Next governor to inherit the challenges

The second in a series of articles on issues facing the next governor.

Governor Mitt Romney enjoyed widespread praise when he signed a first-of-its-kind law requiring all Massachusetts residents to have health insurance. But it's the next governor who will inherit the law's problems -- including a potential revenue shortage -- and who will face pressure to tinker with its delicate compromises.

The new governor will shoulder much of the responsibility for whether the law succeeds. He or she also will face national scrutiny if Massachusetts fails to follow through on its promise to provide affordable coverage for uninsured residents, and could lose a substantial chunk of federal funding. And the new administration's views about how to implement the law, particularly about how much lower-income residents and businesses will have to contribute, will have personal consequences for thousands of people.

``The governor is going to have to display leadership in three areas," said Judy Meredith, executive director of the Public Policy Institute in Boston, a consultant to nonprofit organizations on lobbying. ``Encouraging employers to pay a fair share, encouraging consumers to pay their fare share, and encouraging taxpayers to pay their fair share."

The Romney administration and a special authority created to oversee implementation of the law already have begun deciding key details. Managing the health insurance law will be a handful, but consumers, businesses, hospitals, doctors, and insurers all will press the next governor for money and attention to a range of other healthcare issues.

The cost of medical care is soaring. Community health activists argue that the administration is not spending enough to solve growing public health problems. And while California voters approved $3 billion in state funding for stem cell research to attract scientists to the state, Massachusetts has not set aside public money for the study of stem cells. The next governor will have to balance the demands created by these issues, with any large addition to healthcare spending requiring unappetizing cuts in other programs.

Pressing healthcare challenges the next chief executive will face include:

Implementing the ambitious health insurance law without breaking the state budget. The law aims to cover up to 100,000 uninsured children and the poorest adults by expanding the state Medicaid program. Up to 200,000 uninsured adults with incomes of less than 300 percent of the federal poverty level -- $60,012 annually for a family of four -- will be covered through state-subsidized health insurance plans; the amount of the subsidies will vary depending on a person's income. Another roughly 200,000 uninsured adults with incomes greater than 300 percent of the poverty level will be required to buy specially-designed ``affordable" health plans being developed by insurers.

Legislators and the Romney administration plan to pay for the program with state and federal funds and assessments on employers who don't provide health insurance. But a legislative staff analysis done in the spring estimated that the plan will be about $160 million short of its estimated cost of $1.56 billion in the fiscal year that starts July 1, 2008.

Officials hope to make up the shortfall by negotiating more federal aid, and with cash from the state's free-care pool, a pot of money used to pay hospitals for treating uninsured residents. Use of the pool should drop dramatically as more uninsured residents buy insurance, and, at least for the immediate future, hospitals, health insurers, and the state will continue to fund the pool. Also, the state said yesterday that the number of uninsured is dropping, which could take financial pressure off of the program.

But if these assumptions turn out to be faulty, as some analysts believe they will, the next governor -- along with the Legislature -- will face politically difficult choices. Does the new governor try to raise taxes to pay for insurance, or cut funding for other essential programs? Increase the fee on businesses? Or scale back coverage for individuals?

``We think the cost of this program will really hit in 2008," said John McDonough, executive director of Health Care For All, an advocacy organization in Boston that pushed for passage of the healthcare legislation. ``The question is going to be how to make it financially sustainable."

The authority overseeing implementation of the new law, the 10-member Commonwealth Health Insurance Connector, is debating how much to charge lower-income people for their insurance, and the amount of the state subsidies. The next governor will have the power to replace six members over the course of his or her administration, which could significantly shift the board's balance and change key votes.

Equally controversial, the governor's Division of Health Care Finance and Policy defines which businesses must pay a $295-per-employee fee if their contributions to employee health insurance are deemed inadequate. And even though the Romney administration is looking to finalize regulations that limit the number of businesses subject to the fee, the next governor could push to change those rules too.

``There absolutely will be pressure from outside groups to change the law," said Stuart Altman, a Brandeis University health policy professor.

Controlling health costs without leaving people lacking crucial medical care.

The cost of medical care has soared since the late 1990s and insurers, employers, and government officials are grasping for solutions. Health insurance premiums climbed by 10 percent on average again this year in Massachusetts, the sixth consecutive year of double-digit increases.

Employees paychecks -- and employers' profits -- are suffering. David Ratner, owner of Dave's Soda and Pet City in Agawam, Springfield, Hadley, and Northampton, said he was forced to raise the deductible to $1,000 from $500 and the copayment for doctors' visits to $40 from $10 for himself and his 82 employees to keep premiums from soaring again this year. ``No business can keep going with these increases. You are so squeezed," he said.

While Massachusetts has controlled cost increases in the state-federal Medicaid insurance program for the poor and disabled, largely by limiting the use of expensive brand name drugs, it has not invested heavily in helping the private sector handle this pressing problem.

The new governor could follow Vermont's lead and help healthcare providers better manage and coordinate care for chronic conditions such as diabetes, heart disease, and cancer, which consume 75 percent to 80 percent of all healthcare spending. Vermont will spend $6.5 million over two years on its chronic care initiative.

Tackling serious public health problems.

Heroin addiction and deaths from overdoses in the state have climbed steadily in the past decade. Asthma is afflicting growing numbers of children. And, between 1990 and 2004, the number of obese adults rose 80 percent.

At the same time, the state cut funding for community health centers, family health programs, and other services between 2001 and 2004. Even though the Romney administration and the Legislature increased spending for these programs in the fiscal years beginning in July 2005 and this July, public health advocates argue that current spending levels still fall short of those at the beginning of the decade. The next governor must decide whether to pump more money into public health, which could come at the expense of other state services.

``Massachusetts used to be the national leader in investing in disease and injury prevention," said Geoffrey Wilkinson, head of the Massachusetts Public Health Association, a lobbying group. ``A critical issue for next governor is whether [he or she] will recognize disease prevention as a critical complement to healthcare."