Then there’s the problem with the safety net hospitals, which did not find themselves in the winner’s circle after health reform passed. Last week, the Boston Medical Center, which serves Boston’s poorest neighborhoods—half of its patients make less than $20,400 per year—filed a suit against the state, which hospital officials call “a cautionary tale for national federal health care reform.” The suit alleges that Massachusetts has underfunded the medical center by not adequately covering the cost of care for patients on Medicaid, Commonwealth Care, and those who remain uninsured. One third of the Center’s patients are on Medicaid, a rate higher than other state hospitals.
Last winter I interviewed the Center’s vice president, Tom Traylor, who told me of the hospital’s reluctance to speak against the law, but said that the time had finally come to do just that. Now, with the suit, the hospital is speaking louder. The hospital is facing a budget gap of $180 million because promised funds did not come its way, and because Medicaid reimbursements and money from the state’s free care fund simultaneously decreased. Instead, Traylor says, some of that money was used to subsidize insurance policies for poor people, in a kind of robbing Peter to pay Paul arrangement. “We’re Peter,” he says. “Basically, it’s shifting money around.”
That sounds like a solution some hospitals floated a few weeks ago for national reform. They proposed cutting payments to hospitals that serve a disproportionate number of poor patients. But since the law passed, as the Boston Medical Center has learned, hospital admission rates have increased, as have outpatient visits—and patients aren’t any less costly to treat. A cautionary tale, indeed!
The turmoil in Massachusetts is reminiscent of Tennessee’s bold attempt to provide health care coverage fifteen years ago. TennCare, which provided coverage to poor people and those who were uninsurable because of preexisting health conditions, eventually collapsed under the weight of rising costs. Four years ago, the state summarily dropped coverage for thousands, rationing prescription drug coverage for those who remained.
Things have gotten so bad in Massachusetts that Philip W. Johnston, chairman of the Blue Cross Blue Shield of Massachusetts Foundation—the birth mother of reform and its chief advocate—has now said that the state needs a dedicated revenue stream to protect its growing child. That’s the same point Traylor made to me months earlier. While Traylor says the law “is not working and needs new revenue,” he also says there’s no appetite for further tax increases. The legislature just hiked the sales tax from 5 percent to 6.25 percent.
The financial mess in Massachusetts shows why Social Security and Medicare have survived over the decades. Both programs rely on dedicated payroll taxes that everyone pays, giving everyone a stake in the program. Sure, they’ve had some funding problems along the way—but these problems have always been fixed, and most neutral experts believe they can be fixed again. FDR knew that payroll taxes were as much a matter of politics as of economics and later proclaimed: “With those taxes in there, no damn politician can ever scrap my Social Security program.” So far, no one has.