From the Commonwealth to Obamacare: Reflections on 10+ Years of Expanding Health Insurance Coverage

Interview · October 8, 2019

Jon Kingsdale and Tom Lee head shots

Thomas H. Lee, MD, interviews Jon Kingsdale, PhD, former Executive Director of the Commonwealth Health Insurance Connector.


Tom Lee:  This is Tom Lee for NEJM Catalyst. We’re talking with Jon Kingsdale, who’s played a number of interesting and important roles in health care, but the one that we’re focusing on today was one that he began in 2006 when he was Executive Director of the Commonwealth Health Insurance Connector. We’re having this conversation because we’re just about at the 10-year anniversary of the passage of Obamacare [Affordable Care Act (ACA)] and there are going to be a lot of important reflections on lessons learned over the last decade. But Jon has more than a decade of insights on this model for expanding coverage because [he] played an interesting, important role.

He created the first exchange, which was what followed from the passage of health care reform in Massachusetts. That occurred in 2006, and the exchange, which was developed in Massachusetts under Jon’s leadership, was the model upon which Obamacare was based. Jon is a friend. I like him and respect him, but I admire him because he created something from nothing. There were no exchanges and Jon and his team had to come up with a model that would work. It’s safe to say that if the Massachusetts exchange had not been heading in the direction of viability, it would have a lot harder to get Obamacare passed. You can say with a lot of plausibility that tens of millions of Americans have coverage today because of the work that Jon played a critical role in.

Now, we are going to ask Jon to look back and talk about lessons learned, what went right, what went wrong, what he might have done differently. But first, though, let’s talk a little bit about what was it like starting with a blank slate. How did you go about creating the vision for the first exchange, how it would work, and how you would get it off the ground?

Jon Kingsdale:  Hello, Tom. It’s a pleasure to talk with you again. I want to pick up on something that you were just saying. It’s amazing how much influence Massachusetts did have on federal health care reform — in large part because of the role that Senator [Ted] Kennedy here [in Massachusetts] and in Washington and some of his staff had, particularly John McDonough, who was influential in enacting reform in Massachusetts and nationally, but it’s also instructive as to how parochial American health policy can be.

We, apparently, find much more inspiration in a model of universal or near-universal coverage developed in one small state, Massachusetts, than in all the many models of universal health care financing prevalent throughout the economically developed world and that we have consciously ignored; that Massachusetts could cover most residents, 97%, with a particular approach seemed to have been a powerful stimulator not only to try it nationally, but to copy our model. I’d contrast that with, for example, Taiwan, which in the early 1990s went out to study universal coverage around the world and select the best one for their country. They ended up choosing Canadian-style Medicare for All, and ours was the very opposite approach. If it wasn’t invented in the good old USA, it seems alien and irrelevant.

D.C. looked closely at our model, at our experience, and was constantly asking, “How did you handle this?” or “How did you handle that?” The best thing in terms of getting this going, to return to your question, is that we had an amazing degree of bipartisan consensus here in Massachusetts that, obviously, has not been the national experience. We had, for example, 198 out of 200 state representatives and senators voting for this reform, including then Republican State Senator Scott Brown. It was championed by Republican Governor Mitt Romney in a deep blue state, and it was paid for in half by George Bush’s Centers for Medicare and Medicaid Services.

My job was to ride the wave, basically to use the momentum of overwhelming bipartisan support and not fall off the surfboard. There were a lot of private-sector leaders, essentially much of the local power structure vested in our success, so we mobilized their support and we stoked it and we fed it. I remember one of the first interviews I did when I was just coming on board at the Connector was with an old Democratic warhorse, Phil Johnston, who told me, “Jon, never forget this is a campaign from beginning to start,” and we really did do it that way.

