Thank you, Stephen, for your warm introduction and for your and Fenway Health's extraordinary service to this community.
Thank you for having me this afternoon.
I was asked to speak about the past, present and future of health care reform in Massachusetts. I am delighted to do so because in my time in office, health care has been a central issue: how to expand access, how to improve quality, how to control cost. In one form or another, health care affects everything: government, business and household budgets; people's ability to get a job; a child's readiness to learn. So let me make a few observations about our journey over the last six years. Then, we can have some time for conversation.
Let's start with where we are.
Six years after we passed the 2006 law, health care reform is working in Massachusetts. We have expanded coverage to 98.2 percent of our total population. 99.8 percent of children. No other state in the country can touch that. While the national trend was going in the other direction, we increased the number of insured in Massachusetts by more than 400,000 people.
There was fear that our health care law would result in fewer employers offering coverage, but the opposite has happened. More businesses offer health insurance to their employees today than before our reforms took effect, some 78 percent of Massachusetts businesses as compared to the national average of about 69 percent.
So-called Minimum Creditable Coverage in Massachusetts includes not only primary care, but also cancer screenings, emergency care, mental health and substance abuse programs and lifesaving medications and treatments. This was the right approach both to help keep people healthy and to save the system money in the long run. And we're healthier because of it.
Preventive care is up: more people are receiving cancer screenings, more women are getting pre-natal care and visits to emergency rooms have decreased. 150,000 people have stopped smoking because we now cover smoking cessation programs. A recent study by the National Bureau of Economic Research documents improvements in physical health, mental health, functional limitations, and joint disorders as a result of increased access to care in Massachusetts. Women, minorities and low-income people have experienced the biggest health improvements.
For example, among Hispanic males, a notably under-insured population before reform, the majority of cases of testicular cancer are now detected at an early, treatable stage. And with wider access to screenings, we've seen a 36 percent decrease in cervical cancer in women.
We have reduced the number of new, annual HIV diagnoses by 50% in the last 10 years.
By the way, the capacity shortage is real, but less profound than we expected. Over 90 percent of our residents have a primary care physician, and 4 out of 5 have seen their doctor in the last 12 months.
As all of you know, community health centers are critical to the mission of providing quality care in an affordable setting. So, it was wonderful to receive support from the Obama Administration to upgrade buildings and technology at eight health centers across Massachusetts, the largest allocation of any state.
And I should add that expanding coverage to 98% of our residents added about 1% more of state spending to our budget.
Those are the stats. But even better are the stories. I remember meeting a young woman named Jaclyn Michalos, a cancer survivor who would not have gotten the care she needed to save her life without the Commonwealth Connector.
A self-employed man named Ken Brynildsen ignored his gastrointestinal symptoms for 3 years because he could not afford to see a doctor or pay for possible treatments. Once insured, he was seen and treated for Stage III colon cancer and is cancer free today.
The expansion of access has been a policy success in Massachusetts, I believe, because we started with the belief that health is a public good and that everyone deserves access to affordable, quality care. For us, it's an expression of the kind of Commonwealth we want to live in. That understanding was meaningful enough to compel a Republican Governor, a Democratic legislature and a Democratic United States Senator to work together with organized labor, business groups, medical professionals, and patient advocates to develop and pass a landmark health care reform law -- and then to stick together to refine it as we went along. So, in my view, it's a pretty good model for good politics, too.
I am also proud that what we have here in Massachusetts serves as the model for what the President and the Congress have done for the country.
For all the success of health care reform in Massachusetts, there was and is still a separate challenge: the rising cost of health care, especially the rapid increases in premiums for families and small businesses. Having insurance premiums that rise sharply year after year, even during the Recession, is a national problem, not unique to us. Some of the conservative commentators want you to believe that this is happening because of our health care reform, but they are wrong. In Mississippi, a state with no commitment to universal care, premium rates increased faster in the last six years than they did here.
Nationally, spending on health care increased 6.5 percent annually in the last ten years, while real incomes fell by more than 7 percent over that period. Spending on health care makes up 18% of all spending in the United States -- one of the largest single sectors of our economy. In recent years, health care costs have grown faster than GDP even as the share of Americans with health insurance has fallen. Across the Nation, just like across the Commonwealth, working families, small businesses and governments are being squeezed by premium increases.
