OP-ED

The Massachusetts Mistake

A year after the passage of health care reform, fewer than half of Americans support it, a similar percentage believe that it has already been found unconstitutional or soon will be, health care costs are continuing to rise far faster than the CPI, and the Republican Party has seized on the issue as a sure election winner.

The Obama administration and congressional Democrats, now thoroughly on the defensive, are clearly surprised at the public and political reaction. But should they be? This post—on the reliance on Massachusetts as a model—is the first of three that will look at some of the miscalculations—and sheer bad luck—that have helped to undermine reform. When Governor Mitt Romney signed Massachusetts’ reform bill into law in 2006, it was widely regarded as a bipartisan political triumph, and one that was supported by the public and by most of the state’s insurers and providers. Massachusetts would be the first state to require virtually all legal residents to have coverage (with tax penalties imposed on those not complying), while providing subsidies for lower-income individuals not eligible for government programs, as well as to implement a state-administered brokerage function (the Connector) to allow competitive selection of health plans. By the fall of 2008, as congressional efforts to design national health care reform moved into overdrive with the election of Barack Obama, the Massachusetts legislation was widely regarded as a success. Public reactions were generally positive, the numbers of uninsured had fallen, and there had been no dramatic increase in costs. It was scarcely surprising that the Massachusetts model emerged from the field of competing proposals as the favorite of most Democratic lawmakers.

Unfortunately, the elected officials in Washington DC failed to recognize that Massachusetts was an exceptional state in terms of health care. Even before the state’s reform bill was enacted, the percentage of uninsured was very low. It was also a socially very liberal state, far more likely than most to support reform efforts (in fact, Massachusetts had passed, but then revoked, a slightly different version of health care reform a dozen years earlier). And, of course, the economy was still in its boom period when the new law was passed. Massachusetts had other advantages that would not transfer to national reform. As a small state, with only a small percentage of the population likely to be directly affected by reform, implementation could be much faster—less than a year for most provisions of the state’s new law.

Similarly, interfaces between programs like Medicaid and the state subsidy program could be handled at the state level, without federal involvement. In fact, even some of Massachusetts’ apparent success proved illusory or at least oversold, presaging criticisms that would later be leveled at national reform. Although Massachusetts does now have the highest rate of insured in the country, the goal of universal coverage has not been achieved, with some five percent of the state’s population still without insurance. The Connector has failed to influence costs for either public or private payers, and government program expenditures are creating an ever bigger hole in the state budget. The Connector also has had only marginal success in attracting non-subsidized enrollees (although a revamped small business offering is finally showing some gains). And, of course, along with the rest of the nation, Massachusetts has continued to suffer from the effects of the prolonged recession.

Massachusetts clearly has some value as a prototype for national reform, but the Accountable Care Act might have been very different if its authors had recognized just how small a percentage of the state’s population had gained coverage (and added to overall expenditures), or realized that the state’s efforts had had no discernable cost control effect.

Roger Collier was formerly CEO of a national health care consulting firm. His experience includes the design and implementation of innovative health care programs for HMOs, health insurers, and state and federal agencies.  He is editor of Health Care REFORM UPDATE.

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Matthew HoltJohn R. GrahamPaul Levynate ogdenRichard L. Reece, MD Recent comment authors
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nate ogden
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nate ogden

lol, funny how one’s perspective scews what we view as sarcasm or satire. What do you think of it? I agree almost 100%, I want to go back to a time minus all the government fixes when people could easily afford to pay most if not all of their lifetime medical cost out of pocket. When needing assistance to buy healthcare was the rare exception.

I don’t think you agree with that though. Thanks for the link though, its nice to start the day with some validation, even if it is from Harvard

Margalit Gur-Arie
Guest

Nate, I just saw this video on Greg Mankiw’s blog. You absolutely have got to watch it. It is surreal…… I’m not sure if the guy is serious or if it’s a joke, but I think he is serious. You’ll love it 🙂

http://gregmankiw.blogspot.com/2011/04/jeff-miron-on-healthcare.html

nate ogden
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nate ogden

Most of the private problem is derived from public failure. For 45 years Washington has been trying to “fix” private insurance and they only succeed in making it more expensive and increasing the number of uninsured. If you want to fix insurance remove government

Margalit Gur-Arie
Guest

“The problem in America is not with private insurance”

I disagree. The problem is cost. It affects both private and public. Public is perceived by some to be everybody’s problem and private is perceived to only be the problem of those who can’t afford it. I think both problems are everybody’s problem.

nate ogden
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nate ogden

The problem in America is not with private insurance, its the failed government programs. You want to talk of Conservative snow jobs, what ever that is, but ignore the problem which is the government plans crated by liberals that have been over budget from day 1.

