A Model for State Health Insurance Exchanges
Massachusetts' Jon Kingsdale discusses health insurance exchanges and the opportunities -- and challenges -- of health reform.
Four years ago, Jon Kingsdale left a successful career as a senior executive at Tufts Health Plans to serve as the founding executive director of the newly created Commonwealth Health Insurance Connector Authority. "Nobody really had a very clear picture back in June 2006 what a state-based health insurance exchange was," notes Kingsdale. Today, Massachusetts's Connector is a model for state-run health insurance exchanges nationwide. At Governing's recent Cost of Government Summit, Kingsdale, who retired this spring and now works as an independent consultant with states and the U.S. Department of Health and Human Services, sat down to talk about health insurance exchanges and the opportunities -- and challenges -- of health reform. Below is an edited transcript of his comments.
You've been quoted as saying that you think health reform is going to be "the toughest implementation of federal policy since the civil rights law." Why do you think that is?
Well, health policy is very emotional, extremely complicated and then, as you know, it is very controversial right now. Basically, the political spectrum is divided almost down the middle between those who ardently feel that the Affordable Care Act (ACA) is the vehicle to cover most people in the United States and those who are pretty ardently against any kind of increased government role, which clearly there is in the ACA.
Let's back up a little bit and have you explain some of the concepts that we will be talking about. One of the most notable features of health reform in Massachusetts is the Connector. Can you explain how that works?
Sure. The Mass Health Connector is a way to connect individuals and small employers with health insurance. Part of what we do is provide government subsidies for low-income, otherwise uninsured individuals to help them pay for insurance, and offer a choice of easy to understand, fairly standardized health plans to choose from. These are private health plans. And we, like any large employer, negotiate with those plans at a price, and then select them based on quality, access and price. In addition, we have kind of a second exchange, which is purely a commercial insurance exchange for individuals and small employers who are not subsidized. And there, we offer a better, easier, more consumer-friendly way for people to understand the options that are available to them to buy insurance with their own money. We have about 220,000 [enrollees] between the two exchanges.
How do you think that state health-care reform is going to affect state and federal relations?
The Affordable Care Act is -- I don't know if it is unique, but it is certainly a throwback. In some respects, it's a very middle-of-the-road approach to federalism. It is a humongous federal act with 10 titles. But in the area we are talking about, it relies largely on exchanges and subsidies for insurance and reform of the private insurance market by the states to actually enact and administer the key provisions of the Affordable Care Act. So I think it is going to be a test in the 21st century of some 18th and 19th century principles of coordination and federalism between the states and the federal government.
What sort of innovations or strategies are you seeing to contain costs?
Well, this is clearly the most difficult and perhaps one of the most important challenges in the whole field of health-care policy. I have been involved as an ardent cost controller for 35 years, and let's say I'm still meeting lots of challenges. I don't think I have solved that one at all. So I have to give credit to Congress and the president in building so much cost containment effort into the Affordable Care Act. How that's going to work out [is an open question]. Cost containment in health care means restraining the resources available to people who save lives for a living: doctors, hospitals and so forth. That's a tough, tough challenge, and Americans are ambivalent. They want cost containment -- but for somebody else, not for themselves and their loved ones. I think the states have a lot of opportunity to weigh in here.
Medicaid and the new exchanges will give the states significant new opportunities to promote accountable care organizations. Unfortunately, we have grown into a system of paying for health care that simply rewards the providers of medical care for doing more as opposed to doing the best with a constrained set of resources and/or really focusing simply on quality for a population to be served. So much of what we call fee-for-service medicine is really just paying people to do more. That's the challenge, and there is great opportunity with these exchanges and changes in Medicare and Medicaid to address that, but I think it is a hard problem.
Outside of Massachusetts, what state or local health-care initiatives have impressed you?
Well, I think outside of Massachusetts, there are a lot of different interesting initiatives going on. Maine has had their for several years now. Vermont has a very innovative effort at community-based health care and long-term care, case management and disease management to deal with a lot of acute care issues, [such as] chronic care long-term conditions like arthritis, diabetes and so forth, that now comprise so much of the illness we have to deal with. On the other coast, Oregon and California have significant ambitious plans in the works to build new exchanges. So across the country there is lots of stuff going on.
As a consultant, what advice would you offer to leaders trying to innovate in a period of constrained resources?
You know it is tough to innovate when you don't have the resources to do it, and I think all the states are feeling that very acutely. One of the great things for the states about the Affordable Care Act is that some of the most innovative opportunities are with health insurance exchanges, and those are fully funded out of the federal purse. That has its own set of problems, but from a state's perspective, the opportunity to develop an insurance exchange, to provide care-subsidized care for low-income uninsured really comes with a unique level of federal backing and support for it. So that's where I would love to see a lot of innovation.
The other kind of innovation that is going to be required in health care is trying to contain the cost of Medicaid, and states have done a good job by keeping fees down. I think the challenge will be to move the delivery of medical care under Medicaid programs toward a much more efficient and effective model of what services get provided to the population.
-- Massachusetts's efforts to curb premium increases is faltering.
-- State insurance commissioners worry that federal requirements that health insurers spend at least 80 cents of every premium dollar on medical care will disrupt markets.
-- Some big health insurers have stopped writing freestanding policies for children.
-- The Robert Wood Johnson foundation highlighted initiatives by its grantees to promote active living by design in Cleveland, Louisville, Oakland and the South Bronx.
-- Medical care prices fell for the first time in 35 years. A raft of new health reform provisions went into effect on September 23.
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