This is especially true for small businesses. I used to meet many small business owners who are beginning to see their commercial activity pick up and are ready to start hiring again -- until they get their annual health insurance hike. Double- digit increases sent businesses scrambling to find new carriers, with less coverage at the same price or the same coverage with higher deductibles, in an annual ring-around-the-rosy of shifting plans. I have yet to meet a business owner in Massachusetts, especially a small business owner, who didn't see health care costs as a significant impediment to adding jobs. And with small businesses making up 85 percent of the businesses in Massachusetts, if they don't start hiring, we don't get a recovery.
The growth in health care spending is also unnecessary. Experts estimate that as much as 20 to 30 percent of current health care spending is wasted on overtreatment, avoidable hospital readmissions, preventable errors and unnecessary administration. All in all, spending on health care is $67 billion every year in Massachusetts; so, that means we spend somewhere between $13 billion and $20 billion annually that we need not be spending.
That's why we have been working hard to find new ways to lower health care spending.
In April 2010, after a long time in frustrating and unproductive conversation, I directed the Commissioner of Insurance to disapprove nearly all of the rate increases proposed by private insurers. It was ham-fisted, I know, but it got the ball rolling. That decision set in motion a series of negotiations and settlements that led to a $106 million reduction in the base rates carriers originally proposed.
Then, later that year, we authorized limited network health plans to give consumers opportunities to get great care in neighborhood settings at lower cost. There are now new plans tailored for small businesses, that promise to be as much as 20 percent cheaper than current rates. We worked hand-in-hand with insurers and businesses to create small business co-ops, and are working with hospitals, community health centers, doctors and other providers to pilot patient-centered medical homes.
We also worked to end administrative duplication by requiring common codes and forms from insurers and providers. And now hospitals and insurance carriers have reopened their contracts and cut rate increases, in some cases by more than half.
We've seen the savings. Two years ago, average premium increases were over 16 percent. Today, they are less than 2 percent.
With all that we had accomplished, we needed to find a way to sustain the savings we had created for the next decade or more.
I have heard, time and again, from doctors and patients, from economists and health care executives, that one of the main reasons for the high cost of health care is the way we deliver health care. I have heard how a "fee-for-service" model creates financial incentives for the quantity of care a patient receives, not necessarily the quality. We pay for individual procedures and appointments, not for coordinated care that treats the whole patient. Doctors who treat patients well or help them manage chronic medical problems are not rewarded for those outcomes. There is no financial incentive in the current system for good care, only for more care. That has to change.
Thanks to a lot of hard work and partnerships with the legislature and advocates, this summer I signed a health care cost containment bill that will help us make that change real.
First, we established a cost containment goal that is both ambitious and attainable.
Since all we were trying to do was make sure health care costs don't squeeze out everything else, the legislation sets a goal for health care costs to rise at the same rate as the state economy for the next five years and then at half a percentage point below that for five years after that.
Second, we protected the flexibility that the health care industry needs to meet the goal. It's lowering premiums and maintaining quality we care about, not necessarily the details of every method of care delivery. So we kept faith with that principle in the final bill.
Third, we provided a means for the industry to be accountable for reaching the goal. Government has to have a role in that -- obviously working with health care experts and allowing sufficient latitude and time to get there -- because achieving the goal is in the public's interest.
And finally, but importantly, we included sensible tort reform to reduce unnecessary costs for so-called "defensive medicine" in the system.
As I said before, community health centers are a key player in all of this -- serving as the primary care provider for 20% of our MassHealth members. MassHealth has been working to develop a payment reform project open for community health centers to participate in where they may receive a bundled payment to cover primary care and other medical services. Community health centers that participate in this program may receive enhanced rates as part of the cost-containment efforts.
Even in this next stage of reform, it is all still about values, about who we are as a Commonwealth. Policy matters only at the point when it touches people. For Jaclyn and Ken and hundreds of thousands of others whose lives are better because of it, these policies matter.
Through them and through our Commonwealth, it is better. Thank you for all that you do -- I look forward to the conversation.