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The lessons of Massachusetts

Markos Moulitsas takes a look at Massachusetts and concludes that the individual mandate isn't working well, because Massachusetts's costs have merely improved from "the worst in the nation to merely one of the worst in the nation."

There's a lot to say about this (and I think there’s something to Steve Benen's insight that the arguments folks on the left are having about this bill have gotten comically substantive), but one thing to say about this is that the reason Massachusetts had the most expensive average premiums in the nation was because they had a robust set of insurance regulations and subsidies but no mandate. That gave them a huge adverse selection problem. They added a mandate and, well, the situation, as Markos admits, improved. It's only been a year or two, so it's not like the place has transformed. But the trend line is positive.

Massachusetts, far from being an example that the mandate doesn't work, is an example that health-care reform won't work without it.

That brings us to broader questions of cost, because Massachusetts, as I've argued before, is also an experiment in what happens when you do health-care reform without attempting cost control. Before we dig into that a bit, one caveat: Massachusetts is uncommonly expensive because the state is uncommonly thick with high-tech, brand-name medicine. Think Harvard, or Mass General, or Brigham Young. Kevin MD says a bit on that here. Providers have too much power in the Massachusetts -- and, in particular, the Boston -- market, and these are providers who make their name on using cutting-edge technology and pioneering new methods. This is a huge cost problem in Massachusetts, and it's important to keep it in mind.

But the problem with the Massachusetts reforms wasn't that the cost controls didn't work. It's that they weren't there. The bill was about insurance market reforms. The people behind them were very free in admitting that.

If you go back to my post on the five cost controls in health-care reform, you'll see that Massachusetts didn't have three of them. There was no bundling, no excise tax, no Medicare Commission. And of the dozens of small cost projects, from the Payment Innovation experiments to the creation of a comparative effectiveness process, Massachusetts had none of them. Most of the pages of the health-care reform bill are dedicated to experiments and mechanisms trying to change things that happen in hospitals. Massachusetts was about changing the workings of the insurance market. And though those reforms were effective at creating a better insurance market and cutting the number of uninsured, they were not sufficient.

But they are, in their own way, working. The prudential purchasing has brought costs down in the individual and small group markets where it exists. The individual mandate has forced a focus on cost control far beyond anything operating in any other state. A commission created to control costs recently recommended that the state begin to end fee-for-service medicine -- which is far beyond anything that any other state, or the country, has explicitly begun doing. As most in Massachusetts agreed, there would never have been the impetus to do cost control if the universal plan and the mandate hadn't deposited the problem squarely in the legislature's lap.

The lesson of Massachusetts is, broadly speaking, that you can't cut costs simply through making changes in the insurance market. Health care is expensive because, well, health care is expensive. You have to attack at the source. The Massachusetts reforms didn't do that, but the pressure of the individual mandate is forcing them to reconsider. The Senate health-care bill may not go as far as some would like, but it goes a lot further than anything we've ever done before. For more on that, see Atul Gawande, or this article from Ron Brownstein.

And so we end up in much the place these posts always end up. The Massachusetts reforms covered 97 percent of the population and improved the outlook on cost control. Oh, and they're popular. The Senate reforms do something similar on coverage and more on cost. Is that enough? Probably not. Is it better than the status quo? Absolutely. An improvement on coverage, an improvement on cost control, and an improvement on cost control trends and politics is, well, an improvement.

By Ezra Klein  |  December 18, 2009; 11:54 AM ET
Categories:  Health Reform  
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This is nitpicky, but Brigham Young is in Utah. The hospital system in the Boston area is Brigham and Women's.

Posted by: dirkDP | December 18, 2009 12:04 PM | Report abuse

What you're missing, though, is that the penalty in Massachusetts for failing to obtain health insurance is greater than the paltry penalties in the federal bills (especially in the Senate bill). And the penalty in MA went into effect immediately, not phased in as in the Senate bill.

In MA in 2009 the penalties were equivalent to half the cost of the lowest priced plan (sliding scale based upon income). For 300% of federal poverty level and above, that would translate into a penalty of over $1,000 per year.

The Senate bill would impose penalties of $95 in 2014, $350 in 2015, and $750 in 2016, and would be indexed for inflation thereafter. Most believe that these extremely puny penalties will be completely ineffective.

