HEALTH CARE SPENDING in Massachusetts is just about the highest in the world. It is enough to finance health security for all of us. Health security means that we get care that’s effective, competent, quick, and kind—with no more than tiny co-payments and no worry about medical debt. To redeem the promise of plastic insurance cards, health security requires having enough good doctors, dentists, nurses, hospitals, and other caregivers where we need them.
That doesn’t make health security for all easy to win—just easier than housing, education and job training, global warming, personal and national security, decent living standards, or the other huge challenges we face. Because we already spend enough on health care to get the job done.
Unfortunately, we won’t get even one step closer to affordable health security for all by nibbling around the edges of the problem. That includes following the well-intentioned but deeply flawed recommendations that the CEO of Blue Cross Blue Shield of Massachusetts, Sarah Iselin, set out in a recent CommonWealth Beacon commentary.
Her proposed remedies are modest. Even so, they are not likely to be implemented. If they were, they would do little good because they don’t attack—or even identify—the causes of high costs, weak access, and caregiver shortages. How can a problem be successfully treated if it isn’t correctly diagnosed?
Blue Cross’s imaginary world
Iselin asserts that “Our state has a chance to make big changes in our health care system right now—the kind of transformation that can only come about in a crisis.”
But who in our state will take that chance? Most politicians mean well but none yet face strong political pressure to fix health care. Our governor wasn’t elected because she knew a lot about health care. Our legislative leadership knows less—apart from a few terrific committee chairs. And the Health Policy Commission’s two new members are the head of the state hospital association and a drug company executive, each an informed insider who seeks not transformation but simply higher revenue for their sector.
Many citizens and caregivers are suffering already, but their crisis hasn’t translated into political pressure for serious change.
When it comes to lobbying in Massachusetts, it’s no surprise that health insurers, hospitals, and others in health care are eight of the top 12 spenders, as reported earlier this year.
Iselin claims that “We have an excellent track record in our state of collaboration between health plans, clinicians, business, labor, and policymakers.” Sure, but that happy harmony has been lubricated by ever more money each year for business as usual. The throats of that harmonious chorus will go dry after the last remaining dollar is pumped out of the financial aquifer.
State government has for decades refused to put its arms around health care and understand our cost or access or caregiver problems—or their causes. It did pass a law in 2012 requiring an assessment of needed hospitals and other caregivers, but then simply walked away from implementing that law. So state government still doesn’t know which hospitals are needed, or how many doctors we need or even have. And it has refused to forge the financial and legal tools to sustain needed caregivers.
Still, it’s encouraging that so many smart and knowledgeable and dedicated people already work in health care in state government and elsewhere. They will be able to help fix our health care, once the people at the top face political pressure to get serious.
For now, though, we have good reason to worry. Many insured people couldn’t afford out-of-pocket costs of needed care before the cuts from Trump’s big tax and spending bill. About a dozen million Americans will lose Medicaid coverage owing to the budget bill. Up to another dozen million could lose Affordable Care Act coverage if Congress refuses to extend Biden’s extra subsidies, which expire in December.
Most Massachusetts hospitals are already losing money. Many nursing homes are in bad financial shape. Many people—even with insurance through the job—can’t find a family doctor who takes new patients. Or afford high deductibles and co-pays and co-insurance.
Bad as this is, it isn’t the crisis. It’s the storm clouds and heavy rain that precede the hurricane. The health care crisis is probably a few years away—when Congress does something drastic—like freezing all federal health spending on Medicare, Medicaid, and ACA subsidies.
Why might Congress do that? Because it will face a massive federal budget crisis—one fueled by international tensions, reckless tax cuts, a $2 trillion deficit in good economic times, discord between two dysfunctional political parties, and the many competing demands for public dollars.
That very real crisis could politically galvanize health care reform, but sudden pressure for change will be worthless without advance preparation.
The remedies advanced today don’t help us prepare.
Iselin bemoans higher costs for medical care and medications, and the high share of our citizens who delay care owing to its cost.
One of her proposed remedies is greater reliance on value-based payment. This is tied to rewarding health outcomes, not volumes of care. Both notions have been wildly oversold. They simply haven’t saved any serious money, as both the Congressional Budget Office and the Centers for Medicare and Medicaid Services have finally admitted.
One big reason value-based payment doesn’t work is that payers find it very hard to devise trustworthy ways to measure the value of doctors’, hospitals’, and other caregivers’ services. Especially since the caregivers control the evidence and can game the payment method if they wish. Financially incentivizing caregivers to pursue “value” induces them to think more and more intensely about ways to maximize their own incomes and less about us as patients. For-profit Medicare Advantage plans respond the same way.
More important, high volumes of care aren’t America’s problem. Doctor visits here are only 60 percent of the average across all rich democracies, and hospital admissions are 80 percent of that average.
