Here is what the election will not change: there is no new money available for health reform. That means that any funding for reform must come from money that is already in the system. That, by the way, is not a bad thing. We don't need to spend more money on health care overall.

Sen. Coburn's overhaul of the health care system, for example, is totally funded by rearranging existing susidies. Sen McCain's plan was originally designed to be revenue neutral as well.

There is roughly $250 billion in tax subsidies and about $30 billion or so that pays for uncompensated care (DISPRO) plus all of the money that currently goes for Medicaid and SCHIP.

If the next president isn't smart enough to use all of these funds for much better purposes, he should abdicate and let someone else have the job.

How we will address our national health care crisis is a key issue for voters this fall and a stark difference between our presidential candidates. However, one thing we all agree on is the longer we wait, the worse it gets.

The economic crisis working families are now facing in the midst of Wall Street's failures demands that we solve our national health care crisis. We will all need to play a part to make sure that the mandate for Congress and the new administration is clear from Day 1. America's families—and our economy—can wait no longer.

As working families struggle to stretch their paychecks in this economic freefall, there are three lessons from Massachusetts that Congress should consider to ensure quality, affordable health care for every American:

1. Working together for comprehensive reform. Massachusetts got reform done when lawmakers, business, labor, health care providers and advocates put aside their differences and agreed upon a shared goal of quality, affordable health care. As the process rolled out in several stages, the legislation itself was clear in both its intent and urgency. Lawmakers deserve credit for understanding that citizens of the Commonwealth simply could not afford a partial fix, and thanks to leaders Governor Deval Patrick and health care champions like Senator Kennedy, Massachusetts is continuing to expand affordable, comprehensive health care. Since the passage of its groundbreaking health care law under Gov. Mitt Romney, nearly 75% of individuals who were living without health care insurance before are now are fully covered.

2. Everyone pays their fair share. Massachusetts also made sure that the individual right to health care was balanced by an individual responsibility that was fair to working families. After all, what's affordable to a family of four with an income of $100,000 is not affordable to another family of four with an income of $20,000. The state recognized that working families would need help paying for their health care coverage. The Bay State also took the concept of responsibility a step further and made sure that employers shared in the responsibility for expanding health care coverage. If individuals were being asked to pay their fair share in terms of the cost of health care premiums, then employers should be asked to do the same.

3. Defining coverage. Far too many families have found themselves on the fast track to financial disaster because they've discovered too late that their health care plan doesn't cover essential care or medications. Massachusetts prevented this catastrophe by clearly defining the term "comprehensive" health care coverage. No stripped down plans are permitted in this market, and prescription drug coverage, annual checkups, and preventive care are required.

We know that when everyone participates—when employers, government, and patients each have a role—shared accountability works. Massachusetts' success in transforming its health care system and improving the lives of its citizens is proving that fact each and every day.

Our job is clear: we need to make sure Congress understands that we are behind them, beside them, and ahead of them paving the way to make health care reform a top priority come January.

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There are several lessons to be learned from the health care reform efforts underway in Massachusetts, although some of them may surprise you.

The middle part of this decade was a heady time for governors interested in health care reform. Maine, Massachusetts and Vermont headlined a long list of states embarking on ambitious health care reform efforts, and larger states like California and Pennsylvania soon came to the table. Some key factors were in their favor: 1) states have traditionally been the laboratories of innovation in this country, and health care has always been a top interest of reform-minded governors; 2) robust state economies allowed many governors to think big; and 3) there was little evidence that any significant federal reforms were forthcoming.

Of all the reform efforts undertaken by the largest states, Massachusetts’ plan arguably had the best chance for survival. Massachusetts had the advantage of one of the country’s lowest uninsured rates, significant amounts of uncompensated care funds already in the system and a very high per-capita income. It also had broad support from the business, provider and consumer communities.

Indeed, the initial feedback out of the state was extremely promising, and many states looked to see how this ambitious project would fare.

Even during this early period, however, there were concerns that aggressive state reforms would not be sustainable financially over the long haul without significant federal action. States in general simply do not have the financial support to sustain major coverage expansions. They also lack the ability to affect significant portions of the insurance market because of ERISA protections and need federal leadership on critical areas such as health information technology.

Halfway through the three-year implementation process, Massachusetts has rightly been hailed as a success, and many states are attempting to replicate the “Connector” model that it has pioneered. The Connector is an innovative idea that allowed the state to begin decoupling the anachronistic linkage between health insurance and employment. While successful so far in Massachusetts, it has not proven to be a panacea in other states.

Furthermore, it must be noted that even with all its advantages—and while the economy was still booming—the success of the Massachusetts program quickly outpaced the program’s budget parameters. Although this may be viewed as the result of a program that exceeded expectations, in the end, future success will require a continued state financial input that may not be sustainable—and that is certainly unrealistic for the majority of other states interested in health care reform.