We had meetings, some 320 community meetings around the state to try to explain what this was all about to people, to employers, to brokers, to consumers. We had a huge sponsorship by the best-respected brand in New England, the Red Sox. We strove on every controversial issue to get a unanimous vote of our board. The board ranged the full range of Massachusetts politics, from far left to dead center, and we did manage to get the unanimous votes. We employed survey research every other year, sponsored by Blue Cross Blue Shield of Massachusetts Foundation, to measure the impact on access, quality, and cost of care. There was a PR campaign funded by the private sector, you may recall, Tom, that tried to soften the blow of the most controversial part of this whole reform, which was the requirement that all individuals who could afford it buy insurance. We even had a war room of sorts to counter the inevitable attacks from right-wing radio that was determined to find the flaws in what we were doing. It was a lot of PR, a lot of public communication.

Lee:  Oh, it was a great story. I’m sure you will remember, but the viewers won’t, that we had dinner with our spouses the night you finished your prior job at Tufts Health Plan and before you started this one, and you said you weren’t a religious man, but you wanted to have a brief prayer. What you wanted to pray for was that we wouldn’t have a recession for the next 3 years. Of course, that prayer did not work out, but despite that, the exchange went on and then health care reform passed in this country. What’s your overall assessment of how the exchange model has functioned? What grade, now that you’re an academic, teaching classes, would you give them?

Kingsdale:  I’d give them maybe a B+, and here I’m speaking nationally. Unlike Massachusetts, [what’s] now called marketplaces — that’s the federal designation for what we first learned to call exchanges — they’ve labored under some trying circumstances. First of all, there’s this so-called federal/state partnership, which is almost an oxymoron, even in the Massachusetts Connector. For years, it floundered; I used to introduce myself to audiences outside of Massachusetts by saying that I ran it back when the Connector worked, and I have to give kudos to Governor Charlie Baker, Marylou Sudders, and Louis Gutierrez and his administration for putting it back on track — it’s working nicely now. But the exchanges suffered from a lot of those “glitches” and it was political opposition at both the state and federal level, very much in contrast to the support we had here.

You had 50 different states thinking about starting up all at the same time with limited IT and other resources, and frankly, far less progressive local health plans that didn’t necessarily dig in to help them out. They’ve done okay. The states have done a little better than the federal marketplace. Most states didn’t step up to the line so, surprisingly, [federal] had to run the marketplace in about 35 of the 50 states. But the state marketplaces have continued to grow a little bit despite federal efforts to undercut, whereas the federal marketplace has been shrinking for the last couple of years. So it’s not a perfect record by any means.

On the other hand, the exchanges maybe were oversold as a new, new thing. Insurance is confusing, frankly. It’s a whole lot easier to give it away than sell it, and I’m not sure that the strength of the government is in selling certainly as complicated a product as health insurance is. The enrollment has been somewhat disappointing. There were supposed to be more like about 16 million people enrolled in the exchanges and there are only about 10 million, and not all of those are newly insured, by any means. And then there’s this whole theory of empowering consumers. Consumers are still confused about health insurance. So it’s a mixed record.

Lee:  The concept, at the least the concept that I absorbed as this model was being developed, is that this was our shared attempt to try to preserve the vitality of the private marketplace. This is a Republican ideology, but Republicans aren’t the only ones who believe in the vitality of a private marketplace. We were trying to keep that vitality in health care or even enhance it by having competition among insurers and bringing better products to the market and competition among providers to be participants in those products. At this point, a decade into it, do you feel that ideology is the right one, or do you think something simpler like Medicare for All might get the job done with a lot less muss and fuss?

Kingsdale:  Well, you ask a good question. The way I would frame the question is, what can you do within the ideological and interest-group constraints they are operating with? The market and the private sector are almost guaranteed a role in health care. It’s our biggest business; it’s 18% of gross domestic product. But there’s a lot of “can’t” about the role of markets and health care and insurance because market competition is flawed. We could discuss that for hours, but market competition in health care, particularly, is really flawed, and hope for the exchanges to enhance competition was always going to be an uphill battle.

