Massachusetts Passes Health Care Price Controls. Costs Rise Anyway.


Photo credit: WBUR / Foter.com / CC BY-NC-ND

When Mitt Romney made the case for a state-level health reform as governor of Massachusetts, he promised that insurance would become affordable and "the costs of health care will be reduced." That didn't work out so well. Costs continued to rise, and health insurance premiums in the state were among the nation's most expensive. So last year, Romney's Democratic successor, Deval Patrick, signed into law an ambitious cap on health cost increases. But now it appears that Patrick's price controls may not work very well either.

Earlier this week, the Boston Globe reported that after a brief period of moderating growth "health care prices—and insurance premiums—may soon start accelerating again, exceeding a heralded cost cap set by the state last year." The Globe points to several reasons why this is the case, including a wave of mergers, and some federal rule changes related to ObamaCare. But mostly it just appears that health care prices and utilization are outpacing economic growth.

"Health insurers in Massachusetts estimate the 'medical cost trend' — an industry measure based on the price of services and the volume of doctor visits, procedures, and tests — will rise between 6 and 12 percent this year," according to the Globe. "That would be more than double the state's anticipated rate of economic growth." It is mystifying indeed to see that state-imposed price controls are failing to restrain cost growth.