A [Massachusetts] official may have gone off-script last week, but what he had to say is an important contribution to the state’s ongoing debate over reining in health care costs.
Terry Dougherty, director of MassHealth, the state’s Medicaid program, was addressing a budget hearing in Boston Friday, State House News Service reports. He noted a little-known fact that runs counter to the widespread assumption that government is more wasteful than the private sector.
MassHealth, which insures nearly 1.3 million Massachusetts residents, spends just 1.5 percent of its $10 billion budget on administration, Dougherty said, while private insurers spend about 9.5 percent of their revenue on administration.
“I like the market, but the more and more I stay in it, the more and more I think that maybe a single payer would be better,” Dougherty said. Under a single payer system – like MassHealth or Medicare – the government pays health care providers directly, instead of an insurance company.
Unlike private insurance companies, Dougherty said later, at MassHealth “We don’t build big buildings. We don’t have high salaries. We don’t have a lot of marketing, which makes, to some extent, some of the things that we do easier and less costly than some things that happen in the marketplace. Overall, my point is, we have individuals who work in state government in MassHealth … who are just as smart, just as tactile, just as creative as people who work in the private sector, but they work for a lot less money.”
Dougherty’s boss, Secretary of Health and Human Services JudyAnn Bigby, disavowed his comments. When the state adopted health care reform back in 2006, the decision was made to keep private insurers at the heart of the health care system, subsiding residents qualified to purchase the private insurers’ coverage. Gov. Deval Patrick and legislative leaders sound determined to tackle the issue of costs without a reform, like single payer, that could put health insurance companies out of business.
But Dougherty’s comments deserve to be heard. It sounds strange, but one way to rein in health costs is to get the private sector to become as efficient as the government.