Mitt Romney

Sorry, Liberals, RomneyCare Is Still Not Working

The Massachusetts health care overhaul continues to come up short.

|

Liberal pundits are thrilled by a recent (non-peer-reviewed) blog post claiming that RomneyCare—the universal coverage program that Mitt Romney enacted in Massachusetts in 2006—has put a lid on skyrocketing health care costs. But they shouldn't pop the cork yet: The evidence shows neither that the declining costs will last nor that they are the result of the program.

Progressives have long argued that it is not only uncivilized but also uneconomical that America does not offer coverage to all Americans. Uninsured patients impose undue costs because, instead of getting regular checkups and timely care, they rush to emergency rooms or wait until their conditions worsen. It's no coincidence, under this view, that America is the world's biggest health care spender (16 percent of gross domestic product) and also has the most uninsured citizens (45 million). Cover the uninsured and, voila, health care spending will stop soaring. But critics argue that savings from overuse of emergency care could not possibly offset the spending increases that patients with lavish coverage and no incentive for prudence would trigger.

So far, the evidence has been on the critics' side. Indeed, a 2010 study by Stanford University's John Cogan and others in the Forum for Health Economics & Policy found that in the first two years after Romneycare, premiums in Massachusetts in nearly every category shot up above the national average.

But that picture changed in the subsequent two years—at least according to Fred Bauer, a liberal blogger. Premiums in Massachusetts are growing at a slower rate than the national average. For example, average family premiums between 2002 and 2006 grew 5.5 percentage points more than the national average but 3.1 percentage points less between 2006 and 2010. Likewise, average single-coverage premiums grew 3.6 percentage points more before Romneycare and only 1.7 percentage points after.

This prompted The Washington Post's Ezra Klein to jubilate in sentence fragments: "Romneycare is working. Across the board." And Igor Volsky of Think Progress exulted, "The very fact that the law did not meet the doomsday scenario of critics and cause premiums to skyrocket is significant."

Not so fast, guys.

You could claim success if the premium declines actually stemmed from the logic of universal care—that is, from savings generated through more preventive and timely care and less emergency use. And there is evidence of fewer emergency visits. But is that the cause of the declining premiums? No.

The Boston Globe reported a few weeks ago that the main force driving premium drops was people postponing care in a down economy—and that trend is already ending. Indeed, health plans whose "cost trend" (a combination of overall medical claims and the cost of care) increased 6 to 8 percent during the past few years are likely to return to 8 to 10 percent going forward, once again putting upward pressure on premiums.

But the other thing driving premiums down is that after RomneyCare busted the state budget in its first full year with cost overruns of 48 percent, Massachusetts started aggressively looking for cost-control measures. In 2009, Gov. Deval Patrick blessed an effort to nix coverage for 37,400 legal immigrants (and this from a liberal Democratic governor), but the courts outlawed the move as discriminatory last month. The courts also barred Patrick from imposing a uniform rate cap on insurers in 2010, although individual insurers still face price controls, since they need the state board's blessing for any premium increases.

There's more. Massachusetts has implemented something called "global budgeting," a form of managed care under which providers are given a fixed sum per patient per year instead of being paid on a more traditional fee-for-service basis. Since providers keep any money left over in the patient's budget, the hope is that they would offer more cost-effective care.

Although one in five Bay State residents are now on this "global budget," the expected savings haven't quite materialized: Powerful insurers and providers have simply negotiated a bigger per-patient budget. Hence, in 2010—when Bauer observed the biggest premium drop—the Bay State passed a law requiring insurers to offer cheaper, tiered-network plans that compel patients to get care from community hospitals and cheap providers unless they cough up more for better ones.

There are two points worth making about all this.

One: Massachusetts' increasingly complex web of price controls and rationing might curb costs—until patients and providers find ways to beat them, that is. But that has nothing to do with the inherent logic of universal coverage. Indeed, if such measures had been imposed before RomneyCare burdened the state with more demand, the Bay State might have reduced health care costs even more.

Two: Desperate to temper runaway costs, universal coverage enthusiasts are embracing the very things that they abhor about the market. Isn't the whole point of universal coverage to make quality care available to everyone regardless of ability to pay? Yet here they are, mandating "tiered" plans that let rich people buy quality and access while the poor languish in substandard facilities.

The problem with RomneyCare is that after destroying the market's natural incentives for prudence and efficiency, it is trying to recreate them through bureaucratic fiat. This is something that ObamaCare will confront on an even grander scale. The outcome won't be more equitable or better care, just loss of patient and provider control. That's nothing to celebrate.