Care volumes are low here partly because high out-of-pocket payments deter many of us from seeking care. But the high out-of-pocket costs have been fostered by federal and state policies that try to turn American patients into kamikaze pilots in the war against high health care costs.
Relying on patients—the least powerful and least informed group in the health care universe—to shop wisely for health care is a sick joke. It’s wrong to rely on suppressing access to care as a main cost control technique. Doing so manifests public and private payers’ unseriousness about cost control. And their stunted empathy for people who can’t afford high out-of-pocket costs.
Another proposed remedy is finally enforcing the state’s “benchmark” for spending increases. In 2012, the Legislature created the Health Policy Commission and charged it with setting a yearly benchmark for the percentage rise in health care spending. But the HPC’s statutory authority is feeble. It took years, after the fact, to even try to recoup heavy overspending by Mass General Brigham. With health care spending increases widely disseminated, enforcing the benchmark on dozens of hospitals and others would be an administrative and legal nightmare.
Other proposals call for a medication affordability board, hospital price controls, shifting surgery to allegedly cheaper ambulatory surgery centers, greater emphasis on primary care, and finding ways to ensure that for-profit groups like Steward play nicely.
Yes, negotiating affordable drug prices is a good idea. But do individual states have the willingness, the buying power, or the political support to leverage lower prices?
Even federal action on drug prices has been feeble. It took two decades for Congress to require Medicare to negotiate prices for its 10 costliest drugs. But the resulting prices remain almost triple the Western European average. There’s still little political will to take on the drug makers.
Only one state has acted effectively to rein in hospital spending. Step by step, over five decades, Maryland has established a small, uniquely powerful and experienced state agency to set adequate budgets for all needed hospitals.
This requires learning which hospitals and which services are actually needed, and how much it should cost to efficiently deliver care. Politically, the Maryland arrangement was possible partly because hospital trustees—who cared about their hospitals but also about costs of health insurance—controlled the state hospital association. A few other states have been taking baby steps to follow Maryland, but Trump may stop them in their tracks.
Also, in response to Maryland’s success in slowing hospital spending, considerable care has been shifted from hospitals to ambulatory surgery centers. This doesn’t save money—it simply sorts the dollars into different boxes. Worse, ambulatory surgical centers have very high profits and underserve Medicaid patients. The lesson? Individual reforms must be coordinated.
Primary care? It’s been like the weather: Everyone talks about it, but no one does anything real about it. A big reason is that no one is accountable for making sure we have enough primary caregivers to serve all 7 million Massachusetts residents. Not Medicare, Medicaid, Blue Cross, or other payers. Not medical schools. Not teaching hospitals that train residents. And not state government.
Sadly, reforming for-profit hospitals or insurance companies simply isn’t possible. The problem isn’t Steward, its deleterious and disgraced former CEO, or private equity. Focusing on them is like the French army preparing to fight the last war. Complete market failure in health care means we can’t trust greedy profit-seeking to give us the innovation, efficiency, and cost-cutting—or the provision of needed and effective care—that real markets would deliver.
The real world
US health spending this year will be $5.6 trillion. That’s six times defense spending and triple all education spending. In Massachusetts, health care spending this year will total about $140 billion, or roughly $20,000 per person—about one-third above the US average.
This should be enough to pay for the care that works for all of us who need it. Most of the world’s other rich democracies have worked this out. We can, too.
Massachusetts and US health care have become financially addicted to more money each year to finance business as usual. The grave health care crisis—the actual hurricane—will arrive when the new money stops flowing. The freeze in federal health spending, mentioned earlier, is one of the possible sparks for explosive changes. It will threaten caregiver bankruptcies and much greater suppression of needed patient care.
The first response by hospitals, doctors, and drug makers to the freeze will be to try to raise the prices they get from insurance companies, money supplied by the employers who pay insurers’ bills. But with family premiums already over $30,000 yearly, private employers and also state and local governments will say no to higher prices.
Their second response, discussed shortly, will be very different.
But why isn’t current spending enough? Because up to half of what we spend on health care is wasted.
On care that isn’t effective or isn’t needed or has enormous cost but low clinical value. Or that lacks continuity and coordination owing to shortages of primary care and the loss of lower-cost community hospitals.
On vast paperwork that stems from deep mistrust between payers and caregivers—and the resulting upcoding, downcoding, prior authorization denials, and litigation—and from the astonishing complexity of coverage and error-prone bill-paying.
On very high prices for needed drugs, devices, and other things. (Americans are 4 percent of the world’s people but we give the world’s drug makers 50 percent of their worldwide revenue, and an even greater share of their profits. That’s not affordable and it’s not right.)
And on outright theft. Complex payment methods, market thinking that applauds greed, belief that health care theft is a victimless crime, and short-handed prosecutors who negotiate no-contest plea deals all help sustain theft.
