THIS MONTH MARKS the 20th anniversary of the Massachusetts health care reform law, Chapter 58, which became the model for the federal Affordable Care Act enacted four years later. The goal of the law was to expand access to health insurance coverage for all Massachusetts residents, and it imposed a tax penalty on residents who chose to not purchase health coverage.

While some may want to celebrate Chapter 58, many remain concerned about a health care system that is among the most expensive in the nation. Twenty years of paying for near-universal health coverage is taking a toll on taxpayers, businesses, and families.

As Chapter 58 expanded government coverage and mandated subsidized insurance, it created a system that continues to saddle taxpayers and working families with escalating premiums, hospital bills, record-breaking drug prices, and unnecessary hospital expansions. High-cost Boston academic medical hospitals have acquired smaller hospitals, primary care practices, and even insurers, creating multi-billion-dollar companies that drive up our premiums and erase competition.

In the years following the passage of Chapter 58, the law was not properly updated to integrate with the Affordable Care Act to protect our small businesses, to provide employer and premium payer affordability, or to reflect insurance coverage and costs in the rest of the nation.

State efforts to deal with escalating costs were ineffective. The state created a new state bureaucracy, the Health Policy Commission, which studies the cost problem but has no regulatory enforcement authority. Consolidation trends have been ignored, and new laws passed by the Legislature were often counterproductive, creating even more medical inflation.

As a result, health care in Massachusetts is now unaffordable for families and small businesses, and we have the highest health insurance premiums in the country.

Perhaps the most troubling consolidation trend was primary care acquisitions, which flipped the script from promoting “wellness and prevention” of chronic conditions, to high cost “sick care.”

As chronicled in a 2008 Boston Globe Spotlight series on the years leading up to the passage of Chapter 58, we knew large, costly academic hospitals were acquiring primary care practices as early as 2000 in order to drive more patients and procedures to their facilities, but we did nothing about it. Today, more than 90 percent of medical spending in Massachusetts goes toward hospital-based care, or sick care, while less than 8 percent of dollars go toward primary care or wellness.

The result of the consolidations and spending is a shortage of primary care physicians, and not enough incentive for medical students to choose that vital pathway.

Meanwhile, after mandating that residents purchase health insurance under Chapter 58, the state dramatically expanded the list of what that insurance must cover and look like, while taking away the right of patients to choose different plans, raising premiums to unaffordable levels. This shifts the economic power away from those paying the bills, and empowers the health care industry to raise prices and expand utilization.

No group of consumers has been financially injured more than employees of small businesses. Chapter 58 chose to lower the premiums of individuals buying health care on their own by forcing small businesses and individuals into the same risk pool—the so-called merged market. Part of the original public policy deal that merged the small group and non-group risk pools was regulatory protections through state rate setting to prevent unfair levels of cross-subsidies to higher cost individuals through unaffordable increases in small business premiums.

However, when Congress passed the Affordable Care Act–modeled on the Massachusetts law—the new federal law preempted that Massachusetts rate-setting discretion. That had no effect on the other 49 states, which kept their non-group and small group risk pools separate, but it led to unaffordable small business premiums in Massachusetts.

What’s more, the ACA has assisted individuals with subsidies that small groups are not eligible for, giving those buyers in Massachusetts even lower premiums, funded by both taxpayers and the artificially high premiums of small employers that serve as cross-subsidies.

Further damaging the bottom lines and workforce competitiveness of small businesses was the passage of state health coverage mandates – there are now nearly 60, including seven new mandates passed in the last legislative session. These are only applicable to fully insured health plans — as opposed to self-insured plans, which operate under federal rather than state laws. One consequence of this: The number of lives insured through small group plans has fallen by more than 500,000 since the passage of Chapter 58, with even the smallest of employers choosing to escape to self-insurance and operate under federal law to lower costs and increase subscriber choices.

Current estimates of the costs of the state mandates on fully insured plans range from 17 to 24 percent of the total premium. That’s about $10,000 of mandates on a Massachusetts small business family policy, which typically today exceeds $40,000 per year.

Twenty years after the passage of Chapter 58, we have a system that is increasingly unaffordable for working families. How do we fix it?

Let’s start here:

  1. Consumer Choice and Affordable Products: If Massachusetts insurance laws allowed premium payers and employers to choose insurance products that suited their needs and their budgets, they would save money and force hospitals and health plans to become more efficient and compete based on price and lower premiums. The laws should give premium payers—not insurers, providers, or politicians–the right to choose a product that comes with fewer state mandates, excludes specific high-cost hospitals and providers from networks, and promotes use of lower-cost services and generic drugs. Retailers compete based on price, service, and quality. Health care should be no different.
  1. Bolster Access to Primary Care: Massachusetts laws should allow premium payers to pay their primary care doctor directly through tax-advantaged accounts rather than through their insurance. Through direct primary care and a variety of subscriber and premium payer cafeteria plan choices, consumers can save thousands of dollars, while getting better, higher-value care when they need it. Meanwhile, entrepreneurial family doctors can avoid costly red tape. We also need more independent primary care practices that put the patient and their families — and chronic-condition prevention — first at lower short-term and long-term costs. This means incentivizing primary care practices to thrive as independent organizations, not owned by hospitals or health insurance companies. The state should offer tax credits that enable independent practices to acquire medical and technology equipment. The state can also exempt independent primary care practices from the regulatory determination of need process, which today deters primary care practices from buying equipment like CT scans and X-rays, and prevents competition with hospitals.
  1. End or Reform the Merged Market to Protect Small Employers and Their Workforces: Massachusetts small businesses operate under the most discriminatory insurance risk pool rules of any state in the nation, requiring Main Street employees to pay higher premiums so that individuals can pay lower premiums. Forced into the same risk pool, only in Massachusetts do small businesses pay higher premiums to cross-subsidize premiums for individuals. Most of those very same individuals also get generous taxpayer-funded subsidies through the Connector, which are not accessible to small groups. This is an anti-small business, public policy failure, and needs immediate attention.
  1. Reform the Cost Containment Benchmark: The Health Policy Commission’s spending benchmark is flawed and flaunted by health care providers. Since the benchmark includes Medicare and Medicaid spending, it masks the annual double-digit spending increases that occurred over the last decade in the commercial market. We should lower the benchmark and establish prohibitions–or penalties–for contracts that advance provider reimbursements above the benchmark.

Twenty years after the landmark 2006 health care law, this is the year we must come to terms with what we did right and what we did wrong in setting Massachusetts on this path. Our state’s economic competitiveness for investment, job growth, and affordability depends on it.

Dr. Jeffrey Gold is founder & CEO of Gold Direct Care of Salem. Jon Hurst is president & CEO of the Retailers Association of Massachusetts