Thank you, Chancellor Motley, for hosting us and for that warm welcome.
Dr. Altman and members of the Health Policy Commission, thank you for convening today's hearing and for the opportunity to offer a few comments as you get underway. I want to thank the Attorney General's Office and the Center for Health Information and Analysis for their vital roles today as well.
The coalition gathered here today is well-known and well-regarded, and for good reason. This broad-based group of leaders -- providers, payers, patients, consumers, business and labor, from across the political spectrum -- came together to invent health reform in Massachusetts and, importantly, has stuck together to refine it as we have moved along. They have grappled together -- thoughtfully and with determination -- with how to make quality health care more accessible and more affordable for everyone.
We start with the premise that health is a public good. Accessible, affordable, quality care in all cases improves lives and in many cases saves lives. It gives peace of mind and economic security to working families. It increases productivity for large and small employers. It creates jobs and contributes to the strength of the Massachusetts economy. It's a powerful statement of who we are as a Commonwealth.
That's why in Massachusetts we didn't get stuck in the same old false choice between a perfect solution and no solution at all, and instead undertook to try something.
Well, by any measure, Massachusetts health care reform is a success. Virtually every resident in the Commonwealth is insured. More private companies offer insurance to their employees. Over 90 percent of our residents have a primary care physician. Preventive care is up, and health disparities are down. Most important of all, we are healthier. And over all these years, expansion has added only about 1 percent of state spending to our budget.
The Affordable Care Act, for which Massachusetts is the model, will build on our success by investing billions of additional federal dollars in our reforms, enabling us to reach more young adults and seniors, and closing the Medicare prescription drug donut hole.
Small businesses benefit from the ACA through new tax credits that make it more affordable to cover their employees. With more carriers and plans in the Health Connector than in the past, there is a more competitive rate-setting environment. Businesses who sign up for a Wellness Track program, available only through the Health Connector, can save up to 15 percent more on health insurance premiums.
While a few loud voices are still trying to shout down a presidential election, several failed repeal votes in the Congress, and a decision by the United States Supreme Court, the ACA continues to do good for the people of the Commonwealth and America. How? Because people with pre-existing conditions can no longer be denied insurance, people who get really sick can no longer be kicked off their insurance, and kids can stay on their parents' plans a little bit longer, until they can get their own. And as the Act is fully implemented over the next months and years, the nation will experience the many benefits that we have come to know here in Massachusetts.
Now, Massachusetts is setting the pace again, by tackling the high cost of health care.
It bears stating at the outset what this coalition knows but some in the general public do not: health care costs have not risen because of health care reform. Premiums had been rising faster than inflation for many years before our reforms went into effect. And in many states, like Mississippi, for example, where there has been no effort to extend health care to all, premiums have risen as fast or faster than they have in Massachusetts. The relentless increase in health insurance premiums is an economic and social challenge that stands apart from the expansion of coverage. It squeezes household, business and public budgets equally. And it was unsustainable.
Beginning in 2010, we took several steps to address this challenge. Those steps included: disapproving nearly all rate increases proposed by private insurers, working with insurers and businesses to create limited network plans, and partnering with hospitals, community health centers, doctors and other providers to pioneer patient-centered medical homes.
Just three years ago, average premium increases were over 16 percent. Today, through the push and pull of this coalition, premium increases average less than 2 percent. That's significant improvement. We are here today because we resolved to make that progress stick.
Chapter 224, the cost containment bill I signed last summer, is the Commonwealth's latest milestone in our health reform journey. Representative Steven Walsh, from whom you will also hear today, as well as Attorney General Martha Coakley, Senate President Therese Murray and Senator Richard Moore, who will be with you tomorrow, worked wisely and well with many of you to develop strategies to slow the growth in health care costs. Their respective staffs were key to getting this right, perhaps none more so than David Seltz, now the Commission's executive director, whom I wish also to acknowledge. Secretaries Glen Shor, JudyAnn Bigby and John Polanowicz from my Cabinet were also essential contributors.
As you know, chapter 224 established a cost growth benchmark: health care costs may rise no faster than the state's economy for the next five years and then at not more than half a percentage point below that for the five years that follow. The benchmark for 2013 and 2014 -- developed through consensus -- is 3.6%.