Overall, we waste so much because we rely on free market competition to contain cost and on government action to regulate our way out of problems. Neither works.
The conclusion that competitive free market simply does not work in health care is a pragmatic assessment, not an ideological one. (I think free markets are a good idea, where they actually exist.) Not one of the seven requirements for a genuine free market is—or can be—remotely well-satisfied in health care.
Market failure means that we don’t get innovation, lower costs, or the care we need and pay for. But we waste time and effort by trying to shoehorn size-12 health care realities to fit into size-5 market fantasies. This is a bipartisan problem. Both Democrats and Republicans talk about anti-trust suits against hospital mergers but neither does much. Both parties push caregivers to post prices on web sites, but the numbers are generally useless—and unused.
At the same time, government’s energies have been diverted into trying to regulate to clean up the many messes that the failed market leaves in its wake. It acts like the worker with the wheelbarrow and shovel who follows the circus parade.
Steward is the latest acute example. The state’s cost benchmarks’ failure to limit spending is a chronic example. Low-quality nursing home care is a third. Widely disseminated theft in health care is a fourth. Governments write regulations that are hard to enforce; failed enforcement undermines confidence in competent public action.
Failed markets and incompetent government mean health care anarchy. Anarchy means weak accountability for financial coverage, for actual access to care, for cost control, or for securing the right doctors, hospitals, and other caregivers in the right places. It means more waste.
In a few years, the explosive health care financial crisis will provide the energy to blast loose most of the vast dollars now wasted inside Massachusetts and US health care.
Hospitals and doctors will support reform when their alternative is bankruptcy or deep income cuts. Patients will support reforms that guarantee needed care that’s affordable. Employers will finally recognize that they can’t rein in their own costs. Politicians will try to catch up.
Real reform requires crafting an alternative to markets that can’t work. And to traditional reactive government regulations that can’t work. We can look at the arrangements prevailing in most of the world’s other rich democracies—nations that successfully, though not perfectly, protect all their people, give more health care, spend one-half as much per person, and live longer.
Here’s what that would mean.
First, an insurance card for each person, one requiring no more than nominal out-of-pocket payments. Back the cards financially with the dollars already available. Give up on trying to save money by suppressing patients’ use of care by making out-of-pocket burdens unaffordable or doctor appointments unavailable or waits for mental health care intolerable.
Second, redeem the plastic cards clinically with adequately financed budgets for needed hospitals, nursing homes, home health agencies, and other institutions. And for the right types and numbers of doctors in the right places. If we want more primary care doctors, we have a choice between drafting them and paying them more money. Much more. And slashing their paperwork. And supporting them with NPs and PAs.
This means careful public action to identify needed caregivers and pay them enough to finance efficient delivery of needed care. It also means paying caregivers in ways that allow us to trust them to spend our huge but finite dollars effectively, equitably, and frugally. That’s a tall order.
Third, a yearly cap on national and state-level health care spending. This means putting health care on a budget. Making that work requires caregivers and managers who are accountable for spending our vast—but inevitably finite—health care dollars as well as possible.
The first three actions require strategic legislation. Making the big strategic decisions well can set health care on a path to affordable self-regulation by caregivers. If governments don’t make the big decisions well, they will be pressured to continue to make lots of micro regulatory decisions. It will remain impossible to make those competently or efficiently. Or enforce them.
Fourth, recognize that free markets and government regulatory micro-management don’t and can’t work in health care. The resulting anarchy means that no one is accountable for ensuring good care for all people, containing cost, or sustaining the right caregivers in the right places.
To assure good and affordable care for all—to balance access and cost—there’s probably only one workable alternative to failed markets and incompetent government regulatory micro-management.
It turns out that individual doctors’ decisions about how to diagnose and treat us control and spend almost 90 cents on the health care dollar. So we have to put our money in doctors’ hands under arrangements that allow us to trust them to spend it as well as possible—to do as much clinical and human good as possible.
That means paying doctors well, but in financially neutral ways that don’t incentivize them to give unneeded care or deny valuable care. This means seeing physicians as fiduciaries, not MBAs. It probably means salaries (large ones) for doctors working in hospitals and other trustworthy arrangements for doctors working in ambulatory care.
Greater physician altruism will help. So will a simple bargain: Doctors, we will get rid of almost all of your payment-related paperwork, including prior authorizations. And we will even end medical malpractice suits—and craft alternative ways to compensate patients who are harmed by bad care. But only if you agree to serve as clinical and financial fiduciaries for your patients.
Doctors’ better decisions will weed out clinical waste. Especially when supported by hospital trustees and managers who also act as fiduciaries—helping doctors get as much clinical value as possible for patients out of finite hospital budgets. That will require making better evidence available on effective and affordable ways to diagnose and treat illnesses and injuries.