Instead, given both the momentum and the expertise that has been developed in the states, the Massachusetts experience should serve as a framework for federal reform efforts, and it highlights the need for strong federal leadership in a number of key areas. First, within a federal framework, states need broad authority to tailor models to respond to the wide variations in health insurance markets and local market conditions. States must have the flexibility to implement the right parameters and mix of innovative approaches, including tax credits, vouchers, premium assistance, public-private partnerships and other models adapted for differences in population, resources and markets.

Second, there is a need for strong federal leadership in setting standards for quality measures and health information technology – approaches to cost containment critical to federal reform efforts. Many states already have moved forward with policies to eliminate reimbursement for so-called “never events,” develop disease management and pay-for-performance programs and promote transparency, where appropriate. Entities such as the State Alliance for e-Health continue to push aggressively in adopting health information technology. But there is only so far states can go without additional federal leadership in these areas. The federal government must take the lead in shaping a framework for the development of uniform quality measures and standard technology platforms which are necessary to improve efficiency and ultimately reduce costs throughout the health care system.

Finally, with the nation about to enter an economic recession, and states facing upwards of $26 billion in budget shortfalls for 2009 alone, a very different landscape emerges for the future of state-based health care reform. We cannot expect meaningful reform to succeed in creating a 21st health care system that provides quality care while containing costs unless there is certainty in financing. As the Massachusetts’ experience demonstrates, state reform efforts must be combined with a sufficient federal financial investment.

Amidst the successes of the Massachusetts program and ongoing support for health care reform—broadly defined—policymakers cannot afford to overlook a critical lesson. Ultimately, coverage expansions are a key component in transforming our health care system, but these alone will not resolve the fundamental challenges that continue to drive up costs and do little to improve efficiency and quality. It is possible to build on the Massachusetts model to facilitate consistent access to quality, affordable care. To do so, state and federal leaders must work in partnership to establish a federal framework for quality standards and health information technology that also retains certain key functions and flexibilities that permit state innovation.

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I posted a quick question for the presidential candidates earlier this week, but I wanted to circle back to the Massachusetts question because I think that the Massachusetts health reform effort offers many lessons for the nation.

Bipartisan Reform Is Possible

In Massachusetts, a Republican presidential aspirant was willing to use the word “all” and a very liberal Democratic legislature was willing to accept the word “limit.” Romney accepted a mandate because it is essential to achieving universal coverage using private insurance. And the legislature agreed to pass an appropriations bill, not an entitlement, so that they have to decide each year, as leaders, how much to subsidize and how to exercise stewardship over the health care system. Bipartisan reform is possible if both parties see their core values in the policy outcome. For Democrats, that includes covering all and making sure insurance is affordable for the low income and the sick. For Republicans, this requires that markets and personal choices decide how most health resources get allocated, and there must be sound budgetary constraints. No health reform proposal will be sustainable without strong bipartisan support. Massachusetts remains an inspiration for federal lawmakers and other states seeking reform.

Large-scale Reform Requires Time

New markets have to be organized, and it is important not to have unrealistic expectations about how fast coverage can be expanded. Likewise, Massachusetts also makes clear that if legislation and leaders convey seriousness of intent, many people (roughly half the uninsured by most counts) can be covered within 18 months of enactment. At the same time, rushes to judgment (i.e., pre-mature evaluations of the reform) are unwise and counter-productive. Mid-course corrections are inevitable, and definitive evaluations are not possible in less than 3-5 years from the beginning of implementation.

Make Sure Your Estimates are Accurate and Budget Accordingly

Massachusetts would have been better prepared for the aggregate costs of subsidized coverage had state officials based their uninsured and budget estimates on the most accurate survey of the uninsured that was available at the time of passage. Federal lawmakers should and will take notice of this, thanks to CBO if nothing else.

Enforcing a Mandate Necessitates a Multi-pronged Approach

There is considerable evidence to suggest that an individual mandate to purchase health insurance is enforceable.[i] While Massachusetts took a bold step in requiring all residents to purchase health insurance, it may have erred in relying almost solely on the tax code to enforce the mandate. Others considering an individual mandate might also consider:

Information sharing. Electronic information sharing between insurance agencies, insurance companies, and government entities (e.g., the DMV and schools) would allow insurance administrators to systematically review and monitor enrollment. Increased information sharing would also help identify individuals who are eligible for public or subsidized coverage but not enrolled.

Auto-enrollment/insurance checks at point of service. Individuals who did not sign up for coverage (or, if eligible, enroll in a government program) could be automatically enrolled in a health plan by an insurance administrator. When such individuals sought medical care from a doctor, hospital, or clinic, their insurance status would be checked. If they had not paid their premiums, they would be reported to the appropriate government agency. A payment schedule would be set up, based on the uninsured individual’s income and ability to pay, to catch up on overdue bills. This process would not impede access to care.

Financing Reform on the State Level Alone Is Impossible

Massachusetts is a rich state with relatively few uninsured and it still depended on over $3 billion in federal financing to pay for reform. The claim that individual states can do this alone ignores quite a bit of hard evidence. State and federal partnerships in elements of reform are essential; all health care markets are local, and there is considerable variation in various forms of capacity and in preferences around the nation. But the bulk of the financing, and therefore also the overall analytic structure of reform, must be decided at the federal level to make sure national money is spent consistently with national purposes.