Reason Foundation Senior Analyst Shikha Dalmia is a a columnist at The Daily, where this column originally appeared.

Advertisement

NEXT: Taking a Shot

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. I live in Mass and have seen first hand how much the prices have actually gone up, and have read the back page news on how many hospitals are suing the state to get paid the promissed “medicare” money that was the bait to get everyone on board with the “plan”.

    Now after several years the truth is seeping out and the Liberals hate it.

    1. Libertarian: the uncompetitive faction of the Republican Party.

      1. Nevermind that it was a Republican politician in this state who enacted *ROMNEY*Care.

    2. I found a great dating bisexual site DATEBI*C’O’M. It is a serious& safe dating site for the bisexual and bi-curious individuals to meet in a friendly and comfortable environment. It hopes that all members can make new friends and establish romantic relationships. I have to say DATEBI*COM the best site I have ever joined so far. They verify all members. Unlike other sites,NO scammers or fake profiles here, and you can meet many rich or mature women as well, including celebs, famous stars.BEST OF LUCK!

      1. This is what Romneycare leads to.

  2. Still unanswered questions:

    ? Is any white person‘s right an individual or collective right?
    ? Is the right to take a negative or positive right?

    “[The Native Americans] didn’t have any rights to the land … Any white person who brought the element of civilization had the right to take over this continent.” ~Ayn Rand, US Military Academy at West Point, March 6, 1974

    1. I should read Rand. Yes, that is what I will do. And donuts! Lots of donuts! MMMmmmmm…donuts!

    2. Is it my positive right to eat my own body weight in mcdonalds apple pies?

      1. Not for long.

    3. Here is your answer, so please do not ask again or state that it is unanswered:

      A white person’s right is an individual right, since person’s here is singular.

      A right to take is a positive right, since it is a right that permits action, not a right that permits or obligates inaction.

      I’m glad that’s settled.

  3. Ron Paul’s wife, Carol Paul Speaks Out, Says Elections Are Being Stolen!!! http://www.examiner.com/conspi…..-confirmed

    IFFC President, Steve Scheffler has been caught selling Iowa’s national delegate seats to the Republican National Convention for up to $20K each! http://www.examiner.com/conspi…..le-sources Scheffler: “I Will Destroy the Iowa Tea Party!”

  4. “No way. He’s the one that farted. Probably doesn’t even know when he does.”

  5. Now do you see why I’ll repeal ObamaCare?

  6. “The evidence shows neither that the declining costs will last nor that they are the result of the program.”

    Talk about spin, even the good news is defined as bad.

    On any given day, more than 87000 safe flights in the US and evidence shows that ain’t going to last either!

    Greater good, baby 🙂

    1. have to admit I had the same question about that quote. Perhaps the answer lies in the broader question: why did premiums go up so sharply. Was passage of Romneycare causal or a correlation? Maybe the Mittster’s plan along was to sign such a bill in order to provide evidence of its long-term unsustainability.

      1. one reason prices went up: the mandated plans (those considered “creditable coverage”) had way better benefits (lower deductible, mandated Rx coverage) than I was able to purchase before. Less ability to self-insure, significantly larger premiums.

        1. clarify: than I was FREE to purchase before.

    2. I would have said the spin would be giving RomneyCare credit for price reductions that it had nothing to do with.

      This is the key:

      The problem with RomneyCare is that after destroying the market’s natural incentives for prudence and efficiency, it is trying to recreate them through bureaucratic fiat.

      We have decades of experience with this general approach (Medicare and Medicaid). It has comprehensively and utterly failed to control costs. So, when someone claims that RomneyCare has broken the code and controls costs by subsituting elaborate, expensive, laggy bureaucracy and regulation, some skepticism is in order.

    3. Well, it follows the same pattern: to it’s supporters, when health costs go up, it has nothing to do with Romney/ObamaCare. When health costs go down, it’s all due to the greatness of Romney/ObamaCare.

      And vice versa for the critics. I favor the same long view as the article. I wouldn’t criticize Romney/ObamaCare because costs temporarily jump. Rather, I critize it because I think it violates people’s rights to avoid health care and insurance. I consider it a side note that there’s no reason to think that guaranteeing everyone universal access to healthcare reduces costs, especially when looking at the history of Medicare and Medicaid.