Paying doctors and hospitals in simple and trustworthy ways will slash administrative waste.
Capping drug prices or negotiating deals with drug makers will make needed meds affordable for all. This can be matched with big dollar prizes for competing labs that develop effective and safe new meds.
Simplifying the flows of money inside health care will cut opportunities for theft. Health care theft and fraud are not impulsive. They are calculated. Catching more crooks and imposing serious jail time on those who steal will help deter further crime. Capping spending will make it clear to everyone that theft kills. This will spur more whistle-blowers to come forward.
Fifth, since market failure means that profit-seeking isn’t legitimate, outlaw for-profit caregivers and insurance companies. Buy up owners’ equity by floating 20-year bonds.
You may not think a crisis is coming. You might be right.
US and Massachusetts health care might continue to muddle through. Some hospitals will close; others will lay off nurses and other workers. And cut money-losing services. ER delays will grow. Access to care will get a little worse each year. More paperwork and private insurance companies’ denial of care will drive us a little crazier each year, but only slowly. AI will automate the job of making us crazy. Employers will boost out-of-pocket costs to slow premium increases. Anxious not to upset organized lobbies of caregivers, drug makers, and insurance companies, politicians will continue to do as little as possible.
But you might be wrong. If a grave crisis does arrive, and political pressure for reform becomes irresistible, will we know what to do? It’s a bad idea to defer sewing parachutes until the plane’s engine has stopped.
The best insurance policy we could craft for our health care is to begin right now to plan what to do if the crisis hits. Crisis means an opportunity to fix all that’s wrong with our health care. But only if we prepare in detail.
Broad and deep planning is vital because health care itself is so complicated—and because reform is even more complicated. Also because it’s essential to minimize disruption to patient care and to conserve the valuable and intricately organized networks of caregivers we rely on.
The premium for this policy would cost a few million dollars yearly for five years or so. That money would establish a state government office to plan the responses to the many challenges that a health care financial crisis will present. Some of the jobs entail preparing state government to make essential strategic decisions. Others involve orienting doctors and other caregivers toward balancing the financial and clinical books—the pressures to care for all citizens of Massachusetts effectively, equitably, and efficiently—with the vast but finite dollars available.
Some of the individual jobs include:
Sustaining the flow of revenue into health care, to protect access and to keep all needed hospitals, doctors, dentists, nursing homes, hospices, and other caregivers out of bankruptcy
Assessing the current availability and locations of care—from hospitals, doctors, dentists, nurses, nursing homes, mental health, and other caregivers
Learning how much hospital inpatient capacity we require, where it should be located, and how much it should cost to deliver efficiently
Learning which types of doctors we need, how many, and in which locations
Designing ways to fill gaps between current capacity and need—and of implementing those designs
Starting today to rapidly rebuild primary care capacity—and also dental care capacity
Learning how to cap cost of care at affordable levels—and securing revenue commensurate with that cost
Crafting ways to pay doctors, hospitals, and other caregivers that are financially neutral, adequate to keep caregivers reasonably happy, simple to administer, and affordable to all of us to provide the money
Promoting an altruistic and fiduciary outlook for all caregivers
Designing a financial-clinical-political deal with caregivers, one that lifts today’s oppressive and time-consuming administrative burdens, pays them well, and liberates them to spend our health care dollars to do as much good as possible
Addressing prescription drug prices and incentivizing development of valuable new meds
Assuring worried patients that health care is working for them—since pathology is remorseless but resources are always finite, how to build citizens’ trust—such that the only reason one patient doesn’t get certain costly care is to liberate doctors’ time and hospitals’ nurses and dollars to deliver care that’s more valuable?
Developing ways to identify and respond to problems and complaints from patients, caregivers, payers, and politicians
Integrating the pieces so they fit by developing timelines for each activity and coordinating revenue, budgets and other caregiver payments, access and equity and quality of care.
Affordable high-quality health care for all of us should be the easiest aim to attain because we already spend enough. Nations that are realistic about health care—and that don’t tolerate wasting one-half of their health care spending—cope continuously with the challenges a deep crisis would mean. It’s time Massachusetts state government took those challenges seriously. It’s time to begin to organize the efforts of the many competent and smart people working in and out of state government to plan to respond to the crisis—if, or when, it hits.
The alternative will be to accept that a health care crisis would hit us like a Pearl Harbor attack—unready to respond.
Preparing to fix health care will help us win a victory for compassion and competence—one that will liberate money and attention to address the tougher problems that confront us.
Alan Sager is a professor of health law, policy, and management and director of the Health Reform Program at Boston University School of Public Health. You can read his detailed analysis of our health problems and how to fix them in his book The Easiest, available online here at no charge.
