RomneyCare: More Price Controls On the Way?


The Massachusetts health care overhaul signed into law by Mitt Romney is similar to the federal plan signed into law two years ago by President Obama in all the most important ways: Both laws seek to increase health insurance coverage through a combination of insurance subsidies and expanded Medicaid enrollment; both laws contain an individual mandate to purchase coverage; both laws rely on state-run health insurance exchanges to regulate insurers and the types of plans they offer. 

But there are some differences. One notable difference is that the federal overhaul merely gives the Health and Human Services Secretary the power to label rate increases "excessive" and publicize them as such. It's the power to shame insurers rather than to explicitly block or cap their rates. 

Massachusetts, on the other hand, retains the power to reject health insurance rate increases outright should state officials deem the increases excessive. This power became a major issue in 2010 when the state rejected about 90 percent of proposed increases in the individual insurance market, effectively shutting down the market for a brief period of time. 

So as it stands, the Massachusetts health system mandates the purchase of insurance, subsidizes individual insurance buyers, regulates the plans that that insurers can sell, and sweeps low-income individuals into Medicaid, a government-managed plan.

But apparently this isn't enough for at least one state official, Massachusetts Attorney General Martha Coakley. According to The Boston Globe, Coakley is circulating draft legislation aiming to control the prices that insurers pay to health providers: "Providers and insurers would have to provide detailed price information to patients before they undergo a test or treatment, and the Division of Insurance and Department of Public Health would have new authority to limit the prices and market power of providers under Coakley's proposal." 

The legislation is still in draft form; Coakley may not get the power she's asking for. But it is notable simply that she wants it, just as it is notable that Democrats initially wanted to give the federal government the power to reject rate hikes rather than merely publicize them. Given the similarities between the two laws, Massachusetts is the best real-world model for what we can expect from the national law. If Coakley is asking for this power now, it's a good prediction that that federal authorities will eventually request similar authority.

Meanwhile, it puts the law's defenders in a bit of an awkward place. Defenders of the Massachusetts health care overhaul continue to insist that it is working, despite rising insurance costs and an unsustainable health spending burden, but also that the system requires still more regulation and oversight. Any remaining problems, apparently, are caused by the few parts of the system they don't yet control.