Include a Comprehensive Plan to Control Costs

We are not going to write a blank check for coverage expansion, nor should we. As we have noted, the primary factor behind the higher than expected aggregate cost of the Massachusetts reform plan is the number of individuals who have enrolled in subsidized coverage. This enrollment exceeded “official” estimates of the number of uninsured, which were lower than better surveys and analysts made available at the time. At the same time, the state did not simultaneously institute a comprehensive plan to control health care spending and improve value, and it must, or coverage expansion will not be sustainable. As with financing, controlling health care costs on the state level is difficult because states do not have any say over the immense buying power of Medicare or the decisions of large self-insured employers, who cover most of the lives in our nation. States can take some meaningful steps to control costs. However, those steps will be more effective if they are implemented as part of a comprehensive approach that combines information systems, payment reforms and re-aligned incentives (for providers, patients, and malpractice lawyers), and comparative effectiveness research and dissemination.

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Congress should follow the lead of Massachusetts and recognize the crucial role that prescription drugs play in assuring high-quality care. Officials in the Bay State understood that both brand-name and generic medicines are an important key to improving both our health and our health care finances. Today's pharmaceutical advances help add years to our lives, reduce disability and improve quality of life. Innovative medications also help control health care costs, including the cost of chronic diseases, which account for 75 cents of every health care dollar.

PhRMA's comprehensive "Platform For a Healthy America" reform proposal calls for promoting benefits "that meet patients' needs. Any health reform initiative should recognize the importance of coverage needed for improved early intervention and secondary prevention of chronic illness and to avoid catastrophic expenditures. This includes brand and generic prescription drug coverage."

Examples of the cost-effectiveness of medicines include a recent report from the Centers for Disease Control and Prevention, which found that adults in the United States have reached an average cholesterol level in the ideal range (below 200) for the first time in 50 years, thanks to the use of cholesterol-lowering medicines in the over-60 population. There is also good news in the treatment of heart failure. A study published in the Journal of the American Medical Association (JAMA) found that between 1999 and 2005, rates of death and heart failure dropped by nearly half mainly as a result of the use of cholesterol drugs, blood thinners and angioplasties. Not only are patients lives' improved, but money is saved. A report for the Alzheimer's Association projects that new treatments that delay the onset or slow the progression of Alzheimer's by just five years could save $100 billion annually in Medicare and Medicaid costs by 2020.

To find out more about PhRMA's "Platform For a Healthy America," go to the Web site www.phrma.org.

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Mass is important in this respect State reforms can tell us alot about political consensus and costs and quality. The Clinton Administration encouraged state experimentation in both welfare and childrens health long before the legislation was put together and passed. The State experience educated local and national lawmakers but also federal officials learned alot about policy and implementation. I do not believe Mass can be easily implemented in every state but I might suggest that the next President be willing to let a thousand ideas bloom using waiver authority and spending some money as glue for state proposals. We would learn alot. My best guess is that we would learn we need a national framework that states can't go it alone for very long.

For tonight's presidential debate, I would need something stronger than a magic wand to get the candidates to say just about anything substantive about how they actually would address the most important health policy issues over the next four years, which involve Medicare; particularly in a manner that does not preempt the next round of investment we all need to make in the human capital of current younger, and future, generations of those who will have to pay our mounting bills.

But a more immediate goal would be to have the candidates actually put some of their ambiguous platitudes and amorphous health policy Jell-O into more defined, operational containers. I actually think we know a fair number of details for the McCain proposals, because they have been released publicly (amount of the tax credits, how they would be indexed, who is eligible, parameters for the Guaranteed Access Plan funding, what interstate purchasing might look like -- in terms of similarities to the older Shadegg and Fletcher bills, etc.), although the Medicare P4V reimbursement overhaul needs further expos...

For tonight's presidential debate, I would need something stronger than a magic wand to get the candidates to say just about anything substantive about how they actually would address the most important health policy issues over the next four years, which involve Medicare; particularly in a manner that does not preempt the next round of investment we all need to make in the human capital of current younger, and future, generations of those who will have to pay our mounting bills.

But a more immediate goal would be to have the candidates actually put some of their ambiguous platitudes and amorphous health policy Jell-O into more defined, operational containers. I actually think we know a fair number of details for the McCain proposals, because they have been released publicly (amount of the tax credits, how they would be indexed, who is eligible, parameters for the Guaranteed Access Plan funding, what interstate purchasing might look like -- in terms of similarities to the older Shadegg and Fletcher bills, etc.), although the Medicare P4V reimbursement overhaul needs further exposition.

