Massachusetts, pioneer of universal health care, now may try new approach to costs

BOSTON — Five years ago this week, Massachusetts became the first state to move toward universal health insurance, foreshadowing the 2010 federal health-care overhaul. Now, the commonwealth is debating whether to become a role model again — by replacing the fee-for-service system that has long defined U.S. medicine.

Massachusetts Gov. Deval L. Patrick (D) is trying to “shove,” as he put it, the health-care system here into a new era of cost control. He is proposing a new way of paying for care that would try to propel changes in the way it is delivered. It would give lump payments to teams of doctors responsible for almost all the care of a group of patients, with bonuses for saving money and dispensing high-caliber services that keep people healthy.

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The governor’s plan — stirring an impassioned debate inside the gold-domed State House on Beacon Hill and among players in the state’s vaunted health-care industry — would make Massachusetts the only state to promote wholesale new arrangements of “integrated care.”

Massachusetts in 2006 created a health insurance exchange, a requirement that most residents carry coverage and subsidies to help them pay for it — central elements now in the federal law. As a result, 98 percent of the residents here are now insured, the highest rate in the nation. But the state’s first round of health-care changes devoted far less attention to medical costs.

“We did access first,” said state Senate President Therese Murray (D). “Now we have to figure out how we afford that.”

With that question widely regarded here as unavoidable, “Massachusetts is where the feds are going to be” in a few years, predicted Robert Laszewski, a health industry consultant. “It’s a time machine.”

The governor’s proposal builds on a surprising consensus among leaders from the state’s insurance and hospital industries, medical society, legislature and governor’s staff who served on a special state commission assigned to diagnose the culprit behind the soaring medical spending.

Fee-for-service medicine “is a primary contributor to escalating costs and pervasive problems of uneven quality,” the commission unanimously concluded in 2009.

Despite the consensus, huge questions loom: Who should be part of the new medical teams? How would the idea work for most doctors who practice alone or in small groups? How much clout should the state wield to blunt the ability of powerful local health systems to drive up costs? And, importantly, how heavy a hand should the government use to compel change?

“We are preparing ourselves to grapple with a certain amount of constructive disruption in the industry,” Patrick said in a lengthy interview. “It’s a journey.”

In the pressure-cooker of medical costs in the United States, Massachusetts offers a particularly vivid example. The spending per person on health care is 15 percent higher than the national average — even taking into account the comparatively high wages here and outsize role of medical research and training. The move to near-universal coverage, state figures show, accounts for a sliver of recent increases in insurance premiums, which have soared above inflation. The main reason has been a rapid escalation in prices.