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Affordable health care for all is the easiest problem to solve in Massachusetts
Alan Sager, CommonWealth Beacon
September 28, 2025
HEALTH CARE SPENDING in Massachusetts is just about the highest in the world. It is enough to finance health security for all of us. Health security means that we get care that’s effective, competent, quick, and kind—with no more than tiny co-payments and no worry about medical debt. To redeem the promise of plastic insurance cards, health security requires having enough good doctors, dentists, nurses, hospitals, and other caregivers where we need them.
That doesn’t make health security for all easy to win—just easier than housing, education and job training, global warming, personal and national security, decent living standards, or the other huge challenges we face. Because we already spend enough on health care to get the job done.
Unfortunately, we won’t get even one step closer to affordable health security for all by nibbling around the edges of the problem. That includes following the well-intentioned but deeply flawed recommendations that the CEO of Blue Cross Blue Shield of Massachusetts, Sarah Iselin, set out in a recent CommonWealth Beacon commentary.
Her proposed remedies are modest. Even so, they are not likely to be implemented. If they were, they would do little good because they don’t attack—or even identify—the causes of high costs, weak access, and caregiver shortages. How can a problem be successfully treated if it isn’t correctly diagnosed?
Blue Cross’s imaginary world
Iselin asserts that “Our state has a chance to make big changes in our health care system right now—the kind of transformation that can only come about in a crisis.”
But who in our state will take that chance? Most politicians mean well but none yet face strong political pressure to fix health care. Our governor wasn’t elected because she knew a lot about health care. Our legislative leadership knows less—apart from a few terrific committee chairs. And the Health Policy Commission’s two new members are the head of the state hospital association and a drug company executive, each an informed insider who seeks not transformation but simply higher revenue for their sector.
Many citizens and caregivers are suffering already, but their crisis hasn’t translated into political pressure for serious change.
When it comes to lobbying in Massachusetts, it’s no surprise that health insurers, hospitals, and others in health care are eight of the top 12 spenders, as reported earlier this year.
Iselin claims that “We have an excellent track record in our state of collaboration between health plans, clinicians, business, labor, and policymakers.” Sure, but that happy harmony has been lubricated by ever more money each year for business as usual. The throats of that harmonious chorus will go dry after the last remaining dollar is pumped out of the financial aquifer.
State government has for decades refused to put its arms around health care and understand our cost or access or caregiver problems—or their causes. It did pass a law in 2012 requiring an assessment of needed hospitals and other caregivers, but then simply walked away from implementing that law. So state government still doesn’t know which hospitals are needed, or how many doctors we need or even have. And it has refused to forge the financial and legal tools to sustain needed caregivers.
Still, it’s encouraging that so many smart and knowledgeable and dedicated people already work in health care in state government and elsewhere. They will be able to help fix our health care, once the people at the top face political pressure to get serious.
For now, though, we have good reason to worry. Many insured people couldn’t afford out-of-pocket costs of needed care before the cuts from Trump’s big tax and spending bill. About a dozen million Americans will lose Medicaid coverage owing to the budget bill. Up to another dozen million could lose Affordable Care Act coverage if Congress refuses to extend Biden’s extra subsidies, which expire in December.
Most Massachusetts hospitals are already losing money. Many nursing homes are in bad financial shape. Many people—even with insurance through the job—can’t find a family doctor who takes new patients. Or afford high deductibles and co-pays and co-insurance.
Bad as this is, it isn’t the crisis. It’s the storm clouds and heavy rain that precede the hurricane. The health care crisis is probably a few years away—when Congress does something drastic—like freezing all federal health spending on Medicare, Medicaid, and ACA subsidies.
Why might Congress do that? Because it will face a massive federal budget crisis—one fueled by international tensions, reckless tax cuts, a $2 trillion deficit in good economic times, discord between two dysfunctional political parties, and the many competing demands for public dollars.
That very real crisis could politically galvanize health care reform, but sudden pressure for change will be worthless without advance preparation.
The remedies advanced today don’t help us prepare.
Iselin bemoans higher costs for medical care and medications, and the high share of our citizens who delay care owing to its cost.
One of her proposed remedies is greater reliance on value-based payment. This is tied to rewarding health outcomes, not volumes of care. Both notions have been wildly oversold. They simply haven’t saved any serious money, as both the Congressional Budget Office and the Centers for Medicare and Medicaid Services have finally admitted.
One big reason value-based payment doesn’t work is that payers find it very hard to devise trustworthy ways to measure the value of doctors’, hospitals’, and other caregivers’ services. Especially since the caregivers control the evidence and can game the payment method if they wish. Financially incentivizing caregivers to pursue “value” induces them to think more and more intensely about ways to maximize their own incomes and less about us as patients. For-profit Medicare Advantage plans respond the same way.
More important, high volumes of care aren’t America’s problem. Doctor visits here are only 60 percent of the average across all rich democracies, and hospital admissions are 80 percent of that average.