For the Obama proposals, they still seem either like a random walk till Election Day or efforts to fudge what's actually planned but cannot withstand further upfront scrutiny. So, let's just imagine we could find out just a bit more than the usual moving targets in about six areas tonight:

(1) What's the actual rate for the "pay" tax in the pay-or-play employer mandate? Sheils at Lewin assumed 6 percent. Feldman at HSI network modeled 7 percent. Were they right, or is it all just a guess, for this new pass-thru "tax" on workers whose employers do not offer meaningful coverage? Which size employer is exempt from this tax (e.g. is it just those least likely to offer coverage currently)?

(2) Just where does that "pay" tax revenue go? Only to the public plan -- modeled somewhat similar to a Medicare-for-all-under-65 approach --or to ANY highly regulated plan that participates in the National Health Insurance Exchange? Does the new "pay" revenue just get parked in the Treasury's general inbox, or is it steered directly to the more "public" versions of future insurance options, which reimburse providers less and don't pay any agent commissions or broker fees?

(3) What happens to the tax treatment of employer contributions to their workers' coverage, if the former toss them into the new National Health Insurance Exchange? Do those tax subsidies disappear, or are they added on top of the proposed lower-income subsidies? Which, by the way, are structured, roughly, how? With a sliding scale across individual, or family, income up to how much, and subsidized at what percent of premium? Or with a maximum out-of-pocket cap for one's premiums, regardless of how much more generous and expensive is the coverage that one "purchases?"

(4) Does the definition of "meaningful coverage" for employer mandate purposes, or for NHIE purposes, include coverage that at least some workers can afford or might prefer? Like HSA-eligible coverage, with lower premiums but more cost sharing, or its actuarial equivalent?

(5)Just how might $50 billion over 5 years for Health Information Technology actually get appropriated and spent? Is there a real procurement plan, or is this just a number and a wish?

(6) In providing recommended preventive medical services to everyone receiving meaningful coverage, just how might they actually be delivered, given the limits of our current medical care infrastructure? The last estimate in the American Journal of Public Health (2003) calculated that it would take each primary care doctor in the country over 1770 hours a year just to deliver to their patients all preventive treatments recommended by the U.S. Preventive Services Task Force.

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No one can deny that the Massachusetts experiment has been a success. At the same time, everyone recognizes that the circumstances in the state were and are quite different from those prevailing elsewhere. Massachusetts’ uninsurance rate was relatively low, it had a large uncompensated care program and hundreds of millions in federal waiver money that could be marshaled for the cause and the state’s health sector leadership was both enlightened and dedicated to expanding access in a responsible way.

For advocates of health reform at the national level, the question is, “What does the Bay State’s experience teach us?” Here are the lessons I would emphasize:

• It’s best to leave many critical decisions--like the definitions of a standard benefit package and what constitutes affordable insurance and the subsidy schedule--to experts and those who will implement the reform rather than to have politicians grapple with these divisive issues when they write the legislation.

• Institutions that organize and manage health insurance markets and disseminate comparative data—exchanges, connectors, etc.—can work and don’t need to be big government bureaucracies.

• Individual mandates, when combined with a safety valve that exempts those for whom the burden of insurance costs net of subsidies is too heavy, are politically viable.

• Crowd-out need not be a major problem if reforms are carefully designed and

• Sequencing is important. It may be politically impossible to restrain costs at the same time one significantly expands access.

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I would like to see the candidates focus on expanding health care access by taking steps to reduce the skyrocketing costs of health care services and getting better value from every dollar we spend.

With health care costs going up and up, we cannot pretend we can cure what’s wrong with health care by throwing more money at the problem, or by expanding expensive government-run entitlements.

Instead, we need to take a careful look at ways to reduce the costs of health care, like encouraging use of health information technology, promoting medical malpractice reform, and emphasizing preventative care.

The adoption of cutting-edge information technologies in health care would improve patient care, reduce medical errors, and cut health care costs. In short, it would save lives and money.

Likewise, medical malpractice reform would help control health care costs by keeping malpractice insurance premiums in check. It would reduce injuries and save lives by encouraging early disclosure of preventable health care errors, prompt and fair compensation for injured patients, and careful analysis on patterns of health care errors to prevent future injuries.

We must also do more to prevent disease and manage chronic illness in order to move from a system of sick care to health care. Congress and the states should consider a very successful program in Wyoming, EqualityCare.

EqualityCare, our Medicaid program, provides one-on-one case management for Medicaid participants with a chronic illness, to encourage better self-management of these conditions. This program saved an estimated $13 million in 2006, particularly because it cut down on emergency room visits.

We must also take steps to put valuable information about the costs and quality of health care services into the hands of American patients, so they can become smart health care consumers with the knowledge they need to make the best decisions for themselves and their families. This is critical to help families find the health care plans they need at prices they can afford.

All of these practical reforms are included in a bill I have already introduced, called 10 Steps to Transform Health Care in America (www.enzi.senate.gov/10steps). My 10 Steps bill will reduce costs and expand access so that every American can afford health insurance for themselves and their families.

