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Care, cost stressed in R.I. initiative

Shifts from Mass. universal coverage Would raise cash with business tax

Email|Print| Text size + By Alice Dembner
Globe Staff / February 13, 2008

Drawing lessons from Massachusetts, Rhode Island's lieutenant governor unveiled a healthcare plan yesterday that puts as much emphasis on slowing soaring costs as it does on providing universal coverage.

The plan, which would need legislative approval, acknowledges that Rhode Island cannot afford, financially or politically, to insure all its residents unless it can deliver healthcare more efficiently and raise money through a tax on businesses that do not provide coverage.

The approach represents a significant shift from the choice Massachusetts made to expand access to care first and address costs later, a strategy that has helped more than 300,000 people get healthcare coverage in just 18 months, but has left the state facing a ballooning bill.

Healthcare specialists say that Rhode Island's proposal is part of a trend among states to take a slower approach that addresses costs first, or at least simultaneously with access.

"As states look at what's been done in Massachusetts, they're beginning to realize that while near-universal coverage can and should be a goal, it is necessary to address the cost and quality issues," said Jennifer Tolbert, a policy analyst who is tracking state healthcare initiatives for the Kaiser Family Foundation, a nonprofit health research organization.

The collapse of California's universal insurance proposal two weeks ago because of rising cost estimates and the slowing of the economy nationwide are also contributing to the new financial focus in many states. For example, a committee appointed by the governor of Minnesota proposed steps last week intended to save nearly 20 percent on health spending by 2015 that could be used to subsidize coverage for low-income people.

Massachusetts, Maine, and Vermont are the only states that have enacted comprehensive healthcare programs. Twelve others, in addition to Rhode Island, are moving toward it, according to the Kaiser Foundation.

In Rhode Island, Lieutenant Governor Elizabeth Roberts proposed a package of legislation yesterday that starts by imposing potential cost-cutting strategies on insurance plans covering state workers and Medicaid recipients and expands them quickly to all private insurance plans.

The strategies include emphasizing primary care over emergency care, managing treatment of people with chronic diseases, and paying doctors to keep patients healthier. The proposal would also establish a massive database of healthcare treatments, outcomes, and costs designed to point the way to better care at lower costs.

The state would also establish an agency, similar to the Commonwealth Connector, the state authority in Massachusetts, that would work with insurers to design more affordable private coverage plans and develop subsidized insurance for low-income individuals.

By July 2009, everyone earning more than 400 percent of the federal poverty level, or $41,600 for an individual, would be required to buy insurance.

In addition, businesses would have to pay the government $1,000 a year for every uninsured employee, money that would fund insurance products offered beginning in 2010, if enough funds are collected, according to Roberts's staff.

The state also plans to expand its government programs that cover the poor and children.

Roberts said she hopes the plan would provide coverage for many of the state's 120,000 uninsured.

"I am taking a page from the boldness of the Massachusetts vision," Roberts said, "but we made a decision to talk about the cost . . . in the beginning."

Unlike Massachusetts, Rhode Island does not have a large pot of Medicaid money dedicated to paying for the uninsured that it could shift to pay for insurance.

"We have to make the subsidized product affordable, or we can't pay for it on the state dime," said Jennifer Wood, Roberts's policy director.

The cost-control programs are modeled in part on Vermont's health insurance initiative, which is in its second year.

Massachusetts is now looking at some of the same tactics for cost savings as Rhode Island, through an advisory council established in the healthcare initiative law. While many of the steps may improve the quality of care, specialists say, it is unclear how much money the state initiatives will save.

"I have no confidence that it's going to significantly impact healthcare costs," said Jonathan Gruber, an MIT economist who helped design the Massachusetts plan and who is advising states across the nation.

"We can't have real cost control without pain, without telling people they can't have healthcare they want," Gruber said. "That's why we can't let universal access be hostage to cost control. That approach is a recipe for paralysis."

Gruber said that states have some other options to fund reform, such as raising taxes. But, he said, the majority of states need a significant boost in federal funds to make coverage work.

Yet states are trying to proceed without that guarantee and launching programs to reduce costs at the same time, said Enrique Martinez-Vidal, director of the State Coverage Initiatives program of AcademyHealth, a professional society of health researchers.

Washington state, for example, passed a limited coverage plan last year that also includes a number of strategies aimed at controlling costs and improving quality.

"They're trying to take it all on at the same time," Martinez-Vidal said. "It helps them politically sell the coverage expansions."

Alice Dembner can be reached at Dembner@globe.com.

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