Care volumes are low here partly because high out-of-pocket payments deter many of us from seeking care. But the high out-of-pocket costs have been fostered by federal and state policies that try to turn American patients into kamikaze pilots in the war against high health care costs.
Relying on patients—the least powerful and least informed group in the health care universe—to shop wisely for health care is a sick joke. It’s wrong to rely on suppressing access to care as a main cost control technique. Doing so manifests public and private payers’ unseriousness about cost control. And their stunted empathy for people who can’t afford high out-of-pocket costs.
Another proposed remedy is finally enforcing the state’s “benchmark” for spending increases. In 2012, the Legislature created the Health Policy Commission and charged it with setting a yearly benchmark for the percentage rise in health care spending. But the HPC’s statutory authority is feeble. It took years, after the fact, to even try to recoup heavy overspending by Mass General Brigham. With health care spending increases widely disseminated, enforcing the benchmark on dozens of hospitals and others would be an administrative and legal nightmare.
Other proposals call for a medication affordability board, hospital price controls, shifting surgery to allegedly cheaper ambulatory surgery centers, greater emphasis on primary care, and finding ways to ensure that for-profit groups like Steward play nicely.
Yes, negotiating affordable drug prices is a good idea. But do individual states have the willingness, the buying power, or the political support to leverage lower prices?
Even federal action on drug prices has been feeble. It took two decades for Congress to require Medicare to negotiate prices for its 10 costliest drugs. But the resulting prices remain almost triple the Western European average. There’s still little political will to take on the drug makers.
Only one state has acted effectively to rein in hospital spending. Step by step, over five decades, Maryland has established a small, uniquely powerful and experienced state agency to set adequate budgets for all needed hospitals.
This requires learning which hospitals and which services are actually needed, and how much it should cost to efficiently deliver care. Politically, the Maryland arrangement was possible partly because hospital trustees—who cared about their hospitals but also about costs of health insurance—controlled the state hospital association. A few other states have been taking baby steps to follow Maryland, but Trump may stop them in their tracks.
Also, in response to Maryland’s success in slowing hospital spending, considerable care has been shifted from hospitals to ambulatory surgery centers. This doesn’t save money—it simply sorts the dollars into different boxes. Worse, ambulatory surgical centers have very high profits and underserve Medicaid patients. The lesson? Individual reforms must be coordinated.
Primary care? It’s been like the weather: Everyone talks about it, but no one does anything real about it. A big reason is that no one is accountable for making sure we have enough primary caregivers to serve all 7 million Massachusetts residents. Not Medicare, Medicaid, Blue Cross, or other payers. Not medical schools. Not teaching hospitals that train residents. And not state government.
Sadly, reforming for-profit hospitals or insurance companies simply isn’t possible. The problem isn’t Steward, its deleterious and disgraced former CEO, or private equity. Focusing on them is like the French army preparing to fight the last war. Complete market failure in health care means we can’t trust greedy profit-seeking to give us the innovation, efficiency, and cost-cutting—or the provision of needed and effective care—that real markets would deliver.
The real world
US health spending this year will be $5.6 trillion. That’s six times defense spending and triple all education spending. In Massachusetts, health care spending this year will total about $140 billion, or roughly $20,000 per person—about one-third above the US average.
This should be enough to pay for the care that works for all of us who need it. Most of the world’s other rich democracies have worked this out. We can, too.
Massachusetts and US health care have become financially addicted to more money each year to finance business as usual. The grave health care crisis—the actual hurricane—will arrive when the new money stops flowing. The freeze in federal health spending, mentioned earlier, is one of the possible sparks for explosive changes. It will threaten caregiver bankruptcies and much greater suppression of needed patient care.
The first response by hospitals, doctors, and drug makers to the freeze will be to try to raise the prices they get from insurance companies, money supplied by the employers who pay insurers’ bills. But with family premiums already over $30,000 yearly, private employers and also state and local governments will say no to higher prices.
Their second response, discussed shortly, will be very different.
But why isn’t current spending enough? Because up to half of what we spend on health care is wasted.
• On care that isn’t effective or isn’t needed or has enormous cost but low clinical value. Or that lacks continuity and coordination owing to shortages of primary care and the loss of lower-cost community hospitals.
• On vast paperwork that stems from deep mistrust between payers and caregivers—and the resulting upcoding, downcoding, prior authorization denials, and litigation—and from the astonishing complexity of coverage and error-prone bill-paying.
• On very high prices for needed drugs, devices, and other things. (Americans are 4 percent of the world’s people but we give the world’s drug makers 50 percent of their worldwide revenue, and an even greater share of their profits. That’s not affordable and it’s not right.)
• And on outright theft. Complex payment methods, market thinking that applauds greed, belief that health care theft is a victimless crime, and short-handed prosecutors who negotiate no-contest plea deals all help sustain theft.
