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.
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