What happens when you implement guaranteed issue and community rating without an effective individual mandate? Premium costs soar in a death spiral, as all the young and healthy people decide not to obtain insurance unless and until they need it. This happened in Kentucky 15 years ago, so it really shouldn't be any surprise to policymakers.

Posted by: Policywonk14 | December 18, 2009 12:27 PM | Report abuse

Keith Olbermann wins the “What a Maroon!” “What an Ignoranimus” award for the second time! Or is it the third time?

Umm, the Swiss have NO single payer and NO public option and NO Medicare. In fact they have NO government-run HC, period! They have universal coverage and a strong individual mandate and spend six-tenths of what we spend per capita.

Please Mr. Obama, throw Olbermann’s dumb ass in jail!

Posted by: SisterRosetta | December 18, 2009 12:30 PM | Report abuse

They polled 506 people. All from Brookline or Cambridge I'd bet.

Posted by: obrier2 | December 18, 2009 12:30 PM | Report abuse

Ezra, I'd add of the five states that have community ratings -- MA, NJ, NY, VT, and ME -- the Bay State has by far the lowest premiums adjusted for actuarial value. Just check out the prices for a given level of coverage on the Connector ( compared to those on for NJ and NY. Heck, in VT, according to the Blue Cross/Blue Shield of Vermont website, $1,590/mo. gets you a $7,000 deductible, 20% co-insurance, and $19,000 out-of-pocket cap policy.

Check out this column by that guy Jon R. Gabel who you quoted (

Also, keep in mind that only one-third of Bay State residents in employer-provided health insurance face deductibles. That figure is 65 percent nationwide.

Posted by: BradGabel2002 | December 18, 2009 12:40 PM | Report abuse

I hope Ezra addresses this:,-must-be-scaled-back

Ben-Ben isn't just making demands on Abortion. He's looking to gut coverage and funding.

Perhaps this might finally make a deal that Ezra can't sign off on, because coverage and funding are 99.99% of what he cares about in the bill.


Posted by: toshiaki | December 18, 2009 12:48 PM | Report abuse

So health care reform is popular in very liberal Massachusetts. I don't know if other parts of the country will have the same positive reaction to this type of bill. You can't take a small subset like that and extrapolate it nationwide. I can support the current bill (barely), but I'd rather go to reconciliation than give in to Nelson's outrageous demands. After all, Nelson wants to kill the bill. He knows his demands are a poison pill.

Posted by: marvyT | December 18, 2009 1:04 PM | Report abuse

has the individual mandate really been watered down that much already? wow... this is going to be a disaster.

Posted by: spotatl | December 18, 2009 1:07 PM | Report abuse

Markos just should not try to argue policy, he's really bad at it.

And if Nelson is serious about the link toshiaki put up, then it's time to abandon him and convince Olympia Snowe that all the stuff she objected to is now gone and since she's pro-choice she should really prefer the current bill to the one with Nelson's demands. The only thing keeping her from supporting it at this point seems to be some pathological insistence that the vote is coming to soon, but maybe Reid can talk/bribe her out of that stance.

Posted by: Chris_O | December 18, 2009 1:28 PM | Report abuse

Posted by: obrier2 | December 18, 2009 2:11 PM | Report abuse

Brad, that's not at all apples to apples. There are a number of differences in insurance regulations across those states, just saying they are all community rated doesn't tell you that much.

Posted by: ab13 | December 18, 2009 2:16 PM | Report abuse

ab13, I agree with you on that. But even a 64-year-old in NYC with the Empire State's pure community rating pays more for health insurance than the 64-year-old in Boston with the Bay State's 2:1 age rating.

And there is no way a 64-year-old in Boston pays $520/mo. for a $3,500 deductible, 20% co-insurance, and $9,500 out-of-pocket cap policy that you would pay in Burlington. I believe the Green Mountain State also has a pure community rating.

There is some evidence of the individual mandate holding down costs.

Now obviously, it's still a little apples to oranges because the benefit packages, reserving requirements, etc. are not the same in all states.

Posted by: BradGabel2002 | December 18, 2009 2:24 PM | Report abuse

The Brighams of Boston who led to Brigham and Women's Hospital were Peter Bent Brigham & Robert Breck Brigham (known as "the Brigham of the excellent hair." Okay, not really.)