That said, there was a legitimate hope that fair competition would empower individual consumers to shop in a more competitive insurance market. And direct consumers of insurance are better served; they are better served by an individual market under the ACA than they were in the past. Part of that is due to minimum standards replacing pretty shoddy coverage, although these standards are now under Republican attack again. Part of it is that much more of the premium dollar actually goes to pay for medical care than for marketing and administration. In Massachusetts, that’s 90%; nationally, it’s 80% or more. It used to be about 60%, before the ACA, of individual premiums paid for medical care, which is outrageous. Part of it is due to greater transparency and competition, but even though consumers can compare and shop, we had marketplaces that were plagued with operational failures. They’ve been plagued in the last couple of years with escalating premiums, although that now seems to be beginning to moderate.

That’s really the big problem, continuing cost escalation. And the ACA, frankly, consciously avoided the politically tough battles over cost control. We couldn’t even allow a public option in the marketplaces because that threatened the egregiously high payment levels that providers and drug companies can extract from weak private insurers.

I do think that a robust public option and enhanced subsidies, with those in place, Americans might begin to see the ACA marketplace contribute to cost control. I’d point as an example, again, [to] the Massachusetts Connector, which features several private plans that are essentially a form of public option in drag, if you will. Massachusetts subsidizes a limited number of low-premium plans on the Connector and those plans essentially pay Medicaid reimbursement rates. They are Medicaid MCOs, or Medicaid managed care organizations, offered as private plans on the exchange, and they’re priced well below competing commercial plans. But I don’t want to oversell this. First of all, we’re only talking about 10 million of 300 million insured people in the United States on the exchanges, and second, even a tightly controlled premium is $20,000 per year for a family of four. That’s seems pretty egregious to most middle-income Americans.

We’re probably going to have to find some way to marry competition with an all-payer rate-setting system, like every other civilized country does, if we’re going to solve the conundrum of continuing escalation in health care costs.

Lee:  Let me close with two questions that are completely speculative. The first one is, if you could go back and redo what you did in Massachusetts, is there anything you would have done differently, anything that you realize, oh, that was a mistake in retrospect?

Kingsdale:  Maybe I’m not very self-reflective or self-critical, but I wouldn’t change a lot. We certainly didn’t ratchet down premiums, but Massachusetts did eventually take a real stab at health care costs in 2012 with the passage of something we refer to as Chapter 224, and that has shown some limited impact on cost trends over time. We did it, in part, because we said we’re going to cover everybody, or virtually everybody, which meant that we had to confront the costs. 224 has had some impact. It hasn’t solved it, but we’re not going to be able to tightly control costs, as I said, without some kind of all-payer rate regulation. In Massachusetts, we did a good job with the tools we were given and the political possibilities that we had, and we laid the basis for additional legislation, which has had additional beneficial impact. So I’m not sure there’s a lot I’d change.

Lee:  My last question, since you’ve confessed that you’re not self-reflective or self-critical: What would you prescribe for the rest of the country going forward? That blend, as you were suggesting, of marrying a marketplace with competition with a strong public option?

Kingsdale:  Some combination is inevitable, and I’ve written a little bit about this. There’s a fascination at the moment, in the Democratic party at least, with Medicare for All, but it’s incredibly disruptive to move in any rapid period to displace literally tens of millions of financial arrangements between employers and employees and health plans and doctors and hospitals, etc. Like many other countries, we could get there with better subsidies for low-income people, with negotiation of reimbursement rates on an all-payer basis with a public option, and a strategy for interdigitating competition where we have private-sector players, including much stronger antitrust enforcement — it’s criminal that we’ve let this merger-mania over the last 30 years basically destroy competition in so many areas, which strengthens the case for regulation now — and combine it with a strong governmental role that you need to control cost and to subsidize the remaining cost of coverage.

Lee:  The truth of the matter is, my last question was along the lines of, if you were king and could call all the shots, what would you do? But we could [do] a lot worse than having you as king calling all the shots, and I do think the prescription you lay out is a sound one.

I want to thank you for your time and your willingness to share your experiences and to look back. Your insights are great, and I’m sure we’re going to be tapping into them again. We have a lot to gain from Jon Kingsdale now and in the years to come. Thank you once again, Jon.

Kingsdale:  Thank you, Tom. It’s always a pleasure to talk with you, and I appreciate your asking for my thoughts.

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