Massachusetts Health Care Crisis Driven by Backroom Deals between Hospitals and Insurance Companies

Thanks to an excellent series of articles in the Boston Globe, we now have some clear insight into what is driving the unconscionable increases in health insurance in Massachusetts: Secret agreements between the Partners HealthCare system and insurance companies. And while doctors and their insurance companies are quick to blame medical malpractice cases for exploding health care costs, the real increases can easily be blamed on the profit-driven expansion at Partners and increases in profits for insurance companies.

As the Globe has reported in a series of articles on the power and growth of Partners, the hospital corporation is now so large and powerful that it can freely bully insurance companies. The first up, Blue Cross and Blue Shield, which freely agreed to the demands of Partners in a “gentlemen’s agreement” sealed with a handshake. A handshake? Yup, their lawyers were apparently too nervous to put the deal in writing.

The result: an increase of 70% in Blue Cross insurance rates over the last eight year. Not surpisingly, their profits have soared. If you are like most Massachusetts residents, you have not seen pay increases approaching anything like that. And most hospitals that compete with the Partners affiliates have not seen similar increases, instead suffering blows to their bottom lines.

Using its clout, according to the Globe report, Partners also whipped other insurance companies into line, threatening to stop accepting patients insured by Tufts Health Plan, and others, unless they gave Partners a major boost in reimbursement rates.

Where is the money going? Partners keeps its profit margin low by spending hundreds of millions on expansions. The cost of the new cardiac center at the Brigham and Women’s Hospital was $382 million. A new building is popping up at Massachusetts General Hospital at the price of $686 million.   These numbers all dwarf the costs of medical malpractice claims in Massachusetts. (And whatever happened to the notion that these giant health care corporations were supposed to be “non-profit”?)

What does this mean for Massachusetts consumers? Your health insurance costs will continue to skyrocket, Partners will continue to corner the market for medical care in Massachusetts, their doctors will earn more, but the quality of your care will be no better and community hospitals will be threatened by Partners juggernaut. That’s right, you pay more but get care that is no better than average, and lose health care choices in the bargain.

It is time for our legislators, the Governor, and our Attorney General to crack down on costs of health care that are driving Massachusetts consumers towards bankruptcy.

At Breakstone, White & Gluck we are concerned about health care quality, health care costs, and the truth about medical malpractice in Massachusetts. If you have a malpractice matter you would like to discuss with an experienced attorney, please contact us, toll free, at 800-379-1244.

More Information

A handshake that made medical history
, Boston Globe, December 28, 2008 (third article in series)