Interview with John McDonough of Health Care For All

We're very pleased to present the following lengthy interview with John McDonough, Executive Director of Health Care For All.  John probably knows more about the issues involved in the ongoing health care debate than anyone in the Commonwealth.  Here is his bio, cribbed from HCFA's site:

John E. McDonough has been the Executive Director of Health Care for All, Massachusetts’ leading consumer health advocacy organization, since May 2003.  From 1998 through 2003, he was an Associate Professor at the Heller School of Brandeis University and a Senior Associate at its Schneider Institute for Health Policy.  From 1985 to 1997, he served as a member of the Massachusetts House of Representatives where he co-chaired the Joint Committee on Health Care.  In 1996, he led the successful campaign for passage of health access legislation to cover uninsured children, funded by new tobacco taxes, legislation which served as a model for the federal Children’s Health Insurance Program.

He currently teaches at the Harvard School of Public Health and the Boston University School of Public Health.  His articles have appeared in The New England Journal of Medicine, Health Affairs and other journals.  He has written two books, Experiencing Politics: A Legislator’s Stories of Government and Health Care by the University of California Press and the Milbank Fund in 2000, and Interests, Ideas, and Deregulation: The Fate of Hospital Rate Setting by the University of Michigan Press in 1997.  He received a doctorate in public health from the School of Public Health at the University of Michigan in 1996 and a master’s in public administration from the John F. Kennedy School of Government at Harvard in 1990.

The full interview appears below.  Unless you're already a health care superstar, you will learn a lot by reading it.  I know I did.

1. Many people are calling a constitutional amendment for universal health care. Why is the approach of HCFA/MassACT different?

Passage of the proposed constitutional amendment is one route to pursuing expanded coverage.  If approved by the Constitutional Convention and approved by voters, the General Court would have a constitutional obligation to enact laws/statutes to expand affordable quality coverage and submit them to the voters for their approval or disapproval.  MassACT (Affordable Care Today) proposes a ballot initiative for a law with clear and immediate coverage expansions and sources of funding to pay for them.  MassACT proposes a law/statute as the most immediate way to expand coverage to the greatest number of residents without coverage and to provide insurance premium rate relief.

2. What about Romney's plan? Isn't his plan universal?

The Romney plan proposes: A. Development of private, low-cost insurance plans to be available to all uninsured and other categories of individuals (target premium -- $200 for single adults in their 20s, higher for families and individuals in their 30s, 40s, 50s and 60s; B. Use of the Commonwealth’s existing health care safety net funding to provide premium support for lower income uninsured to purchase these new private policies; C. Penalties and state-wage withholding for individuals who don’t purchase coverage and for those uninsured who incur hospital bills.  The Governor describes his initiative as universal.

Problems/issues: A. Not one of the state’s private insurers has come forward with a detailed policy meeting the Governor’s target premium, and outlining benefits, costs, and other limitations.  Without such details (we’ve been waiting since last November), we cannot support the assertion that these low-cost plans are viable; B. We do not believe available funding from the existing health care safety net would be sufficient to finance adequate subsidies for lower income persons who cannot afford insurance purchase with their own income; C. We believe depletion of the existing safety net to pay for the Governor’s plan would severely jeopardize hospitals and health centers that provide the bulk of care for the Commonwealth’s uninsured; D. We believe the Governor’s “individual mandate” would create a series of trapdoors for vulnerable uninsured residents which would create long term financial hardship for low income folks whose only offense is getting sick.

3. What about Travaglini's plan? In your perspective, what is he trying to accomplish?

Senate President Travaglini has been the Commonwealth’s most consistent and reliable friend for low-income uninsured and MassHealth clients since he became president in 2003.  Last November, he set the health reform debate into gear by declaring his objective to reduce the number of uninsured by half over two years.  His plan, released in April, seeks to achieve this goal through modifications to the existing small (firms of 50 or fewer workers) and nongroup (individuals) insurance markets; he also proposes increased rates for MassHealth providers and public health funding restorations – all proposals we support.  We believe his proposed insurance market reforms would fall short of his goal to reduce the numbers of uninsured in half, and are disappointed that he did not direct any funds for coverage expansion.  We are hopeful that forthcoming legislation – coming in October – from the Legislature’s Joint Committee on Health Care Financing will address this deficiency.  President Travaglini is an important ally in the push for expanded coverage and we appreciate his sincere commitment to this cause.

