Three years ago Massachusetts legislators passed health reforms aimed at universalizing coverage and reducing costs. As the national health care debate heats up, many of our legislators are turning to Massachusetts as a possible model for reform.
Massachusetts’ reforms comprise several features: individual mandates, employer mandates, an exchange, and subsidies. Individual mandates require all state citizens to purchase a government-approved policy. Employer mandates require businesses to contribute to their employees’ coverage, fining those that do not meet minimum standards. The exchange creates an artificial, heavily regulated market place. Finally, the government subsidizes the policy for people making up to 300% above the poverty line.
President Obama and other Democrat leaders have proposed a similar package of national reforms in order to reshape our nation’s health care: mandates, an exchange, and a public plan that will likely be subsidized. But before we enact these reforms at the national level, lawmakers should reflect on the results of Massachusetts’s attempts at achieving “cheap, universal” health care.
Three years later, Massachusetts has failed to accomplish its goals. In this briefing, Michael Tanner of the Cato Institute explains the disastrous legacy of its reforms:
Rising insurance premiums:
- In Massachusetts, health insurance premiums rose by 7.4% in 2007 and 8-12% in 2008.
- These cost increases outpaced national averages – 6.1% in 2007 and 4.7% in 2008.
Out of control spending:
- Massachusetts’ health care reforms were projected to cost $1.56 billion.
- Costs for 2009 may now be as high as $1.9 billion – $300 million above original projections.
- These costs lead to new taxes. Already, Deval Patrick has responded to deficits by increasing the state’s cigarette tax by $1 per pack.
- The number of people foregoing care because of difficulty finding a provider has increased from 3.5% to 4.8%.
- Among low-income individuals, the same figure increased even more,from 4.2% to 6.9%.
- Average waiting times for an appointment with an internist have increased from 33 to 52 days.
Failure to universalize coverage:
- Telephone surveys suggest that a minimum of 2.6% of the state’s residents are still uninsured – 167,300 people.
- But phone surveys may be unreliable because they undercount young professional and foreign-language residents, precisely the groups most likely to be uninsured. Other surveys of income tax filers suggest that as many as 5% may remain uninsured.
Health reform may yet cause more damage. If Massachusetts cannot control its spending, it will have to adopt drastic cost-control measures. The state may be forced to limit services to those considered the “highest value.” Alternatively, Massachusetts could enact a “global budget” that would limit the total amount of health care expenditures. Limited spending limits the supply of care. This means rationing, denying potentially life-saving treatment.
Our nation desperately needs health care reform: free-market reforms – not the heavy-handed statist measures adopted in Massachusetts.