Overall, we waste so much because we rely on free market competition to contain cost and on government action to regulate our way out of problems. Neither works.
The conclusion that competitive free market simply does not work in health care is a pragmatic assessment, not an ideological one. (I think free markets are a good idea, where they actually exist.) Not one of the seven requirements for a genuine free market is—or can be—remotely well-satisfied in health care.
Market failure means that we don’t get innovation, lower costs, or the care we need and pay for. But we waste time and effort by trying to shoehorn size-12 health care realities to fit into size-5 market fantasies. This is a bipartisan problem. Both Democrats and Republicans talk about anti-trust suits against hospital mergers but neither does much. Both parties push caregivers to post prices on web sites, but the numbers are generally useless—and unused.
At the same time, government’s energies have been diverted into trying to regulate to clean up the many messes that the failed market leaves in its wake. It acts like the worker with the wheelbarrow and shovel who follows the circus parade.
Steward is the latest acute example. The state’s cost benchmarks’ failure to limit spending is a chronic example. Low-quality nursing home care is a third. Widely disseminated theft in health care is a fourth. Governments write regulations that are hard to enforce; failed enforcement undermines confidence in competent public action.
Failed markets and incompetent government mean health care anarchy. Anarchy means weak accountability for financial coverage, for actual access to care, for cost control, or for securing the right doctors, hospitals, and other caregivers in the right places. It means more waste.
In a few years, the explosive health care financial crisis will provide the energy to blast loose most of the vast dollars now wasted inside Massachusetts and US health care.
Hospitals and doctors will support reform when their alternative is bankruptcy or deep income cuts. Patients will support reforms that guarantee needed care that’s affordable. Employers will finally recognize that they can’t rein in their own costs. Politicians will try to catch up.
Real reform requires crafting an alternative to markets that can’t work. And to traditional reactive government regulations that can’t work. We can look at the arrangements prevailing in most of the world’s other rich democracies—nations that successfully, though not perfectly, protect all their people, give more health care, spend one-half as much per person, and live longer.
Here’s what that would mean.
First, an insurance card for each person, one requiring no more than nominal out-of-pocket payments. Back the cards financially with the dollars already available. Give up on trying to save money by suppressing patients’ use of care by making out-of-pocket burdens unaffordable or doctor appointments unavailable or waits for mental health care intolerable.
Second, redeem the plastic cards clinically with adequately financed budgets for needed hospitals, nursing homes, home health agencies, and other institutions. And for the right types and numbers of doctors in the right places. If we want more primary care doctors, we have a choice between drafting them and paying them more money. Much more. And slashing their paperwork. And supporting them with NPs and PAs.
This means careful public action to identify needed caregivers and pay them enough to finance efficient delivery of needed care. It also means paying caregivers in ways that allow us to trust them to spend our huge but finite dollars effectively, equitably, and frugally. That’s a tall order.
Third, a yearly cap on national and state-level health care spending. This means putting health care on a budget. Making that work requires caregivers and managers who are accountable for spending our vast—but inevitably finite—health care dollars as well as possible.
The first three actions require strategic legislation. Making the big strategic decisions well can set health care on a path to affordable self-regulation by caregivers. If governments don’t make the big decisions well, they will be pressured to continue to make lots of micro regulatory decisions. It will remain impossible to make those competently or efficiently. Or enforce them.
Fourth, recognize that free markets and government regulatory micro-management don’t and can’t work in health care. The resulting anarchy means that no one is accountable for ensuring good care for all people, containing cost, or sustaining the right caregivers in the right places.
To assure good and affordable care for all—to balance access and cost—there’s probably only one workable alternative to failed markets and incompetent government regulatory micro-management.
It turns out that individual doctors’ decisions about how to diagnose and treat us control and spend almost 90 cents on the health care dollar. So we have to put our money in doctors’ hands under arrangements that allow us to trust them to spend it as well as possible—to do as much clinical and human good as possible.
That means paying doctors well, but in financially neutral ways that don’t incentivize them to give unneeded care or deny valuable care. This means seeing physicians as fiduciaries, not MBAs. It probably means salaries (large ones) for doctors working in hospitals and other trustworthy arrangements for doctors working in ambulatory care.
Greater physician altruism will help. So will a simple bargain: Doctors, we will get rid of almost all of your payment-related paperwork, including prior authorizations. And we will even end medical malpractice suits—and craft alternative ways to compensate patients who are harmed by bad care. But only if you agree to serve as clinical and financial fiduciaries for your patients.
Doctors’ better decisions will weed out clinical waste. Especially when supported by hospital trustees and managers who also act as fiduciaries—helping doctors get as much clinical value as possible for patients out of finite hospital budgets. That will require making better evidence available on effective and affordable ways to diagnose and treat illnesses and injuries.
