What Can Massachusetts Teach Us About Health Reform?

By guest blogger Robert Field:

Call it "Romneycare".  In 2006, then Massachusetts governor Mitt Romney championed a major overhaul of the state's health care system to expand access.  Three years later, it served as the model for designing "Obamacare".  Experience with the Romney plan offers the best gauge available of what we can expect from national reform.

The Massachusetts plan is built on an individual mandate that requires every state resident to have health insurance or pay a penalty that is added to their income taxes.  (See Kaiser Family Foundation's summary here.)    Employers must cover a "fair share" of their employees or face an assessment of their own.  The state Medicaid program has been expanded to cover more of the poorest residents.  For those without access to employer-sponsored or public coverage, individual policies can be obtained through an exchange known as the "Health Connector" with subsidies for those of low income.  Anyone who has followed recent health reform debates will find all of this strikingly familiar.

How has reform changed health care in Massachusetts?  The most visible effect is that the rate of uninsurance has been cut in half.  (See the Wall Street Journal's Health Blog here.)  Only about 4 percent of state residents now lack health insurance compared to a national rate of 17 percent.  It seems that health reform did succeed in its underlying goal of expanding coverage.

Several elements of the law have driven this increase.  Compliance with the individual mandate has been widespread, although not universal.  In 2008, about 45,000 residents were penalized for going without coverage, however the number has declined each year.  Virtually all employers in the state with ten or more employees now offer coverage, up from 70 percent before the law, and three-quarters of them view the law favorably.  The Health Connector has arranged coverage for almost 200,000 residents so far.

However, the success in expanding coverage has been tempered with some less desirable effects.  As thousands of newly insured residents have sought health care that they previously could not afford, demand has exploded for some kinds of services, particularly primary care.  The result has been longer waits to see physicians in some parts of the state.  Massachusetts now faces a shortage of primary care providers, and the gap will take a long time to fill.

The increased demand has also exerted a predictable effect on costs.  The cost curve in Massachusetts began moving in the wrong direction soon after reform was implemented, and the state's health care spending is expected to double by 2020.  Massachusetts has now entered the second phase of its health reform debate – how to implement serious cost control while maintaining widespread access.

Obamacare includes a few provisions aimed at trying to avoid the downsides of the Massachusetts experience.  These include new incentives for physicians and other providers to enter primary care and numerous experiments in making care more cost-effective.   However, a recent analysis by the nonpartisan Congressional Budget Office predicts that the cost control efforts will have little effect.

The underlying lesson from Romneycare is that you can't get something for nothing.  Expanding access to health care can be achieved, but at a price.   However, this should not us lead away from this essential goal, especially with over 50 million Americans now uninsured and unable to get much more than emergency care.  We should, instead, take heart that broader access can be achieved and begin the serious and possibly painful debate over how to balance that goal with other health care concerns.

Find earlier items by Robert Field here, including this examinaiton of the legal challenges to the Affordable Care Act (Obamacare).

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