Health Care Reform in Massachusetts: Still a Bad Idea

Health care reform advocates have taken, in recent weeks, to noting that insurance premiums on the individual market in Massachusetts—the state where a variant on proposed national reforms is already in place—have fallen in recent years. And if you look at data provided by America's Health Insurance Plans taken immediately before the 2007 reforms were enacted, the average premium for an individual plan cost $8,537. Now, according an AHIP report released last month, that price has dropped to $5,143.

But upon closer examination, this isn't quite the point in favor of reform that its advocates seem to think. Here's why: In 1996, Massachusetts passed an earlier set of reforms—community rating and guaranteed issue—that required insurers to take all comers, and to sell plans to individuals at the same price, regardless of their individual health status.

For pretty obvious reasons, those sorts of reforms drive up premium prices tremendously. In New York, for example, similar reforms have driven up individual insurance premiums enough that the Manhattan Institute estimates that premium prices would drop 42 percent if they were repealed. And going back to AHIP's reports, sure enough, New York and Massachusetts are the states with the two most expensive individual market premiums.

So what the 2007 reforms in Massachusetts did was to bring more people into a very expensive pool, adding about 45,000 people to the individual market. That brought the prices down from their initial inflated position, but, it should be noted, they're still the second highest in the nation.

More to the point, given that the individual markets in most of the country are not already regulated by community rating and guaranteed issue provisions, this effect is unlikely to show up across the country. And if enough people choose to pay the penalty and opt out of coverage, it's possible that the effects of reform could actually lead to both premium increases and decreased coverage.

Either way, I suspect that, as in Massachusetts, under reform legislation, the overall average price for premiums will rise significantly and overall levels of health care spending will grow to be even more of a problem than they are now. Indeed, many reform advocates have more or less explicitly admitted this, touting the "buy now, pay later" strategy in which we guarantee coverage now and worry about costs down the road once everyone is locked into the system.

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  • Matthew||

    We have a list of who's most likely to vote against the Senate bill:
    http://tinyurl.com/ybnycp3

  • Tinkerbell||

    Either way, I suspect that, as in Massachusetts, under reform legislation, the overall average price for premiums will rise significantly and overall levels of health care spending will grow to be even more of a problem than they are now.

    Clap, damn you!

  • Loo's Croo||

  • ||

    I've stopped regarding Idiocracy as simply a movie, and now consider it prophecy.

  • NAL||

    So, in paragraph 3, are you saying the reduction in cost was due to the fact that the younger people (who were previously playing the odds) are now forced to buy insurance in MA? That is, the young and healthy are subsidizing the old and sick?

  • ||

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  • Agent Provacateur||

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  • ||

    Yo, college students,
    Please try and include more choices in your political identification questions than a scale that goes from very liberal to very conservative. Or, failing that, try not to pimp your quiz on a libertarian site.

  • Bingo||

    You limit your political spectrum to liberals and conservatives; I'm not going to fill out the survey.

  • ||

    Doesn't the disaster that is Mass healthcare reform pretty much disqualify Romney from being President? I don't understand how he can still be viable candidate when he inflicted a program almost as bad as Obamacare on Mass.

  • MNG||

    Lord I hate Romney, but he is on record as opposing the reform now.

    I know, I know...

  • Michael Ejercito||

    Lord I hate Romney, but he is on record as opposing the reform now.


    He was for it before he was against it.

  • MNG||

    I see he's for it now again.

    Give him a few weeks, that could change...

  • ||

    Romney doesn't seem to beleive in much beyond the fact that it is good to be Mitt Romney. It was obvious during the primaries that Masscare was a stupid program. And that was his big claim to fame. I have never understood why anyone takes him seriously.

  • MNG||

    I'll say this about Romney, I have no doubts about his competence. The guy won statewide election as a Republican in a highly Democratic state, got a lot passed while governor, did a decent job overseeing the clean up of the Olympic mess in Salt Lake, etc. It's just I've never seen a man more devoid of principles, a man who has such little respect for the intelligence of voters...

  • ||

    Apparently you didn't live in chicago in the Dan Rostenkowski era.

  • ||

    Check out the guy living in this big, white house in Washington, DC.....

  • ||

    Really? All the politicians you've ever known, and this is the guy you pick out as dissing the intelligence of the voters?

    Tell me this was hyperbole ...

  • ||

    Billy Clinton and 'lil Bush both seem worse than Romney to me.

  • MJ||

    You did not live through the Clinton Administration?

  • MNG||

    During the primaries the Log Cabin Republicans had a website that had Romney quotes and positions from his governor and Senate runs on one side paired with flip flopped quotes and positions on the same issues for is Prez run. It was the worst and most blatant I've ever seen.

  • MNG||

    Here it is. It's amazing...
    http://online.logcabin.org/mit.....flops.html

  • ||

    Yeah, he was probably my least favorite of all the major GOP presidential candidates in '08 and I based that solely on the Masscare enactment. Positive proof he was a big-government tax and spender.

