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Globe Editorial

Taking healthcare's pulse

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December 10, 2007

THE PEOPLE who are running the state's health insurance expansion announced good news last week: Nearly 300,000 customers have enrolled in programs designed to cover most of those in Massachusetts who are without this essential protection. And there was more good news as well in the decision by these same officials to urge that insurance companies keep their rate increases to 5 percent next year.

The board of the Commonwealth Health Insurance Connector Authority is worried that, unless the enormous rate increases of the last few years are moderated, the program to cover nearly everyone in Massachusetts will be in peril. Legislators are worried, too, as are several of the major insurers, who through the Massachusetts Association of Health Plans offered a program to reduce costs. The association released information detailing how much its member plans spend on internal expenses and how much money flows to physicians, hospitals, and other providers.

That's a major step toward transparency in healthcare financing. Blue Cross and Blue Shield of Massachusetts, the largest health insurer in the state - but not a member of the association - ought to follow suit. And, to set an example of frugality, it should refrain from offering lavish retirement packages like the one worth $16.4 million that followed William Van Faasen, its former CEO, out the door last year.

Data from the health plans show that 85 percent or more of premiums goes directly to hospitals, physicians, and other providers. Ultimately, the state may need to intervene to control costs among providers and health plans alike. Before such a major step is taken, however, a voluntary effort should be attempted, led by the three largest providers of healthcare in Boston, Worcester, and Springfield, the state's three major cities.

Here's a challenge, then, for Partners Healthcare, which controls Massachusetts General and Brigham and Women's hospitals in Boston; UMass Memorial Health Care, which runs UMass Memorial Medical Center in Worcester; and Baystate Health, parent of Baystate Medical Center in Springfield. As they negotiate new contracts with the health plans, they need to keep rate increases to no more than 5 percent a year and explain the reasons for any extra costs. The other major providers should follow suit.

Massachusetts residents are used to high-quality, expensive medical care at academic medical centers, and the providers are accustomed to passing the costs directly to the health plans and to everyone who pays the premiums. But 300,000 newly insured people and the rest of the insured population need relief from double-digit cost increases. The success of the Massachusetts health insurance experiment depends on wise restraint.

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