Paying doctors and hospitals in simple and trustworthy ways will slash administrative waste.
Capping drug prices or negotiating deals with drug makers will make needed meds affordable for all. This can be matched with big dollar prizes for competing labs that develop effective and safe new meds.
Simplifying the flows of money inside health care will cut opportunities for theft. Health care theft and fraud are not impulsive. They are calculated. Catching more crooks and imposing serious jail time on those who steal will help deter further crime. Capping spending will make it clear to everyone that theft kills. This will spur more whistle-blowers to come forward.
Fifth, since market failure means that profit-seeking isn’t legitimate, outlaw for-profit caregivers and insurance companies. Buy up owners’ equity by floating 20-year bonds.
You may not think a crisis is coming. You might be right.
US and Massachusetts health care might continue to muddle through. Some hospitals will close; others will lay off nurses and other workers. And cut money-losing services. ER delays will grow. Access to care will get a little worse each year. More paperwork and private insurance companies’ denial of care will drive us a little crazier each year, but only slowly. AI will automate the job of making us crazy. Employers will boost out-of-pocket costs to slow premium increases. Anxious not to upset organized lobbies of caregivers, drug makers, and insurance companies, politicians will continue to do as little as possible.
But you might be wrong. If a grave crisis does arrive, and political pressure for reform becomes irresistible, will we know what to do? It’s a bad idea to defer sewing parachutes until the plane’s engine has stopped.
The best insurance policy we could craft for our health care is to begin right now to plan what to do if the crisis hits. Crisis means an opportunity to fix all that’s wrong with our health care. But only if we prepare in detail.
Broad and deep planning is vital because health care itself is so complicated—and because reform is even more complicated. Also because it’s essential to minimize disruption to patient care and to conserve the valuable and intricately organized networks of caregivers we rely on.
The premium for this policy would cost a few million dollars yearly for five years or so. That money would establish a state government office to plan the responses to the many challenges that a health care financial crisis will present. Some of the jobs entail preparing state government to make essential strategic decisions. Others involve orienting doctors and other caregivers toward balancing the financial and clinical books—the pressures to care for all citizens of Massachusetts effectively, equitably, and efficiently—with the vast but finite dollars available.
Some of the individual jobs include:
• Sustaining the flow of revenue into health care, to protect access and to keep all needed hospitals, doctors, dentists, nursing homes, hospices, and other caregivers out of bankruptcy
• Assessing the current availability and locations of care—from hospitals, doctors, dentists, nurses, nursing homes, mental health, and other caregivers
• Learning how much hospital inpatient capacity we require, where it should be located, and how much it should cost to deliver efficiently
• Learning which types of doctors we need, how many, and in which locations
• Designing ways to fill gaps between current capacity and need—and of implementing those designs
• Starting today to rapidly rebuild primary care capacity—and also dental care capacity
• Learning how to cap cost of care at affordable levels—and securing revenue commensurate with that cost
• Crafting ways to pay doctors, hospitals, and other caregivers that are financially neutral, adequate to keep caregivers reasonably happy, simple to administer, and affordable to all of us to provide the money
• Promoting an altruistic and fiduciary outlook for all caregivers
• Designing a financial-clinical-political deal with caregivers, one that lifts today’s oppressive and time-consuming administrative burdens, pays them well, and liberates them to spend our health care dollars to do as much good as possible
• Addressing prescription drug prices and incentivizing development of valuable new meds
• Assuring worried patients that health care is working for them—since pathology is remorseless but resources are always finite, how to build citizens’ trust—such that the only reason one patient doesn’t get certain costly care is to liberate doctors’ time and hospitals’ nurses and dollars to deliver care that’s more valuable?
• Developing ways to identify and respond to problems and complaints from patients, caregivers, payers, and politicians
• Integrating the pieces so they fit by developing timelines for each activity and coordinating revenue, budgets and other caregiver payments, access and equity and quality of care.
Affordable high-quality health care for all of us should be the easiest aim to attain because we already spend enough. Nations that are realistic about health care—and that don’t tolerate wasting one-half of their health care spending—cope continuously with the challenges a deep crisis would mean. It’s time Massachusetts state government took those challenges seriously. It’s time to begin to organize the efforts of the many competent and smart people working in and out of state government to plan to respond to the crisis—if, or when, it hits.
The alternative will be to accept that a health care crisis would hit us like a Pearl Harbor attack—unready to respond.
Preparing to fix health care will help us win a victory for compassion and competence—one that will liberate money and attention to address the tougher problems that confront us.
Alan Sager is a professor of health law, policy, and management and director of the Health Reform Program at Boston University School of Public Health. You can read his detailed analysis of our health problems and how to fix them in his book The Easiest, available online here at no charge.
This article first appeared on CommonWealth Beacon and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.
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