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Both candidates have said that their proposals will reduce the number of uninsured Americans by making affordable health care more available. Senator Obama plans to offer mixed private-public group insurance with a shared responsibility for financing, while Senator McCain plan to encourage individual market coverage through the use of tax incentives and deregulation. But neither candidate has specified how they define "affordable"--for working families, for small employers. How, specifically, do they plan to cover the most vulnerable Americans? How much would low-income families be expected to spend on their health insurance and out-of-pocket health care expenses as a share of their income? How much would small businesses with 50 or fewer employees be expected to spend on health insurance for their employees?

When state lawmakers work across party lines to tackle the problem of the uninsured, like they did in Massachusetts, our national leaders should take note, and learn from the state’s experience.

Massachusetts’ legislators have proven the importance of bipartisanship by passing health care reforms that have dramatically expanded access to health care in the state. The American Medical Association applauds the state’s efforts to implement initiatives that can serve as a testing ground for federal reforms.

A federal plan, as the Massachusetts plan, should include a system where patients have greater individual control and decision making over their health insurance. Patients, as consumers, should have the ability to shop around for high quality care for themselves and their families.

Helping lower-income individuals purchase health insurance is vital to ensure that health insurance is affordable for every American. The Massachusetts plan accomplishes this through sliding-scale subsidizes, and tax credits or vouchers on a national scale would serve a similar purpose.

The Massachusetts plan has taught us several lessons about the costs of covering the uninsured and the need for more physicians in that state and the nation. The high rates of enrollment into the state’s program were unexpected good news, but also created the financial challenge to pay for care for these additional patients. Massachusetts, like many other states, faces a shortage of physicians to provide care to every patient. As the state works to address this issue, the AMA is working to expand the physician workforce nationally.

The status quo in the U.S. health care system is no longer acceptable for Americans. A federal plan to cover the uninsured must be a public-private partnership: forward-thinking, well-thought out and fiscally responsible. We need an affordable and sustainable solution, and can learn much from the Massachusetts experience.

Without action by Congress and the president, the uninsured problem is likely to get worse very soon. The AMA calls on our legislators and every American to work with us to expand health insurance coverage to all patients: www.voicefortheuninsured.org.

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I would like both candidates to explain if, and why, investing in health reform is and should be part of our economic recovery package in 2009 and beyond. If they do consider health reform a part of our recovery conversation, what would they invest in, and in what order, among: coverage expansion, new insurance market creation, health information technology, payment reform, and comparative effectiveness research.

Both candidates should be asked how they are going to pay for their health plan. There are two new studies out that estimate the cost of these plans between $1 and $6 trillion dollars over ten years depending on various assumptions. Neither candidate has even come close to explaining how he is going to pay for all this. They have been too busy promising to cut everyone’s taxes.

There is analysis of the studies on this and other questions at my blog here: http://www.john-goodman-blog.com/

Massachusetts provides the rest of the country and the federal government a helpful model of health care reform, which is important as the issue of health care reform, despite our economic troubles, remains a top issue for American voters (see the most recent Kaiser Family Foundation Health 08 September survey www.kff.org. and the Partnership to Fight Chronic Disease Oct 15, Bi-Partisan national survey www.fightchronicdisease.org)

As Senator Kennedy wrote, the numbers coming out of Massachusetts speak loudly. Not only have they taken a big chunk out of their uninsured, but they are leading the country in reducing the number of uninsured.
As a result of this initial success, there are some who advocate we adopt the Massachusetts model as our national model. However, we need to look fully at Massachusetts before we take that step. We need to keep in mind a few key facts:

• Massachusetts had a fairly modest uninsured rate when they implemented their plan;

• They had large source of funding through the federal Disproportionate Share Hospital fund and other federal sources;

• Their population is relatively small;

• Their economy is diverse with a strong high tech sector;

• Massachusetts is heavily dominated by one party.

These facts matter as we consider what to do on the national stage. When viewed from the national perspective, the United States has a very diverse population and economy. However, when viewed from the state level we see tremendous differences that cannot be ignored. Some of our states have much higher levels of uninsured than Massachusetts; little funding available; large populations and less diverse economies. What this means is that in order to adopt a national health care reform plan that will work we should not simply assume because something works in Massachusetts that it will work across the country.
Other factors to consider as we assess the Massachusetts plan:

• The cost of providing coverage has been higher than expected;

• While universal coverage was the goal, it has not been achieved, and getting there is proving to be difficult (as with many programs, the take-up rate in the beginning is often good as the easy to enroll and others willing and wanting to participate sign up, then comes the hard part);

Having said that, what we can take away from the Massachusetts plan is that it uses both the private sector and government; it makes choices available to its citizens and it encourages competition.
Massachusetts success encourages us to believe that at the federal level we can craft a plan to help address the challenge of the uninsured.
As we consider this and other reform ideas, I must also remind all of us that simply addressing the uninsured will not solve the challenges facing our health care system. As HHS Secretary I began a campaign to educate the public about the benefits of prevention and of making our system truly a health care system. We must move from a system that waits until we are sick to treat us to a system where we are kept healthy, and when we do get sick, especially with chronic disease such as diabetes, heart disease and asthma, we better manage those diseases to prevent catastrophic illness from occurring. Only in this way through lowering our disease burden will we lower health care costs, improve quality can we make it less difficult to afford expanding coverage for the uninsured.