That benchmark is challenging but also achievable. We know it's challenging because many of the pressures that led to double digit premium increases in the recent past have not gone away. We know it's achievable because payers and providers are already taking steps to transform how they deliver and pay for care and how they encourage consumers to choose value.
Reaching that target also shows that the industry is listening to the cries of small businesses and municipal leaders and working families whose ability to meet other important needs has been cramped by rising premiums.
As an employer and as entity whose budget must meet other important needs as well as health care, state government, I'm proud to say, is leading by example.
During my Administration, MassHealth has been moving away from fee-for-service payment arrangements in favor of innovative programs that encourage efficient, high-quality and coordinated care, through "alternative payment arrangements."
These include arrangements where providers are paid to coordinate care, or where providers share in the savings if they are able to reduce health care costs. As of July 1, 2013, 25% of MassHealth's enrollees use alternative payment methodologies. By 2014, this will increase to 50%; by 2015, to 80%.
The pediatric asthma program, the duals initiative, primary care payment reform, and a program to support people who want to move from nursing homes into the community are all examples of innovative payment methodologies in use today at MassHealth.
Today marks the first day we are able to offer One Care: the new health care option for the so-called "dual eligibles." Through the ACA, Massachusetts has been granted over $10 million for a 3-year demonstration project that will offer individuals eligible for both Medicare and Medicaid to access their benefits through a single accountable care plan. Approximately 90,000 individuals will be eligible to enroll in One Care, many of whom are among the highest cost beneficiaries and have among the most complex care needs, many chronic conditions and behavioral health needs.
And our work with municipal health care reform has changed the way communities negotiate their health insurance plans and helped cities, towns, and school districts stem the rising costs of health insurance to save jobs and deliver core local services.
Since we proposed municipal health care reform in January 2011, over 240 local governments and school districts have collectively saved more than $218 million in health insurance premiums, some by joining the GIC and others by using the new law as leverage to negotiate plan changes. The reform's success has surpassed even our high expectations.
According to independent estimates, municipal health care reform could produce as much as $2.8 billion in cumulative savings over 10 years.
The GIC is also working towards moving toward alternative payment plans. This year the GIC signed a five year contract that requires health plans to work with providers to change the delivery system and move members into risk contracts. Going forward, health plans will pay a penalty unless they move people into risk contracts.
And for the past two years, the Massachusetts Health Connector's Commonwealth Care program has provided health insurance to eligible residents at a lower cost than previous years. The Health Connector has approved plans from insurance carriers leading to a 10% decrease in premiums and hundreds of millions of savings for the Commonwealth. Chapter 224 increases the transparency of health care costs as well. Today patients can review insurers' prices paid to providers online or by calling a toll free number, before that service is performed. Patients will be able to access similar information from providers by January 1.
There is plenty of room to innovate to achieve the goals set forth in the new law. And there is ample oversight. There is limited enforcement for failure to meet the goals, however, and that was a calculated choice, too. That choice was based on the trust members of this coalition have that each would continue their commitment to the success of health care reform, and the understanding that success depends on cost containment. As we go forward, I ask especially that you bear in mind what success looks like from the perspective of the people we ultimately serve.
Health care is a public good and health insurance is vital, for the all the reasons mentioned; but health insurance premiums are often unpredictable, inexplicable and unsustainable. Families, small businesses, not-for-profits and governments see their budgets squeezed by health costs as rising premiums overwhelm other needs. The working theory has been that private insurance obtained in a competitive market can bring relief. But, mindful that people don't buy health care the way they do soap, that means information -- enough and the right kinds -- must be widely available to the purchasing public and markets must be truly competitive. Specifically, as we go forward over time, let us look for responsible options that drive the premiums for working people and small businesses down (not just slow their growth) and also strive for ways to reduce market concentration (not just maintain the status quo) so that competition really flourishes. Over the course of this hearing, you will receive a lot of good information about the good progress we are making, and perhaps share my pride in it. But if you keep top of mind the people behind the facts and figures, you will agree that we have miles to go before we rest.
I know that, just as it has before, the creative tension of this broad coalition will make all the difference. We've shown the nation the way on universal coverage and now we are cracking the code on costs. Surely it won't happen immediately. But for the sake of the people we all serve, let's stick together and keep at it.