates and government subsidies—to speak at a bastion of free market capitalism? The title of the lecture should give it away: “Confessions of a Health Care Optimist.”

Yes, when Andrew Dreyfus, president and CEO of Blue Cross Blue Shield of Massachusetts, spoke on campus in January, he did not hide his enthusiasm for what the Bay State was able to accomplish in 2006—and his hopes for what that meant for health reform on the federal level.

What perhaps was most interesting about his talk, though, was his insight about what Massachusetts has done more recently to cap costs and spending on health care. After all, Massachusetts has been No. 1 in the United States for high medical costs—so much so that the state has seen budgets for social services, meant to keep people healthy, eroded by the costs of treating people after they’ve become ill.

164545950Dreyfus related how insurers and the state have tackled the cost question through regulation and innovation, such as:

Regulation: Every two years since passage of “Romneycare” in 2006, Massachusetts has enacted  a cost-containment law. It set insurance companies’ medical loss ratio—the amount of premium collected that must actually go to care, versus administration—at 90 percent. In 2010, Governor Deval Patrick capped the rates that insurers can raise their premiums. And there was the 2012 law  to cap what the state spends on health care—health care spending cannot grow faster than the state economy’s growth rate.

Andrew Dreyfus, president and CEO of Blue Cross Blue Shield of Massachusetts

Andrew Dreyfus, president and CEO of Blue Cross Blue Shield of Massachusetts

Innovation: Here is where the ears of the health care business professors in the room perked up—when Dreyfus delved into the new model of payment that Blue Cross Blue Shield uses for its providers: the so-called Alternate Quality Contract. The key is an insurance reimbursement to providers based on quality, not quantity, and data to back it up. Blue Cross Blue Shield shares data with providers so that hospitals, doctors and nurses can change, and improve care. (It is a pioneer in what’s now a nationwide trend encouraged by federal health care reform.)

“We have passed the tipping point where people are acting different,” Dreyfus told the audience.

Part of that “acting different” is a collaborative and cooperative environment—among employers, labor, consumers, insurers and policymakers—best relayed by Dreyfus in a subversion of a famous 1960s political slogan:

“If you are not part of the problem, you cannot be part of the solution.”

In Dreyfus’ view, it will be short order before everyone sees themselves as part of the problem on the federal level.

“Confessions of a Health Reform Optimist” was a Leonard Davis Institute of Health Economics and Wharton Penn Risk Insurance Program Health Policy Seminar.

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