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In tonight's presidential debate, if you could wave the magic wand and get the candidates to break out of their standard political talking points on health care, what aspect of health care would you like to hear them address? Massachusetts or otherwise...

Can the nation do better than Massachusetts’ historic reform? Most everyone would say, yes. But can we also agree that the nation should do no worse?

Liberals like it because it aims to cover everyone. Conservatives like it because it encourages people to have private insurance instead of relying on welfare. Centrists have been pursuing this political formula for decades: government action without a government takeover.

As with any compromise, people will find fault with it. Yes, it has cost the commonwealth more than expected. And no, it doesn’t do enough to restrain health care costs and make the quality of care more consistent.

Could other states do better? Perhaps, but there’s only one way to find out: let them try. And if they don’t, then the federal government should insist that they do no worse than Massachusetts.

There’s an important precedent for using a federal fallback to state action on health insurance reform: the Health Insurance Portability and Accountability Act. This bipartisan law enacted in 1996 by a Republican Congress and signed into law by President Bill Clinton has a narrow, but significant aim for health insurance regulation. It requires states to prevent pre-existing conditions from being a legal barrier to health insurance for anyone who keeps up their insurance through a job, but then loses it. To implement the federal law, states used a variety of methods, and in a handful of states, federal regulators had to use a fallback approach. The law succeeded in creating a minimum set of health insurance regulations for the entire nation.

Applying a federal fallback approach to the much broader set of reforms under consideration today would, of course be more complicated than under HIPAA. But if we can’t reach a national consensus on something like the Massachusetts model, then we ought to least in ensure that the nation do no worse and use it as a federal fallback plan.

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I am an admittedly biased observer as I am on the Connector Board that is implementing reform. So I will leave most of the bragging about our accomplishments to others. But I do need to respond specifically to comments that the costs of this program are "too high". These comments are completely without context, and in particular mix two different concepts.

The first is the question of whether the state of Massachusetts should be spending its resources to cover the uninsured. Reasonable people can disagree on this question. In this time of fiscal and economic stress, there are many competing priorities for government spending. My personal view is that such times heighten the moral and economic case for universal coverage. But this is a healthy debate for us to be having.

The second is the question of whether, having decided to cover the uninsured, the state has done so in a fiscally responsible fashion. Here there can be no debate. The state expects in FY '09 to spend about $1 billion to cover at least 450,000 individuals - and likely many more as coverage continues to grow. That is a cost of slightly more than $2000 per newly insured person. There is no other proposal with which I am familiar which would even approach this low cost per newly insured. Could we have spent somewhat less through a few different decisions? No doubt. But this is a historically low level of costs for covering uninsured individuals.

One contrast I find helpful is with Medicare Part D. That program is spending about $40 billion a year to increase drug coverage by 10 to 12 million elders in the U.S. So Medicare Part D is spending twice as much per elder to provide drug coverage alone as Massachusetts is spending to provide complete insurance coverage.

Why is the program in Massachusetts covering the uninsured in such an efficient manner? The answer is a simple one: the individual mandate. The typical problem we face in expanding insurance coverage is the "crowd-out" of existing coverage by new government spending; for example, at least two-thirds of those who have signed up for Part D already had prescription drug coverage. But the individual mandate in Massachusetts has created "crowd-in": private coverage has increased, not fallen.

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As a former state cabinet officer in a big state and as a transplanted Californian who still calls Massachusetts home, I have nothing but admiration for what the Bay State has done in putting together its health reform plan. Some are quick to point out that Massachusetts had a more modest uninsured problem than other states and Federal Medicaid money to play with that many other states don't have. True enough. The potential loss of $385 million in federal funds can bring remarkable focus. But viewed from a national perspective, Massachusetts has shown that it is possible to break through the ideological and policy logjam between Left and Right that has prevented action on health reform nationally for so many years. Massachusetts did this by assembling a broad-based coalition and putting together a plan that gave all sides at least something they could like about our fragmented health system; it built on public programs, the employer-based system, and insurance purchased in the non-group market by individuals, and it improved payment levels for providers.

In many ways, Massachusetts’ weaknesses come from its strengths. The plan does not satisfy purists on the Left or the Right, precisely because it represents an amalgam approach; it is not single payer nor is it a pure market approach. The plan does not cover everyone because pragmatic decisions were made to overcome implementation obstacles rather than let the plan blow up. Two percent of the state’s total population and approximately 20 percent of the uninsured population has been exempted from the mandate to have insurance because these people could not afford it.

