The Lesson of Massachusetts

The New York Times has an article up that takes a look at the Massachusetts health care plan and it's problems dealing with medical costs, and underscores something we'll examine further in a report we're releasing tomorow: a plan like the Massachusetts plan — and any any plan that doesn't directly address health care costs — isn't going to work on a national level.

Three years ago, Massachusetts enacted perhaps the boldest state health care experiment in American history, bringing near-universal coverage to the commonwealth with Paul Revere speed.

To make it happen, Democratic lawmakers and Gov. Mitt Romney, a Republican, made an expedient choice, deferring until another day any serious effort to control the state’s runaway health costs.

The day of reckoning has arrived. Threatened first by rapid early enrollment in its new subsidized insurance program and now by a withering economy, the state’s pioneering overhaul has entered a second, more challenging phase.

Thanks to new taxes and fees imposed last year, the health plan’s jittery finances have stabilized for the moment. But government and industry officials agree that the plan will not be sustainable over the next 5 to 10 years if they do not take significant steps to arrest the growth of health spending.

It's a worthwhile read for anyone working on increasing access to health coverage, but especially progressives. It's a perfect opportunity to emphasize that a plan that relies on exclusively on private insurers fails in two major ways:

• overall control of health care costs, and
• guaranteed access to affordable health care.

Nationally, we already spend $2.4 trillion a year on health care — or about $1,928 per person, which is two-and-a-half times as much as any other advanced country — and yet we have a huge "value gap."

The United States is 23 points behind five leading economic competitors: Canada, Japan, Germany, the United Kingdom and France. The five nations cover all their citizens, and though their systems differ, in each country the government plays a much larger role than in the U.S.

The cost-benefit disparity is even wider — 46 points — when the U.S. is compared with emerging competitors: China, Brazil and India.

Those costs will probably hit $2.5 trillion in 2009.

On top of that, we're also paying for more for the uninsured, whose numbers increase with every job lost.

By one estimate, 25 million Americans can't afford to cover the gap between what their insurance covers and their medical bills demand.

...Many people without adequate insurance are also delaying or forgoing medical care until it becomes an absolute emergency, said Dr. David Chin, managing partner of consulting firm PricewaterhouseCooper's Global Healthcare Research Institute.

By law, hospitals have to treat all emergency admissions regardless of insurance.

"If the underinsured can't pay the bills, the hospital either writes it off as bad debt or shifts the cost to its charity care program," said John Pickering, principal and consulting actuary with consulting firm Milliman Inc.

Increasingly, hospitals are shifting costs to "those who can pay," said Wynn Bailey, partner and health care expert with consulting firm AT Kearney. "That's the government, private insurers and the self-insured."

Bailey said hospitals are negotiating higher treatment rates with insurance companies to offset the bad debt.

W

"It's a vicious cycle," said Pickering.

Bailey said he wouldn't be surprised if people with employer-based health insurance have to pay 5% to 10% more for their coverage over the next year or two.

The need for a public health care plan as an important element in health care reform couldn't be clearer. Not only does it guarantee access, but competition from a public plan can help lower the skyrocketing premiums of private insurers, and use bargaining power to reduce costs.

President Obama and Sen. Max Baucus, are proposing national health care reform that includes a public health insurance option to drive competition, rein in costs and improve quality. The news from Massachusetts only underscores the importance of the president's health care reform proposal to the nation's fiscal — as well as physical — health.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future