Other than that, excellent post. You are just chillin' with too many Mormons, I expect (not that there's anything wrong with that!)

Posted by: theorajones1 | December 18, 2009 2:34 PM | Report abuse

Brad, it's not just community rating. State mandates also have a huge impact on cost. NY is one of the more onerous states when it comes to mandating certain treatments. See here:

You really can't compare two states like that and assume the individual mandate is the factor. Way too many moving pieces.

Posted by: ab13 | December 18, 2009 3:44 PM | Report abuse

I live in Massachusetts and the problem I have is that I am forced to buy a bad policy my employer offers and I have no recourse because the bad policy meets minimum state requirements and from what I have seen the senate bill does not address this issue. If I am wrong I would love to hear otherwise.

Posted by: jbou891 | December 18, 2009 5:07 PM | Report abuse

Dr. Gawande, though commonly refered to as a surgeon is a writer for the New Yorker with an academic appointment in the School of Public Health. He was trained as a surgeon, but certainly doesn't practice surgery in usual sense of the word. He does give a perspective on why medical care in Boston is so expensive. There are literally thousands of academic doctors working for teaching hospitals in Boston, like Dr. Gawande. These people dress up in the white coats and collect big salaries, but do little, if any, clinical work. These doctors are more interested in writing about medical care than delivering medical care.

Unfortunately, the influence of the Boston hospitals politically is very great, for reasons which are unknown to me. In aggregate these doctors cost the system a fortune. The salaries are not grand by private practice standards, but the clinical work load is so miniscule the total cost for all of these doctors is quite high. Per unit clinical work performed, these doctors like Dr. Gawande are among the highest paid in the world.

The true cost is actualy considerably underestimated because virtually all of the downtown hospitals are staffed 24/7 by residents in training who are on the Federal dime.

The cost problem is a lot simpler than it seems. In enlightened Europe, the standard of care is very low. Unlike in America, no doctor is sued ( for example ) for not performing emergency carotid surgery right out of the ER for an evolving stroke. The expensive sometimes dangerous testing and treatment which goes on in our ERs regardless of ability to pay is not even contemplated in the European ER, and simply not available no matter how much you offer to pay. That our outcome results are not much better than theirs in aggregate only shows that much of our expensive care is ineffective. But you can't eliminate even ineffective care unless you provide iron clad tort protection. Ironically, you can be sued for not performing an un-necessary test or treatment, so long as the plaintiff can find a rent-an-expert who tells the jury that the standard of care demands this ineffective treatment or test which was not performed.

Even weak sham tort reform is not even on the horizon.

If you want medical care to cost less, the standard of care must be drastically lowered, and we must do drastically less for sick patients.

We know from Europe that such an approach would not impact our outcomes to any great degree.

So far, this is not exactly what Americans, especially senior citizens want.

Posted by: ChristopherGeorge | December 18, 2009 7:07 PM | Report abuse

Regarding the cost of medicine in Boston/MA in general:

The Harvard name. Insurers tried to play hard ball with the ginormous Harvard Pilgrim Health System, so Harvard/Pilgrim threatened to pull out of the network and refuse to see any of the insurers patients. Guess what happened? Patients went NUTS, demanding that they have access to the HARVARD name on all the hospital buildings. The insurers quickly cried uncle and gave in, due to the PATIENT demand for the Big H.

Without that patiet demand, Harvard would have had no choice but to back down and accept whatever the insurers offered. Blue Cross/Blue Shield covers 30% of the insurance market in Boston alone. There's no way Harvard could say no to that size of market share. BC/BS has all the leverage in theory, yet it was the patients who shot that to hell with their ridiculous clamoring demands for the HARVARD name.

Boston also illustrates the absurd notion that increasing numbers of doctors will lower costs. Thats simply ridiculous, because healthcare is not a free market and will NEVER be a free market. Boston has the highest number of doctors per capita in the United States next to New York, yet still has the highest healthcare costs. If healthcare was truly a free market, doctors in Boston would be making much less money than doctors in say, rural Idaho and conversely overall healthcare costs should be lower.

Posted by: platon201 | December 19, 2009 7:22 AM | Report abuse

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