A few key health policy lessons have also emerged from Massachusetts. One is that subsidized public coverage has been the backbone of the state's success so far in expanding coverage with over two-thirds (68%) of those who were previously uninsured covered through that route. No big surprise here; most of the uninsured are lower income people who simply can't afford health insurance and need a substantial subsidy to get it. The other lesson, mostly overlooked so far, is that the individual mandate has worked pretty well, or at least not caused a political firestorm. This is the first real test of an individual mandate in the nation. No one had any idea whether it would fly or the citizens of the Commonwealth would simply say, "Hell no, I won't go!" So far it is still flying.

As is well known to state officials and outside observers, over the long term the state will need to grapple with how to ensure that the non-subsidized plans offered to residents are affordable and with relieving the considerable pressure paying for the plan puts on the state budget. In addressing the second challenge, it is important to remember that most of the new money in the plan is federal, which is why the recent agreement between the state and the Administration to continue the Federal waiver was so important.

Should comprehensive health reform legislation pass in the Congress in 2009 - a big if with the current economic meltdown - close attention will need to be paid to how it affects the Massachusetts plan.

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Massachusetts has shown the country that there is a practical way to achieve health insurance for all. The state's health reform law builds on the best of our current system, expanding private and public coverage. In fact, half of the improved coverage is due to additional private coverage, including a major increase in employer-based insurance.

As Senator Kennedy notes, health reform has dramatically reduced the numbers of uninsured. According to the latest U.S. Census data, Massachusetts has the lowest rate of uninsured in the country--7.9 percent. A Commonwealth Fund-supported evaluation of the health reform plan found significant gains in access to needed care, particularly among low-income adults. After reform was implemented, low-income adults in Massachusetts were more likely to have a usual source of care, which improves care coordination. The share of low-income adults who had a preventive care visit rose by 6 percentage points.

The evaluation also found that the health reform plan led to decreased out-of-pocket spending and fewer medical bill problems. The share of adults reporting $500 or more in out-of-pocket spending dropped by 4 percentage points, to 57 percent in 2007.

The features of the Massachusetts plan that deserve to be considered in national health reform legislation include:

1. A national health insurance exchange.
2. Expansion of SCHIP to cover all low-income children under 300 percent of poverty.
3. Expansion of Medicaid or SCHIP to adults below 100 percent (or 150 percent) of poverty.
4. Sliding scale premium assistance up to 300 percent of poverty.

Any federal legislation should also include the creation of a national, independent Health Board that has the authority to make decisions on coverage, payment, and other provisions, with broad Congressional guidance.

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Of the 439,000 people in Massachusetts who the state reports are newly insured since the reform law was passed in 2006, at least 56% of them are getting free or heavily-subsidized coverage, jointly funded by the state and by federal matching Medicaid dollars. The federal government recently approved an extension of Massachusetts’ Medicaid waiver, allowing the state to draw nearly $11 billion to fund the $21 billion program over the next three years.

But the state still is facing serious problems with funding, expecting a shortfall even with approval of the federal money. The state legislature recently enacted a $1-per-pack increase in the cigarette tax and has passed legislation calling for “contributions” of an additional $89 million, primarily from hospitals and insurers, to help close the budget gap.

Cost pressures are turning up the heat on the Bay State’s experiment, not only for the state but for individuals and employers.

Businesses with 11 or more employees are required either to make a “fair and reasonable” contribution toward an employee’s health insurance policy or pay an assessment of $295 per employee per year.

When the law was crafted, the proponents estimated that the state would collect $45 million in the first year in penalties from business that didn’t comply. Instead, businesses took action and offered insurance, and as a result, the state collected no fines in the first year and only $7 million this year.

But no good deed goes unpunished, according to Jon B. Hurst, president of the Retailers Association of Massachusetts. Gov. Patrick has been looking for ways to squeeze more money out of employers to fund the plan.

“I think there is going to be a revolt over this,” Hurst said. Employers calculate the reform measures already have cost them an additional $500 million, and the tab is growing.

There are pressures on the provider side as well. Some safety-net hospitals say they still are treating a large number of people without health insurance, but the payments they receive for uncompensated care have been cut as part of the health reform deal.

The shortage of primary-care doctors is making it difficult in some parts of the state for people who are newly insured to find a doctor who will take new patients. Nearly half of internists are not accepting new patients, and waiting time to get an appointment has increased dramatically to nearly two months. One resident complained: “Before, I was uninsured and couldn’t see a doctor. Then I made the sacrifice to buy insurance, but I still can’t find a doctor who will see me. So I still don’t get to see a doctor. It’s just costing me more now.”

Massachusetts had a head start on the rest of the country with a lower-than-average uninsured rate, and with cooperation from businesses, providers, and legislators on both sides of the aisle. Before proceeding with this model, the best advice for the rest of the country would be to see how Massachusetts addresses these and other problems before going down the road of mandates on employers and individuals to provide and pay for increasingly expensive health insurance.

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Massachusetts’ effort to extend health insurance coverage broadly to all its residents is indeed a model for other states and, quite possibly, for the nation. It embodies elements long sought by Democrats and currently advocated by Barrack Obama, including heavy subsidies to help make insurance affordable. It also includes elements now endorsed by conservatives (but also embraced by Obama), such as the Connector.