  • Harry Reid||

    That brought the prices down from their initial inflated position, but, it should be noted, they're still the second highest in the nation.

    FTFY.

  • Episiarch||

    'Cause they're Massholes...e-o-li-oooosss

  • ||

    What is the cost of living in Massachusetts? IIRC, they are pretty high up on the income ladder. Need to compare apples with apples.

    Steve

  • ¢||

    What is the cost of living in Massachusetts?

    Humanity.

  • ||

    Guidos?

  • robc||

    Just for comparison, my individual plan (which is really good, much better than I need) costs me $200 a month, or less than half of the avg MASS plan now.

  • robc||

    steve,

    It isnt twice as expensive as other places.

  • Tom Degan||

    I don't know what kind of health care reform will come out of this session, but I strongly suspect it won't be much. There is, however a silver lining behind this very dark cloud. I am reminded of the Civil Rights Act of 1957. Don't be embarrassed if you've never heard of it, there really isn't a hell of a lot to remember about it; a mere pittance, really - a scrap of leftovers tossed out to "American Negros" (in the parlance of the age) in order to appease them. But it made the passing of the Civil Rights Act of 1964 - the one we remember - all-the-more easier seven years later.

    We'll live to fight another day.

    http://www.tomdegan.blogspot.com

    Tom Degan
    Goshen, NY

  • tarran||

    You mean the same civil rights act that forces people to get a college degree to get a job?

    The same act that discourages employers from taking the risk of hiring people by opening them up to legal scrutiny for their hiring decisions - thus ensuring a higher degree of permanent unemployment?

    Yay.

  • ||

    Seems like political pressure will keep the fine for not carrying insurance relatively low (which is to say, substantially lower than the cost of insurance). So, with guaranteed issue and community rating, you'll always be able to sign up for coverage later at the standard price. Clearly, then, the smart thing to do will be to have no insurance and pay the fine as long as fine + out-of-pocket health costs are less than insurance. When you find yourself needing some expensive care, sign up for insurance. When the expensive care is no longer needed, drop the insurance and go back to just paying the fine.

  • ||

    That strategy is still risky. You could probably pull it off if, say, you get cancer. But if you get in a car accident, you'll get the medical care before you have a chance to sign up for the insurance. As far as I know, coverage for pre-existing conditions doesn't mean the insurance company will pay for care you got before you signed up.

  • ||

    Wouldn't that be covered by auto insurance?

  • Mike M.||

    Although I hardly ever agree with him, to his credit lefty Washington Post columnist has told the plain truth: rationing is the only real way to control long term costs in our out-of-control system.

    Of course he doesn't use the term "death panels", but he doesn't have to; everyone knows the deal.

  • ||

    Senate Majority Leader Harry Reid (D-NV) released a merged version of the Senate comprehensive reform on 11/19/09, which Mike Oliphant whom manages Utah health insurance plans for http://www.benefitsmanager.net/selecthealth.html employers could get behind and support some of it (Patient Protection and Affordable Care Act, or H.R. 3590). This should encourage the private sector health insurance carriers to form INSURANCE EXCHANGES which is what we have done here in Utah. They carry the risk and burden, not the tax payer. See more about this at www.utahhealthplans.info

  • ||

    It's working well in Ohio, we just need to expand this structure to the rest of the U.S. http://cli.gs/z3AtaY/

  • ||

    Hmmmmm, so two states pass toothless insurance "reforms" and the industry responds by punishing them with high premiums as a warning to others who might try to do something real. Then idiots (or shills - you could be one or both) like you pronounce this as the inevitable result of the damn gum'mit interfering with the "free market". This is exactly why the heart of any real reform is the public option!!

  • ||

    "In New York, for example, similar reforms have driven up individual insurance premiums enough that the Manhattan Institute estimates that premium prices would drop 42 percent if they were repealed."

    Peter,

    The Manhattan Institute? You can't be serious.

    Loyal Bushie Paul E. Singer is chairman of the board of the Manhattan Institute.

    The board of trustees includes Mo "AIG" Greenberg and Sick Willie Kristol.

    http://reason.com/blog/2009/11.....HitandRun+(Reason+Online+-+Hit+&+Run+Blog)&utm_content=Google+Reader

    Next time, why not just write "The America's Health Insurance Plans (AHIP) estimates that premium prices would drop 42 percent if they were repealed, death panels would stalk the land, and Amercians would fall under the bin Laden rule of government-backed health insurance"?

    At least you'd be more accurate in your attributions.

  • ||

    Here's the Manhattan Institute Board of Trustees link:

    http://www.manhattan-institute.....ustees.htm

  • ||

    This plan is crap. I have insurance through my second job, I paid it for an entire year and now I am told it wasn't enough. Who are they to tell me how much is enough. I never used it all year. I now face a fine for me and my wife of $1000 each. Thanks Romney you ass

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