RomneyCare appears to be working

So I lived in Massachusetts until last year and was there during the years the health care law changed over. It was controversial at the time, but nothing like the venom that has been unleashed by ObamaCare.

I think one big difference there was that a clearer economic argument was made to justify the shift – it was understood by most everyone, including business people, that a tremendous amount of money from private insurance plans was already being funneled off to pay for uninsured residents.

A second big difference was that the focus was on covering the relatively small percentage of the population that was not covered – I seem to recall it was 8% uncovered. Since MA had fairly extremely high coverage rates already, this seemed fairly achievable.

A related third point is that little was said about the coverage offered by private insurers to the 92% of people who had existing coverage. Maybe there are some basic rules about what should be in private policies, but I don’t believe there was any significant mandating of coverage requirements – that’s not something I saw or read about. The more I learn about ObamaCare, the more I see that it will dramatically reshape private policies – hence the controversy now roiling the Catholic Church. I don’t recall anything like that happening in MA about contraception or anything else.

Another big factor is that the MA constitution allows for the state to mandate costs to its residents and the state had already implemented such mandates before. For example, for as long as I can remember everyone with a car has had to carry auto insurance. This meant that creating an additional obligation for health care insurance was not so ground breaking as at the Federal level where it is unprecedented and of questionable legality (we’ll see what the Supreme Court rules on that in the spring).

Of course, it didn’t hurt any that the state is dominated by Democrats.

My own main concern at the time was that the law did not address another key issue: health care costs. At the time and by design, this was put off for a later date. Everyone who was paying attention understood this: coverage now, cost control later.  For myself, I was personally ok with this and I appreciated that it was explicitly discussed and recognized as being both very important and very difficult. The idea of breaking the problem down into component pieces sounded sensible.

One thing I have hugely disliked about ObamaCare is that it conflates coverage and cost. The coverage piece is arguably relatively easy, but the much harder and less well understood part is the cost control. To bind them together on the scale that ObamaCare did, all we could do was say a prayer and hope a cost control solution became apparent.

Then they went even further than this to mandate coverage standards not just for the new people they were going to insure, but for everyone. I did not appreciate the significance of this part until recently as a result of the Catholic Church brouhaha. Now I realize that they intend to reshape all policies – public and private – to meet some set of standards they are defining as they go. To my knowledge, MA law did nothing like this.

At the time when the ObamaCare bill was still in draft form, I read thru the entire thing (or very large parts of it) and was amazed that everywhere it talked about cost control, it was all pure speculation. They clearly had no concrete idea how cost could be controlled – but trust us, we’ll figure it out. Time after time, they’d reference some study that was done somewhere that showed promise about this thing or that thing. But nothing that was actually proven to work and, certainly, nothing done on any scale in real life (like in a state, for instance). It struck me as massively speculative and premature – and we will likely pay for that as time goes by.

But back to MA: Until now, I had been under the impression that the cost control piece was not working out that great – it is a very, very tough problem, much tougher than the coverage problem. I recall huge battles as the Governor, Deval Patrick, tried to impose cost escalation limits in insurer policies (a power he has that few other Governors possess). This created a firestorm as insurers complained they could not cut costs at the same time that the people they have to pay (i.e., the hospitals and other providers) were increasing them. Sounded like a tough situation.

I haven’t heard much about it lately since I left the state, but today I came across a piece from NPR that apparently aired recently (yesterday?) that updates me on cost control and other elements of the program. The article is here: Health Care In Massachusetts: ‘Abject Failure’ Or Work In Progress?

There were a few interesting points.

First, the Mass health law is not called RomneyCare in Massachusetts. It is only used at the national level, mostly by his fellow presidential candidates to discredit Romney. I never actually thought of that before, but it is certainly true. He was one of many involved with it.

Second and more important, I am most interested to learn that the cost control piece appears to be working – and not just because the state has forced prices down by fiat to the detriment of quality of care. Sounds like Patrick capping the insurance rate hikes was a ‘turning point’ that shook up the entire health care system and got everyone, including care providers, to start reworking their business models.

One promising shift has been to move a lot of patients from a fee-for-service model to a per patient model. One insurer calls it ‘global payment’. I recall this idea being discussed at the time (and it is mentioned in ObamaCare, too), but it hadn’t really been tried or proven to work in any large scale system in the USA.

The various steps seem to be working to moderate Massachusetts’ historically high health care inflation rates. “We’ve got some more work to do here,” the governor says, “but average premium increases were almost 17 percent two years ago. They are less than 2 percent right now.”

They also note that there is talk of holding health care expenses to a certain percentage of expenses. This seems to me a good idea, but I know liberals tend to dislike anything that tries to manage costs like you would in a business. For instance, they seem completely opposed to any notion that Federal government spending should be x% of the GDP. Any such measure, even if done in some sort of band to account for year-to-year variations, would hamstring their efforts to endlessly expand government. So I am surprised, but pleased to hear such a sensible idea is taking hold in MA in regards to health care. Maybe we’ll get Democrats nationwide to think in terms of fiscal responsibility one day.

Lastly, it sounds like the law is spawning lots of benefits in terms of quality of care: more people are going to the doctor, there are fewer emergency room visits, etc. This is goodness.

I have also read that the costs of the program have been higher than expected and that has created some problems. The topic isn’t mentioned here, so I assume it is getting sorted, but I’d be interested to more on that.

Leave a Reply

Your email address will not be published. Required fields are marked *