It is vital that a program to reform one-sixth of the U.S. economy enjoy bi-partisan support–or at least acceptance. And the Massachusetts program, from its initial sponsorship by a Republican governor, enactment by a Democratic legislature, and continued backing by a Democratic governor, shows that such a balanced approach is possible.

The Connector is illustrative. It was developed by an analyst from the Heritage Foundation, a conservative think-tank. It is a means of improving the currently dysfunctional non-group insurance market and enabling individuals to stay in the same insurance plan with employer support even when they change from one job to another. But liberals should understand that a Connector-like organization can evolve. Currently it is helping to improve the non-group private insurance market and is serving as a conduit for conveying subsidies to low-income enrollees. But it can assume increasing responsibilities to regulate the design and pricing of insurance, set standards for service and for payment reform, and become a default vehicle for employers who decide that managing health insurance is not something they want to bother with. A Connector-like organization can serve as mechanism by which our current fragmented payment arrangements gradually evolve into an organized insurance and payment system capable of enforcing genuine systemic reform.

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Both Senator Kennedy and John Goodman are right. Massachusetts was a bold breakthrough in the politics and substance of health policy. And while its centerpiece – the health exchange or “Connector” – is a critically important tool for achieving broad, portable coverage, its heavy benefits mandates will keep costs artificially high. My colleague Ed Haislmaier has looked carefully at these pros and cons

Lessons for national policy? One is that the health exchange idea has enormous potential, and variations on the exchange theme need to be tested to find the right design – and the best design may not be the same everywhere. Another is that state initiatives and experimentation, like Massachusetts, is the right way to find the best insurance infrastructure to reduce uninsurance. Henry Aaron and I have written that national goals can probably only be achieved in practice by blending national action with state experimentation. So Congress needs to make it much easier for states to get partial exemptions from existing laws to try creative approaches.

Such state experiments will not doubt yield mixed results. That’s why boosters should be cautious about declaring victory too soon in Massachusetts. It’s not that long ago that experts were declaring TennCare to be the model for a national solution. But the trial and error of gradual experimentation at the state level is how we will learn to do health insurance reform – not from enacting a sweeping national restructuring and keeping our fingers crossed that we got it right. Senator Obama, especially, should ponder that.

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What Massachusetts did right: It uses "free care" money (DISPRO) to subsidize private insurance. So instead of encouraging people to stay uninsured and rely on the state for free care (old system), people are now encouraged to get private insurance instead.

What Massachusetts did wrong: It specifies the precise package of benefits people must buy. Since health care costs are rising at a rate that is twice as fast as income growth, this means that the insurance people are required to buy will take more and more of family income every year. This cannot be a permanent solution. A better approach is to have a pay-or-play arrangement with no required benefits package.

As Americans look forward to achieving health care for all under soon-to-be-President Barack Obama, we should pay attention to a dramatic success story on health reform from my home state of Massachusetts.

A few numbers speak volumes. Before enactment of the Massachusetts health reform law in 2006, my state had between 550,000 and 650,000 uninsured residents. By March of this year, 439,000 formerly uninsured residents had obtained quality, affordable coverage, and about half obtained it without subsidies.

In August, the U. S. Census Bureau released national and state-by–state data for 2007, showing a decline of 1.3 million in the number of uninsured Americans from 47 million to 45.7 million. That change in coverage reflects the fact that more Americans are obtaining publicly subsidized coverage through state Medicaid and SCHIP programs even though the number of Americans obtaining employer-based coverage still continues to decline.

Massachusetts stands as a bold exception, the one state where private, employer-based coverage actually increased. Of the 1.3 million reduction in the nation’s number of uninsured in 2007, 317,000 of that reduction occurred in Massachusetts. Our state has two percent of the U.S. population but it accounted for 24 percent of the total reduction.

Massachusetts’ political leaders, especially Governor Deval Patrick, Speaker of the House Sal DiMasi, and Senate President Therese Murray deserve great credit for this achievement. Their strong commitment to the 2006 state law and its effective implementation was indispensible to this success – a shining example of the importance of political will in solving one of our nation’s most stubborn problems.

Our former Republican Governor Mitt Romney also deserves credit for his leadership and political courage in signing the state’s health reform law, even though it subjected him to criticism from conservative circles. I also thank the Bush Administration and Health & Human Services Secretary Mike Leavitt in particular for their support of this nationally significant reform by our own state.

Some have criticized the Massachusetts law because costs have exceeded the initial budget. It is true that enrollment in the state program expanded faster than expected in its early stages – but that’s a sign of success, not failure. Costs per enrollee are lower than anticipated and overall costs will moderate in the future. Not only that, the cost to taxpayers of treating uninsured persons in hospital emergency rooms is dropping dramatically.

Our success in Massachusetts should demonstrate to the nation that the ever-festering crisis of the uninsured is solvable. With effective leadership, we can fix this problem, and 2009 can be the year we do it.

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