Is Massachusetts Health Reform Our Future?
President Obama said earlier this year that the health-care bill that Congress passed three months ago is basically the same as the Massachusetts plan signed into law in 2006. Are they? They both claim the same objectives: Universal Health Care Coverage and Affordable Medical Care For All. The components of the reform acts are certainly similar:
- a mandate requiring everyone to have health insurance or pay a penalty
- a government-designed insurance purchasing exchange
- expanded regulations governing insurance companies
- fines for employers who fail to provide employee health insurance
- subsidies for people with low incomes
- an expansion of Medicaid
Given these marked similarities, a look at how Massachusetts has done with its health care reforms should give us a glimpse into the future of our national plan.
The objectives of the Massachusetts plan have been, at least, partially achieved. The number of individuals with health-insurance coverage in Massachusetts has increased dramatically – by more than 400,000. The mandate to buy insurance and subsidies for those deemed unable to buy insurance brought the number of non-elderly insured to 95.2% by the fall of 2009, up from 87.5 in 2006. In 2006, 17% of working-age adults reported that they skipped care because of high medical costs. Two years later, that number was 11 percent. Among people whose insurance was subsidized because of low income, the proportion skipping care because of cost fell from 27 percent to 17 percent.
However, these results come with serious unforeseen consequences. Today, just four years after the Massachusetts legislation has passed, a typical family of four faces total annual health costs of nearly $13,788, the highest in the nation, according to the Kaiser Family Foundation. Per capita spending on health today in Massachusetts is 27% higher than the national average. Rising insurance rates account for most of these increases. Regulations and strict mandates on what insurance companies must cover as part of the health reform plan have significantly altered insurance company cost structures. In addition, the state-subsidized system doesn’t reimburse doctors and hospitals the full cost of services for low-income individuals. In order to survive, those health providers must charge insurance companies extra to make up the difference. As a result, the average ‘medical loss ratio‘ in Massachusetts for individual policies is 112% – that is, insurers pay $1.12 in benefits for every $1 in premiums. The situation is untenable.
Employers in Massachusetts are feeling the pressure as well. In a study, employer-provided insurance rate growth was tracked between 2004-06 and 2006-08. It found Boston employer insurance rates up 8.1 % more than similar municipalities in the country; and small Massachusetts business insurance rates went up a whopping 14.4% compared with the rest of the country in that time span. As a result today, in order to survive, more small businesses are electing to pay the fine and turn their employees over to state-subsidized care. In response, earlier this year, Gov. Deval Patrick imposed price controls in an attempt to keep those premium rates down. However, the Massachusetts state appeals board reversed these because the insurance carriers proved the rate raises were necessary to cover their increased costs.
In another unforeseen development, doctors are refusing new state-subsidized patients because they can’t maintain their business on what the government pays them for services. As a result, emergency rooms are filling up with patients requiring routine care because they can’t find or wait for a doctor to treat them. Hospitals, especially those in low income areas, are in financial trouble because the reform plan cut all their state subsidies to help pay for the plan. This is a problem that can only get worse.
It’s clear then that although health care across the country is increasing in cost every year, the cost for health care is increasing more in Massachusetts. If, as President Obama said, the health-care bill that Congress passed three months ago is basically the same as the Massachusetts plan, then the future for U.S. health reform isn’t bright. Health care coverage, not necessarily actual health care, may be improved but at an unsustainable cost. “Affordable Medical Care for All” is not to be.