Monday, July 19, 2010

Cautionary Lessons from Massachusetts

Yesterday’s Boston Globe had a detailed story about how “the relentlessly rising cost of health insurance is prompting some small Massachusetts companies to drop coverage for their workers and encourage them to sign up for state-subsidized care instead.”  Brokers report that skyrocketing costs – Massachusetts insurance premiums are the highest in the nation – have prompted businesses to pay the $295 per employee fee to drop coverage, “because they know their people can go to Commonwealth Care” and receive taxpayer-subsidized policies.  Of course, as the article also points out, this trend also significantly increases state costs, as more people move from coverage funded by employers to policies subsidized by taxpayers.  This trend, coupled with the fact that small businesses with fewer than 50 workers are exempt from the federal “fair share” tax (as opposed to Massachusetts’ $295 per employee fee for firms with more than 11 workers), indicates that many employers nationwide could drop coverage shortly after 2014, when the federal overhaul takes full effect.  Such a scenario would likely result in skyrocketing costs to the federal government, representing yet another troubling consequence of Democrats’ nationwide health “reform” – one that was entirely predictable, and predicted prior to passage by Republicans.

In the same vein, Robert Samuelson’s op-ed column in the Post this morning also compares the Massachusetts plan to the national health care law jammed through by Democrats earlier this year.  While the article notes that insurance coverage increased within the Commonwealth, emergency room treatments remain stubbornly high – indicating that expanded coverage has not helped improve health outcomes (perhaps due to high waiting times to see physicians).  Costs continue to rise, resulting in Gov. Patrick’s showdown with insurance carriers over rate increases earlier this year.  And, just as the Medicare actuaries predicted the federal overhaul will raise costs, Samuelson predicts that weak cost containment in the federal overhaul means the Commonwealth’s controversies represent the future of the nation’s health care system at large:

Obama dodged the tough issues in favor of grandstanding.  Imitating Patrick, he’s already denouncing insurers’ rates, as if that would solve the spending problem.  What’s occurring in Massachusetts is the plausible future: Unchecked health spending shapes government priorities and inflates budget deficits and taxes, with small health gains.  And they call this “reform?”