Margalit Gur-Arie
Guest

“Nice cover for your argument that makes no sense. why rant about corporate profits then claim they don’t exist?”

They most certainly do exist in the corporate side of the house. Not so much on the public side, as evidenced by the wailing doomsday statements made by certain folks.

nate ogden
Guest
nate ogden

“I assume your dissent is based on the published MLRs.”

No its based on the renewals they give groups, their filings with State DOIs, and their financial filings. I’m talking strait claims paid and reinsurance, not including any operating cost at all.

“The ones that Medicare and Medicaid cannot have ”

” letting American people suffer a bit longer or die a bit sooner, so corporate profits are maintained at satisfactory levels”

Nice cover for your argument that makes no sense. why rant about corporate profits then claim they don’t exist?

Margalit Gur-Arie
Guest

“Here is an example of that ignorance, name any major carrier Margalit who only spends 75% on claims and related expenses. In rebutting his comment you prove it, thanks.” I assume your dissent is based on the published MLRs. Care to explain what exactly is included in the MLR, and why is it that administrative expenses are in double digits for these carriers? I am pretty sure that as private corporations, they are more efficient than what they would like us to believe. “Seeing as how the two largest and failing programs are Medicare and Medicaid what corporate profits are… Read more »

Matthew Holt
Editor

And tcoyote, John Graham and Paul Levy prove my point…..we ended up with a mish-mash that looked a little like Massachusetts BECAUSE the alternatives of EITHER Enthoven style managed competition (Holland), OR properly done employer mandates with wraparound (Germany) OR Government provided VA-style for all (UK) are politically unavailable to Americans. The “Mass plan-lite” we got in the ACA wasn’t the best we could have had, it was the best we could get! Of course we only JUST got that. And as many people delight in pointing out, apparently much if not most of the US public apparently doesn’t want… Read more »

John R. Graham
Guest

Plus, Romneycare is now upside down in the polls, too (http://tinyurl.com/3m73429). It looks like that by hitching his wagon to MA reform, Obama didn’t increase support for Obamacare, but decreased support for Romneycare!

Paul Levy
Guest

tcoyote has it exactly right on rebutting “Similarly, interfaces between programs like Medicaid and the state subsidy program could be handled at the state level, without federal involvement.” Ditto on many other points. Unlike the federal government, which can only look to itself for funds, a major component of the puzzle for MA was access to federal funds that otherwise would have disappeared. This is what brought in many players. In particular, some of the wealthier hospitals were worried about having to pick up the cost of caring for unsubsidized poor patients. Insurance companies, too, were worried about having to… Read more »

nate ogden
Guest
nate ogden

(Try the German, Dutch or British plan) Would that be the british plan 5 years ago or the one today that the telegraph and mirror blast daily? NHS is falling apart faster then our system. “I’ve said for years and it is bearing out to be true: universal coverage is the first step.” universal coverage at $7000+ per person is not possible. It will never happen. The first step is cost, it is much easier to achieve universal coverage when it only cost $3500 per person. That is the major flaw of liberal reform, they want universal cvoerage no matter… Read more »

Richard L. Reece, MD
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Richard L. Reece, MD

Massachusetts thought it was true blue,
Democrats thought the rest of us were too.
But when Bay Staters turned to Brown,
It was the beginning of a big let down,
The fading of blue in the voting queue.

tcoyote
Guest
tcoyote

Not the case, Roger, that the feds were not involved. They were deeply involved, in the sense that they (Bush White House and CMS) insisted that the reform reallocate some $380 million in disproportionate share funds from hospitals (a handful received most of the subsidy) to individuals through a new state subsidy program as a condition of renewing the state’s waiver. Federal DSH funds were a major piece of the funding puzzle, but were not enough to close the fiscal gap. The state subsequently shafted the same two hospital systems losing the DSH payments by slashing its state Medicaid rates… Read more »

Margalit Gur-Arie
Guest

“But the biggest obstacle of all is still the American people, who do not understand the cost drivers.” Not sure I like the sound of this… American people indeed don’t understand how it is possible for insurers to thrive in a recession, not to mention that American people can’t figure out why they have to pay 25 cents on a dollar to these middle men. Most American people don’t know what defensive medicine is, but they do know that Hospitals get bigger and bigger every day, and their administrators make 7 digit salaries. American people also understand that many (not… Read more »