4. Is there a difference between the Health Access and Affordability Act(House Bill 2777 and Senate Bill 738) and the Massachusetts QualityAffordable Health Care Act ballot initiative? Why have legislation and a ballot initiative?

The HAAA was filed in December 2004 as legislation for consideration in the 2005-06 session of the General Court – it is supported by the ACT Coalition (Affordable Care Today) and includes about 35 statewide consumer, health, labor, and business organizations.  It was our best effort at the time to define a progressive and pragmatic health care access expansion which also addressed issues of cost and quality. 

The ballot initiative was filed in August 2005 as a potential initiative petition for a law for placement on the November 2006 state ballot – it is support by the MassACT Coalition, a registered ballot committee.  MassACT includes fewer members than ACT – the legislative coalition – and the initiative is shorter and more precise than the original legislation.  MassACT formed for two principal reasons:

First, the history of initiative and referendum in Massachusetts demonstrates that a well framed ballot initiative can act as a significant impetus for the General Court to pass more meaningful and substantive legislation than they would in the absence of an initiative (two examples: 1994 campaign finance reform and the 2000 patients bill of rights); second, if the General Court fails to pass meaningful and substantive health access legislation, the initiative provides an opportunity for voters to weigh in on a serious and substantive plan. 

Right now, we estimate a 100 percent chance that MassACT will collect the necessary signatures and a 50/50 chance that the MassACT initiative will appear on the November 2006 state ballot.  That depends on how the Legislature reacts to the issues advanced by the initiative.

5. Who is helped by the Massachusetts Quality Affordable Health Care Act?

First, individuals and families under 65 will be eligible for MassHealth if their family income is less than 200 percent of the federal poverty line (FPL – about $38,000 for a family of four, $33,000 for a family of three).  Second, individuals and families with incomes between 200 and 400%FPL will be eligible for direct subsidies and/or tax credits to purchase affordable coverage.  Third, small businesses (fewer than 100 workers) and their workers will be eligible for subsidies and support to make insurance purchase affordable.  Fourth, all current private insurance policyholders and employers will receive immediate premium relief of $160 million per year.  Fifth, community health centers, hospitals, and physicians will receive payments from MassHealth at Medicare rates (roughly 95% of costs).

6. What if you have OK health insurance now, but it gets more expensive every year -- does this act affect you?

Right now, everyone with private insurance pays a hidden surcharge of $160 million per year to help finance the Commonwealth’s Uncompensated Care Pool which helps to finance care received by lower income uninsured persons at hospitals and health centers.  Because the initiative’s MassHealth expansion will dramatically reduce the rate of uninsured, and because about 85 percent of state’s uninsured are in families with incomes below 200%FPL, we can eliminate this unfair subsidy without jeopardizing the Commonwealth’s safety net.  Right now, employers who provide insurance – and their workers – are forced to subsidize the Pool and employers who don’t provide insurance for their workers.  Our proposal is the only one that provides immediate, concrete savings to existing health care consumers by ending this unfair cross-subsidy.  We propose other savings initiatives, though this is the most immediate.

7. (a) Does this act do anything to slow the rise of health care costs in general? (b) How do we avoid a situation like Tennessee, where their comprehensive program is being gutted?

A. Our legislation  (HAAA) proposes creation of a Commonwealth Cost and Quality Council to identify and implement health system interventions with the documented ability to improve quality and lower costs.  For example, a major source of patient injury and unnecessary cost is the epidemic of hospital-acquired infections in our acute hospitals.  These infections injure patients and cost many millions.  Some hospitals in Pittsburgh, for example, by focusing on this problem, have reduced the rate of such infections to ZERO.  Beyond this, the driving force behind rampant health inflation, we believe, is our system’s pathological embrace of the free market as the path the system savings – an approach rejected in virtually every other advanced nation on the planet (whether single or multiple payer).  As Will Rogers said, when you find yourself in a hole, first stop digging.  After 15 years of digging in the market competition hole, we still keep digging. Unfortunately, the Commonwealth’s track record with cost control (hospital rate setting: 1975-1991, RIP) ended in significant failure – and there is no serious proven cost control intervention which is politically viable.

B. Massachusetts can take pride in our deep and sophisticated network of health care access advocates who have constructive alliances with health care providers and payers to support and defend existing access programs.  We saw the results of this when the Legislature voted in 2002 to eliminate coverage for 50,000 very low income MassHealth clients.  While coverage was eliminated in April 2003, by July 2003 this alliance convinced the Legislature and Gov. Romney to restore coverage as of October 2003.  This network and alliance has won many other victories in behalf of coverage for our most vulnerable members of society.  It’s not perfect by any means, and we have many goals not yet achieved (i.e.: restoration of dental coverage for about 550,000 poor MassHealth adults); still it gives us confidence we will not see the kind of retrenchments experienced in Tennessee, Missouri and elsewhere.

