Tuesday, October 27, 2009

Massachusetts Health Reforms Lead to Higher Costs

With so much emotion flying around the health care debate, it is useful to take a step back and look at the issue empirically. Take, for example, the Massachusetts experiment:

Three years after Massachusetts enacted its sweeping health-reform legislation, rising health costs continue to bedevil the state and threaten to derail reform efforts.

Despite a significant restructuring of the state's health sector and dominance of nonprofit health plans, Massachusetts still has the highest health-insurance costs in the nation, averaging $13,788 for a family, according to the Kaiser Family Foundation.

One of the reasons so many people supported the reform effort in Massachusetts is that they were told universal coverage would lead to lower costs. With universal coverage, Massachusetts politicians argued, as many in Washington do today, people would no longer have to pay the medical bills of those who don't have insurance—the "free riders"—and therefore health-insurance premiums would fall, or at least level off.

If more government control can't lower costs, then what is the point?

With health costs are rising so rapidly, Massachusetts has turned to the federal government to cover its shortfalls:

Massachusetts is a problematic model on which to base federal health-care reform because the state relies heavily on Medicaid. Washington in 2008 agreed to provide the state with $10.6 billion over three years as part of its Medicaid waiver request, which allows the state to subsidize insurance for people with incomes higher than Medicaid rules normally allow.

Unlike Massachusetts, the federal government doesn't have a back-up source of funds to help it pay for national health care. Washington might want to see how Massachusetts does in solving these problems before proceeding with a similar model for the country.

We are all now paying for Massachusetts' mistake. Let's not make this a nation wide problem, because there's no one to bail America out if we fail.

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