Why the Massachusetts solution is no solution
Cambridge Health Alliance (CHA) is facing massive layoffs and cuts in services to our patients because Governor Patrick has reneged on a promise of $55 million dollars for the current fiscal year, on top of cuts to reimbursement under the 2006 health reform law. In 2006, the Bush administration threatened to withhold $300 million in Medicaid funding unless the Massachusetts health reform (Chapter 58) reduced free care pool payments to safety net hospitals (principally CHA and Boston Medical Center). Private hospitals and insurance companies – who funded the free care pool – also lobbied for this change. In response, Chapter 58 diverted funds from free care pool payments, using them instead to expand Medicaid enrollment and to help fund Commonwealth Care (a Medicaid-like program that includes Network Health). As a result, free care pool reimbursement – which formerly covered most of the cost of care for the uninsured at CHA – now covers a small fraction of the actual cost of care.
In addition, Chapter 58 shifted Medicaid payment rates – increasing payments for inpatient care and decreasing reimbursement for outpatient primary care. This shift greatly benefitted tertiary care hospitals, but penalized CHA. As a result, tertiary care centers have racked up record surpluses ($350 million at MGH last year, $80 million at Brigham and Women’s), while CHA faced a deficit even before the latest round of cuts.
To partially compensate for these free care pool and Medicaid losses at CHA and BMC, the state promised special “transition” payments to CHA to protect its health care to the poor. It is these transition payments that Patrick has now reneged on. ...
... All Massachusetts hospitals are heavily dependent on direct or indirect government subsidies. Yet Governor Patrick has singled out two safety net hospitals (CHA and BMC), to bear fully half of all health care cuts in the state. The four major tax-payer subsidies are Medicare, Medicaid, the costs of health benefits for government employees, and the tax –subsidy to private insurance. Altogether, such government spending accounts for about 60% of health spending nationally, and more than that at most hospitals. While CHA receives a higher share of its budget from public sources, in absolute terms, government (federal and state) payments to Boston’s large tertiary care hospitals are several-fold higher than payments to CHA.
CHA requires special government subsidies because it provides vital but money-losing services that private hospitals shun: care for the poor, primary care, care for chronic mental illnesses and addictions, and emergency services. Despite the predominance of taxpayer funding, health care dollars are channeled through a fee-for-service system that gives two very clear market signals: 1) care for the affluent pays well while care of the poor is a money loser, and 2) elective, procedure-oriented services like knee replacements, CT scans, and cardiac surgery generate high margins (profits), while primary care, care for chronic mental illness, and emergency room care generate losses.
In order to win single payer it will be necessary to completely expose the Massachusetts system of health neglect.