8. What can be done to manage the costs that the state assumes under the re-insurance plan?

Reinsurance is a way to increase insurance affordability and rate stability by having the state assume a share of insurance costs for high cost cases.  It has been used with success in other states including New York and Arizona.  Because of the potential high cost, we suggest its use in a limited way to provide better affordability and rate stability in the small group and nongroup markets, the two most expensive and unstable portions of our insurance market.

9. Realistically, will we need tax increases to pay for this bill, beyond the cigarette tax increase?

Yes, and the necessary revenues to finance the bill and the initiative are contained in it.  First, we propose a 60 cent cigarette tax increase which will generate $160 million and lead to a significant drop in smoking rates.  Some complain that cigarette taxes fall disproportionately on lower income folks.  While this is true, it is equally true that: a. 100% of the benefits will help lower income families; b. lower income folks will disproportionately benefit from lower rates of disease and death. 

Second, we propose a new payroll assessment which will fall on businesses that do not cover their workers or cover them at inadequate levels (i.e.: Walmart).  The assessment will be 5% of gross payroll for smaller employers and 7% for larger ones (greater than 100 workers).  On average, employers who provide insurance to their workers pay about 15% of payroll.  So this new assessment is less than the cost of providing full coverage, affordable for employers, and adequate to finance all the subsidies and coverage expansions included in the plan.

10. For the state economy, is it better to have somewhat higher taxes and more insured people?

Most people who have coverage now feel they should not have to pay more to cover the uninsured because the cost of coverage is already so high.  We agree.  The MassACT initiative will not cost persons with insurance coverage anything – in fact, it guarantees premium savings.  It fairly spreads the cost of expanding coverage to those without among businesses that don’t cover their workers, government, and newly insured consumers.  We think that’s a formula the people of the Commonwealth can embrace.

11. (a) With the MQAHCA, employers will be mandated to provide a certain level of coverage. Is that going to be tough on small business? (b) What effect will the employer mandate have on companies considering locating in Massachusetts?

The MassACT initiative is not an “employer mandate.”  Hawaii is the only US state with such a mandate (employers must provide insurance to any employee who works more than 20 hours per week); federal law now prevents any other state from instituting such a mandate.  Further, the initiative is different from the “pay or play” universal health care law passed in Massachusetts in 1988, never implemented, and repealed in 1996.  I consider our initiative akin to a “health care minimum wage.”  In the same way there’s a wage floor below which no employer can pay a worker, we provide a health benefit floor or minimum each employer should contribute for their worker’s health security if they fail to provide coverage.   

Our proposed assessment is affordable for small employers and mitigates a significant unfairness in the current system where employers who provide insurance coverage directly and indirectly subsidize coverage for workers in firms that don’t offer coverage.  We are also confident the assessment will not affect companies’ decisions to locate in Massachusetts.  The companies which are mobile (have the ability to move from one state to another) all provide insurance coverage to their workers.  The companies that don’t offer coverage are overwhelmingly service, retail, and food service establishments (i.e.: Walmart, Dunkin Donuts) which lose their customers when they leave a geographic area.

12. What haven't I asked that you wish I had?

Two things:
First, many advocates of a taxpayer-financed single payer system criticize our plan because it’s not single payer.  Health Care For All supports single payer as the best solution to our health system problems, yet honestly sees no short term political viability for this proposal.  Back in 1996, when Sen. Mark Montigny and I led the fight for health reform which expanded the MassHealth program to more than 300,000 lower income uninsured families and individuals, we were constantly criticized for the same reason by single payer advocates.  Single payer was meritorious then as now, and still has zero political viability.  We need to find a way to support incremental measures which will help in immediate ways folks in desperate need today as we continue to educate and press for broader systemic change. 

Second, the questions presented by Blue Mass. Group to me are the most substantive and serious of any we have been asked by any media in the past 12 months.  As the mainstream media becomes increasingly shallow, uninformed, and disconnected from real policy conversations, the value of the Massachusetts blogging community becomes increasingly important.  Congratulations to you and the entire MA blogosphere – you folks are the best hope out there now for informed and meaningful political dialogue (and don’t forget to check out HCFA’s blog at www.hcfama.org/blog).