Massachusetts Disaster?

A comment/complaint I often read is that health care reform won't work because the reform Massachusetts implemented in 2006/7 is a failure. The complaint usually continues that per capita health care costs in Massachusetts are now the most expensive in the Nation, so trying Massachusetts-style reform on a nationwide scale would be a disaster. This raises two questions:

1. Is the Massachusetts reform a good analogy for the Senate (or House) bill?
2. What has actually happened in Massachusetts?

Senate Reform and Massachusetts Reform

Is the Senate reform bill similar to the Massachusetts reform? Yes. The Senate bill is essentially the a refinement of the Massachusetts reform, but with added cost controls (this also applies to the House bill). Common, basic features are:

• Insurance market reforms
• Establish minimum requirements (a floor) for benefits
• Guaranteed issue (no pre-existing conditions or recision)
• Combines the individual and small group risk pools
• Individual mandate
• Include most of the population in the risk pool
• Income-based subsidies to help people purchase insurance
• Penalties for failure to purchase insurance with exemptions for financial hardship
• Create a marketplace where individuals and employers can compare plans and purchase coverage
• Pay or play for employers
• Require firms to offer employees health care coverage or pay a tax
• Exempts small employers
• Subsidies for small employers
• Expand availability of Medicaid.

The Massachusetts plan did not include any cost reduction steps, while the Senate bill includes trial measures such as bundled payments and accountable care organizations aimed at reducing cost growth. In addition, the Massachusetts plan did not address Medicare which is a Federal program.

What Did Reform Do In Massachusetts?

Do the people of Massachusetts like the Massachusetts reform? Yes.

Prior to enacting the reform measures, public opinion was 61% in favor of reform. After experiencing life with the reforms, that favorability grew to 69%. It was not just patients that like the results, 72% of primary care physicians and 70% of specialists also like the reforms.

Sources:

http://www.hsph.harvard.edu/news/press-releases/2008-releases/hsph-bcbs-poll-strong-support-for-ma-health-reform-law.html

http://healthcarereform.nejm.org/?p=2133

Did reform improve the availability of health care? Yes.

The percentage of the population uninsured dropped from 6.4% in 2006 to 2.6% in 2008 (the lowest rate in the country). The percentage of people who cited cost as an optical to receiving care also declined:

• For the uninsured, it declined from 86% in 2007 to 64% in 2008
• For those with insurance it declined from 37% in 2007 to 24% in 2008.

During that same time period, the percentage of firms offering health insurance to their employees increased as well:

• For firms with 3+ employees it increased from 73% to 79%
• For firms with 11-50 employees it increased from 88% to 92%

Source: http://www.mass.gov/Eeohhs2/docs/dhcfp/r/pubs/09/key_indicators_nov_09.pdf

Did reform make insurance more or less expensive? It depends.

The Association of Health Insurance Plans (AHIP), an industry trade group, periodically surveys it's members and estimates average premiums. The latest two surveys for individual policies were taken in 2006/7 and again in 2009: before Massachusetts reforms were in place and after the reforms were in place. During that time period, according to AHIP:

• The average premium for individual family coverage increased 9% Nationally but decreased 14% in Massachusetts
• The average premium for individual single coverage increased 14% Nationally but decreased 40% in Massachusetts

Prior to the reforms, budget analysts estimated an overall premium decrease of 24% in the non-group market.

• The surveys for small group insurance covered different (earlier) time periods with the latest survey taken before Massachusetts reforms were fully implemented

Source: http://www.ahipresearch.org/

How did reform impact the State's finances? Both positively and negatively.

State health care costs are around $400M higher than anticipated:

• Individuals participation grew faster than expected (around 220,000 signed up compared to the 140,000 that were expected)
• The recession cut State revenues.

On the other hand, uncompensated care payments (from the State to hospitals and community clinics) declined dramatically:

• The number of claims dropped by 38%
• The amount paid by the state dropped 41%.

Source: http://www.mass.gov/Eeohhs2/docs/dhcfp/r/pubs/09/key_indicators_nov_09.pdf

Are health care costs in Massachusetts more expensive than anywhere else? Probably.

At best, this is a logical (and reasonable) assumption, but the fact is that no one knows. The most recent state-level data on health care costs is for 2004. At that time, per capita costs in Massachusetts were the highest in the Nation (nearly 27% higher than the National average). The 2006/7 reform did not address health care costs, nor was there anything else the State did that would reduce costs. So it is probably reasonable to assume that Massachusetts remains the highest cost state in the Union. It is not reasonable, however, to assume that reform is a driver of that cost.