Meet Charlie Baker: The Man Destined to Become Our Next Governor
Amid this furious restructuring came a discovery in January 2000 that turned an already bleak picture critical. Baker’s staff uncovered an accounting error of nearly $59 million, which inflated losses to an unmanageable $227 million. Baker had an emergency meeting with Attorney General Tom Reilly. They agreed on a plan under which Harvard Pilgrim was granted a form of bankruptcy protection and placed under state control for five months. The company then remained under state supervision for the next six years. Baker’s critics like to point out the irony in one of Massachusetts’ great free-market warriors requiring state intervention to save his company, but there can be no doubting the competence, creativity, and flexibility Baker displayed during the episode.
“Charlie Baker saved Harvard Pilgrim,” says Paul Levy, president and CEO of Beth Israel Deaconess Medical Center, where Baker once sat on the board. “Charlie arrived at Harvard Pilgrim to find the place was a disaster and was almost out of business, and he had to lead them out of that.”
But there was one challenge for Harvard Pilgrim that even Baker couldn’t overcome. Thanks to the recently deregulated healthcare market, hospitals were free to pursue higher payments for their services, which meant higher costs for Harvard Pilgrim and other insurance companies. In fact, it wasn’t long after healthcare deregulation that Brigham and Women’s and Massachusetts General Hospital founded Partners HealthCare, the largest and most powerful healthcare provider in Massachusetts. Partners began wringing much higher payments out of insurance companies than other providers could get for the same procedures. In 2001 Partners reportedly demanded increases of 25 to 35 percent over four years. Harvard Pilgrim insisted it couldn’t pay that much without raising premiums and taking on even more losses. Partners prevailed. “He was part of the administration under which what had been a highly regulated healthcare system became less so,” says Levy, who is supporting Baker’s run for governor. “Charlie, ironically, ended up being a victim of that at Harvard Pilgrim because they were able to beat him up as a result of their market power and demand higher rates. It was not the way he probably anticipated it, and I think he’d be the first to admit that.”
Perhaps he would, but he certainly isn’t admitting that hospital deregulation was a mistake. “Generally speaking, hindsight’s a great thing, and people can always look back and draw their own conclusions,” Baker says. “But what I would say about this is that as times change, policy needs to change, too….People should think about this as an ongoing narrative in which over time different policy approaches are going to be more appropriate than others based on whatever else is going on.”
AS BAKER’S TOUR BUS prepares to depart Worcester, a campaign worker named Debbie Drinkwater tries to shake the supporters out of their slumber. For the day’s second rally, the campaign is desperate for a better showing. “Make some noise for Charlie!” Drinkwater urges. “Don’t be afraid to interrupt him!” Baker climbs aboard a few minutes later, takes a seat at the front of the bus.