Tuesday, April 15, 2014

Massachusetts gubernatorial candidate Don Berwick is holding a press conference on Wednesday, April 16, at 7pm at Bakst Auditorium at Boston University's School of Medicine to present his plan called "Medicare for All," a single payer system for the state.  Many will be curious to see what he proposes.

As one of Don's supporters in the Democratic primary race, I don't necessarily agree with all he says, but I love that he stretches the limits in his public policy proposals.  It keeps the race vibrant and gets people engaged.

There is a delicious irony to Don's single payer approach in this state, in that a large argument for it has been provided by the state's largest insurer, Blue Cross Blue Shield--which would be put out of business by the proposal.  Why?  Well, BCBS has been so intent on expanding the use of global payments that it has effectively shifted actuarial risk from itself to the providers who have adopted that payment regime.  One can logically ask the question: "If insurance companies don't bear risk, why do we need insurance companies?"  If all they do is handle transactions and claims, who needs them as plan administrators?  What core competencies do they bring to bear that any well-run financial services organization does not?

I'm being slightly facetious but not a lot.  The state's insurers continue to collect a similar percentage of the premium dollar each year for administrative functions.  They seem unable to realize economies and improvements in that part of their business.  Thus, as premiums have risen, their share has risen proportionately. Indeed, one can argue that they have an incentive for higher premiums and more claims processing.  Hmm, it sounds like they operate under their own fee-for-service reimbursement approach, something they decry as inappropriate for the rest of the industry!

Poke that sleeping lion, Don, and we'll see whether it responds with a roar or a meow!


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