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Importance of Health Care Should Prompt Massachusetts to Lead Reform

Posted on March 15, 2012

The Boston Foundation’s 2012 Boston Indicators report, City of Ideas: Reinventing Boston’s Innovation Economy, released Wednesday morning, is at once exhilarating and sobering. The metropolitan area, which accounts for most of the state’s population and economy, is maintaining its position as a global leader in innovation, and this is reflected in relatively strong economic performance. But the challenges are many, including socioeconomic inequities, a persistent and growing jobs/skills mismatch, and above all health care costs.

Health care costsAIM agrees that the cost of health care represents “the biggest bubble” and the greatest threat to our economic future. (I called for holding future increases below economic growth in Tuesday’s blog.) The Boston Foundation report highlights the impact of health-care costs on public sector budgets – crowding out education, transportation and other needed investments.

But the effect of health costs on market-oriented sectors is at least equally dire. Retiree health benefit burdens are crippling “legacy” companies and institutions; costs for current employees burden every employer; and 97 percent of AIM members say that health costs are a significant deterrent to hiring, especially of lower-skilled and entry-level workers.

“City of Ideas” proposes that “the new paradigm” for innovation is local solutions for broader problems. The health cost crisis is, we believe, amenable to this approach, to a greater extent than the report explicitly proposes. While health care is clearly a national crisis, Boston and Massachusetts have a powerful incentive to seek solutions because of the extent of our exposure. Health is our largest employment sector even when limited to care delivery and research organizations, but beyond that we have a wide range of health-related manufacturing and service industries.

Change is coming, ultimately at the national level. Because the stakes are so high for us – and because our structures and circumstances are to some degree unique – we must lead the way to change. We cannot protect our interests by standing pat.  What we need in the health care cost sphere is what we achieved on access: policy innovation produced locally and “exported” nationally.

Of course the specific interests of health care providers, insurers, employers and others diverge and conflict.  That’s exactly why we can succeed. Together with a strong shared interest in reform, we have the balance of differing interests to work through the issues, and the intellectual resources to do it. And we have these in one compact area where reality trumps abstractions, and debate can bring us to agreement. In 2006, we came together with a sense of shared responsibility and found a solution to access. We must do the same for cost control.