Could a Health Plan Executive Actually Become Governor? Yes

Health insurance companies are often seen as the bad guys in politics, but one industry CEO is hoping to change that perception as he makes a move to become governor of Massachusetts. Harvard Pilgrim Health Care CEO Charles Baker last week announced he is running for governor of the Bay State in 2010. His timing was not great with half of Massachusetts vacationing on the Cape and the other half in Maine last week, but his announcement pleased state Republicans.

Baker does not have name recognition now, but political insiders have expected a run for governor and the health industry knows all about him.

With his announcement, Baker, who was state secretary of administration and finance during the William Weld and Paul Cellucci administrations in the 1990s, became the second Republican to enter the race. The only other candidate at this time is Christy Mihos, a Cape Cod businessman, who ran an unsuccessful campaign as an Independent candidate in 2006. Mihos' candidacy three years ago helped sink any chance of interim Gov. Kerry Healey winning the governorship. Mihos hammered away at Healey during debates and the eventual winner, Democrat Deval Patrick, won the election easily.

Patrick rode into office with a game plan quite similar to the way Barack Obama would become president. Both men are dynamic speechmakers who painted themselves as outsiders and gave a recipe of hope and change. While Obama's slogan was "Yes We Can," Patrick led with "Together We Can."

Patrick's speeches inspired the Democratic base and he was seen as an outsider of Beacon Hill politics. Patrick's governance, however, has seen its share of missteps and now the one-term governor is facing not only a Republican challenge but likely an Independent foe—state Treasurer Tim Cahill, who recently announced he was leaving the Democratic party to become an Independent. Political insiders believe that was his first step toward a run for governor in 2010.

Patrick's unpopularity coupled with a possible challenge from a fairly popular third-party challenger points to the possibility of a Republican regaining the Corner Office. The thought of a health insurer CEO as a viable political candidate would be laughable in other parts of the country (imagine the uproar in a place like California). But, in Massachusetts, Baker has a real shot—and it goes beyond the current governor's sagging poll ratings and a third-party challenge.

Baker is a leader who took a sputtering health plan in 1999 and built it into one of the most respected insurers in the nation. In fact, U.S. News & World Report and the National Committee for Quality Assurance named Harvard Pilgrim the top commercial health plan in America last year and J.D. Power and Associates ranked Harvard Pilgrim number one in the New England region this year.

Baker also has a decent shot in 2010 because of the state's healthcare reform plan, which has struggled with costs. The chief executive has been outspoken about the current system in his blog, Let's Talk Health Care, calling attention most recently to the merged market, which blended the individual and small group markets. "As a result of the merger," he said, "the premiums paid by small businesses went up, and individual prices went down."

With rising health costs crowding out other programs and state officials raising premiums and cutting benefits to those in the public programs, Baker's experience could be seen by voters as a reason to go Republican. In his blog, Baker also has promoted the ideas of bundling payments for quality and care coordination, closing loopholes in the state's health reform program, and Medicare payment reform. He has also written about his concerns with a possible public insurance option.

Having Baker as governor would place healthcare reform in the state on a different course. One significant change that a Baker administration might make is fixing a loophole that allows individuals to buy insurance for a short amount of time, receive costly healthcare services, and be considered insured so they don't have to pay a fine.

According to Baker, about 40% of Harvard Pilgrim members who had individual insurance were covered for less than five months between April 2008 to March 2009. He added that those same people cost about $2,400 per month, which is about 600% higher than what is expected.

Baker said those costs are being transferred to small businesses and individuals that are purchasing 12 months of health insurance and it is allowing residents to game the system.

He suggested the state change its policy to remove the loophole. "That would be the simplest and easiest way to protect individuals and small businesses who are playing by the rules—and limit the very costly impact of this wrinkle in health care reform."

Electing Baker would not only help insurers in his state, but could also indirectly affect insurers across the country. Healthcare leaders are closely watching the Massachusetts experiment and any successes there will be tried in other states. With his experience in healthcare and government, plus his outsider role, Massachusetts voters might actually take a chance on a CEO of a health insurance plan.