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January 25, 2011

Massachusetts: Future Hotbed of Value-Based Benefit Design?

The high cost of public sector health insurance benefits -- the albatross around the neck of many a mayor or town manager around the Commonwealth of Massachsuetts and around the country -- has once again attracted the attention of Governor Deval Patrick.  Late last week, he announced that his SFY 2012 budget proposal will include a 7% cut in local aid (state payments to cities and towns), and that he will be looking for a legislative fix to the high cost of local government health insurance premiums.  He was short on specifics, saying he's learned his lesson about being too directive in such matters, and will wait to see what emerges from the legislative process, but the outlines of what he's looking for are clear:  All municipal employees are to be insured through the state employee health insurance plans offered through the Group Insurance Commission (health insurance buyer for all state employees) unless the municipality comes up with a cheaper plan -- which would still have to satisfy all of the richest-in-the-nation mandated benefits laws of the People's Republic of Massachusetts, subject to an abbreviated negotiation window with unions.

Enacting this idea into law will be no cakewalk, but this year the Governor stands a better chance of seeing this thing through, due mostly to the dire financial circumstances of the Commonwealth and its cities and towns.  (His proposal would also shift municipal retirees to Medicare, at a significant savings to cities and towns.)

This approach dovetails nicely with what I have been telling anyone who will listen in local government around these parts in recent years: value-based health benefit design is where it's at.

I've posted podcast interviews in the past with folks from interesting organizations working on this sort of thing: The Healthcare Performance Management Institute and The Center for Health Value Innovation.  Here's an excerpt from the latter:

No one succeeds in a value based design without two things.  One, an incredible focus on prevention and wellness, an expectation that people will take care of their health.  And the second is consistent and ongoing communication.  We have several instances where companies thought if they announced a value based design during benefits enrollment people would dive on to it.  And within eighteen months they had left the value based design space because it’s a complicated message and it takes a while for people to understand what exactly we want them to do.  Value based design is not just about moving copays to zero for a drug.  It really is about teaching people what part of the highway do we want them to travel on.  How do we help them get to their destination, healthier, higher performing, more productive and that’s what the levers are about.  Think of them as cones on the highway, and as we fix the highway or encounter new bumps we move the cones around to get the cars to move a different direction - that’s exactly what a lever does.

Now here's a radical thought: I believe that unions representing municipal employees should not be waiting for movement on Beacon Hill (or opposing it), and should not be focused on holding onto the classic health benefits of yesteryear.  Instead, unions should be insisting that municipalities start making the move to value based design, and sharing in the design efforts so that disease management and incentives may be tailored to best suit the needs of their members in addressing chronic disease and wellness, which will have the greatest impact, both in health status and in financial savings.  A change in mindset to one that embraces personal engagement in the management of one's own health promises to deliver significant benefits along both parameters.  It's a win-win, and municipalities and their employees shouldn't require a nudge from the legislature to help themselves.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

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