  7. First, I have an individual BCBS policy in southern New Hampshire and most of the Boston hospitals are in-network. My premiums have increased nearly 100% since Romneycare was enacted. Comparisons in New England vs national averages are tricky. This is a very expensive market with or without Romneycare.

    Second, one of the biggest tweaks to Romneycare was the introduction of limited enrollment windows to prevent free-riding. This was an important change that prevents people with a high deductible plan or no insurance from getting a low deductible plan once get sick.

  8. IMO, it’s best to view healthcare reform laws in the same manner as electricity market restructuring. In both cases, you start with very broken markets. Using market structures wherever possible is the best approach, but that’s not simple to implement and initial attempts are likely to get things wrong (eg California and Enron).

    It probably took a ten-fold increase in regulation to get electricity markets restructured to where they are today. Personally, I think it’s the right approach, but it’s tricky and requires lots of tweaking. The same will be true of healthcare reform. But if we stick with it we can create a pseudo-market system, much like electricity markets, that’s much more functional than the completely broken system we had to start.

  9. Now that sounds like a pretty good plan to me dude, WOw.

    http://www.Go-Anon.tk

  10. There will be big market in coming ten years for offshore medicine. Free of lawyers, ‘crats and the medical environment they make the bang-for-buck ratio is going to be too yawning to ignore.

    Actual health-care cash-in-hand (cash outside political markets) will go offshore, and those wanting to be paid in such for services rendered will follow the money. And it will be a lot of money.

  11. you have missed the brilliance of Romneycare: faced with an overwhelmingly Dem legislature that was going to pass some sort of HCR, the Governor went along with the idea, vetoing any parts he thought necessary, knowing that the only way to demonstrate empirically that govt health does NOT work is for a govt system to be in place. Brilliant.

    Okay, so it was not planned that way, but it makes the result no less noteworthy. On the other hand, I am curious about the “evidence” that says any cost savings are unrelated to the plan. Then, what did cause them?

    1. On the other hand, I am curious about the “evidence” that says any cost savings are unrelated to the plan.

      One possibility: its a strange phenomenon, but when the economy is weak, healthcare demand goes down, regardless of whether people have insurance or not. I can’t figure it out, myself, but there it is.

      Another possibility: reversion to the mean. After growing faster than average, the premiums revert to the mean with a few years of slower growth. Which still means RomneyCare failed; you can get the same results by doing nothing, after all.

  12. As a Mass resident, I’ve noticed that plans deemed “creditable coverage” are including premium-saving changes, like Rx upfront deductibles and more restricted networks, about 2 years behind the market elsewhere. At least choices in plans are increasing, however slowly, but it still sucks.

  13. I’m confused by the Dalmia’s logic at some key points here. If such a big part of the declining premium growth rates was a down economy, then why was Mass’ premium rates growing at LESS than the national average. The down economy is not limited to Mass.
    Also, a tiered system does not negate the intended benefits of requiring everyone to get healthcare. The goal, mostly achieved, is universal healthcare, not necessarily a French system.
    Do not take this to mean I support nationwide individual mandates, IMO they’re morally repugnant. But if we’re talking from a strictly fiscal standpoint, this article kinda fails to highlight the drawbacks to Romneycare.

    1. The down economy is not limited to Mass.

      But maybe Mass had a worse recession than the country as a whole.

      Also, a tiered system does not negate the intended benefits of requiring everyone to get healthcare. The goal, mostly achieved, is universal healthcare,

      We had universal healthcare before. Now we have universal health insurance. Not the same thing.

      What the tiered system shows is that you cannot afford “cadillac” plans for everyone; that if you are going to mandate some minimum level of coverage, that minimum level has to be pretty fucking minimal or your will break the bank.

      But, somehow, this wasn’t sold as “We will barely avoid complete bankruptcy by offering minimal health coverage.”

  14. He had to throw the legal immigrants off, the illegal ones were already exempt from the penalties. And still the big lib romney supports this mess.

    But what happens when the treatment for your illness is “deemed” “experimental, or worse the excepted treatment doesn’t work, but another one does and the doctors have no idea why. Guess you are suposed to take a pill and die.

  15. Uh, Romneycare and Obamacare were both written up by Senator Chaffee. Who is not a liberal.

    It’s amusing to see headlines of Republican policies failing, yet liberals taking the blame somehow.

  16. A little known loophole in the law is that if you declare yourself homeless, then you don’t have to pay the fine.

  17. We can all learn something new everyday. Impressive page you’re having in here. Thanks!

Please to post comments

Comments are closed.