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Romney Care, cont'd

romneyfistpump.JPG

I'm a few days late -- at least in Internet time -- in responding to Michael Cannon's post on the Massachusetts health-care system, so apologies for that. Let's start with an important technical question: I said that "the [cost] increase in Massachusetts has been 21 percent, while the increase in the rest of the country has been 21 percent," and Cannon says the "premiums rose faster [in Massachusetts] post-RomneyCare than anywhere else; 21-46 percent faster than the national average." So who's right?

I think I am (though I would think that, wouldn't I?). Cannon doesn't mention this, but the data he's using comes from the Commonwealth Fund, and it covers 2003 to 2008. The problem is that Romney Care was signed into law in 2006. What you'd really want is data covering 2007 to 2009. Luckily, we have some.

First, look at the official Massachusetts data on the cost of the median employer's family policy (slide 24, and pdf). Between 2003 and 2005, costs rise by 16 percent. Between 2005 and 2007, it's 14 percent. Between 2007 and 2009 -- the Romney Care years -- the growth is 10.1 percent. So there's a clear slowdown. And don't forget that a lot of people got covered and the plan remained very popular.

To compare it with the national situation, we can look at the Kaiser Family Foundation's survey of mean -- not median, so these aren't directly comparable -- employer premiums. Check page 32 for the data. Growth rate from 2007 to 2009? About 10.4 percent. The mean-to-median thing makes the two less than comparable, but it certainly looks like the introduction of Romney Care marked a cost slowdown in Massachusetts and potentially slower growth than in the rest of the nation.

Now, on to other matters. Cannon criticizes me for saying that the Massachusetts plan was never built to control costs by noting that Mitt Romney said otherwise. Luckily, I'm not bound by Romney's political rhetoric and can just look at the policy instead. And the plan just doesn't have serious cost controls in it. If Romney exaggerated the virtues of his plan, well, that's his problem, not mine.

This has gone on long enough, so let me just respond to Cannon's overarching conceptual point. He's making an argument about the cost of different health-care plans underneath the headline "RomneyCare Advocates: We Swear, This Time Centralized Planning Will Work." But even a cursory read of the evidence would show that whatever the drawbacks of central planning, it covers people at an extremely low cost.

healthcarecostscommon.jpg

Romney Care's cost problem is a result of pasting a coverage-oriented quick fix atop our insane health-care system. Compare its costs to the British system, the French system, the German system, or any other system, and whatever your conclusions, you won't walk away unimpressed by the ability of centralized systems to cover whole populations for much less money than we spend.

Photo credit: By Robert Giroux/Getty Images

By Ezra Klein  |  July 26, 2010; 5:20 PM ET
Categories:  Health Reform  
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Comments

The problem with this post is that many of these systems are not really centrally planned at all. For instance Canada's system is run by the individual provinces and paid for via provincial sales / property and income taxes. If one objects to the Federal central planning of ObamaCare they are also being ridiculous though, there's no way a Federal minimum coverage and mandate is akin to "central planning".

Posted by: sa_waters | July 26, 2010 5:33 PM | Report abuse

great post.

All politics aside, I think if moderates looked at the healthcare bill without all of the distortion of the left and right, they'd see that it has a good balance between private sector innovation and public sector regulation. It doesn't replace private hospitals and insurers with a bloated bureaucracy, but rather attempts to increase competition with the insurance exchanges. This kind of system has already been shown to work brilliantly in germany and switzerland. In 20 years, the conservatives will look back on this program and take some of the credit once it's in place, as they rightly should since they were the driving force behind some of the core principles (1993 counter to the clinton proposal, nixon's proposal, and romneycare).

Posted by: SnowleopardNZ | July 26, 2010 5:56 PM | Report abuse

A good companion piece is Sarah Lyall's report entitled “Britain Plans to Decentralize National Health Care”, which appeared in the July 24, 2010, edition of the New York Times. It's available at URL http://www.nytimes.com/2010/07/25/world/europe/25britain.html and cites a paper by the European Union member state (http://www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/@dh/@en/@ps/documents/digitalasset/dh_117794.pdf).

“The current architecture of the [UK NHS] health system has developed piecemeal, involves duplication and is unwieldy. Liberating the N.H.S., and putting power in the hands of patients and clinicians, means we will be able to effect a radical simplification, and remove layers of management.”

The aim of the new NHS plan "is clear: to shift control of England’s $160 billion annual health budget from a centralized bureaucracy to doctors at the local level. Under the plan, $100 billion to $125 billion a year would be meted out to general practitioners, who would use the money to buy services from hospitals and other health care providers."

So, the centralized UK model used as an example is rapidly disappearing in favor of more sensible approaches...

Posted by: rmgregory | July 26, 2010 6:01 PM | Report abuse

I can't comment on the centralized planning aspects of this blog post. You either want socialism or you don't; it doesn't really matter what it costs because you have no choice.

But there is no proponent or opponent of romneycare in Massachusetts that is claiming costs have come down. Everyone says just the opposite. Costs have gone through the roof both on the provider and payer (insurance company and me) sides. It is absurd for the Washington Post to say this.

Posted by: byrondennis | July 26, 2010 7:57 PM | Report abuse

rmgregory,

Aren't we even going to look at the results of the NHS's reforms (if they are even enacted) before declaring them "more sensible"? By this logic, we shouldn't even be debating Romneycare, because it must be "more sensible" by virtue of having been proposed.

Posted by: Factaaa | July 26, 2010 8:02 PM | Report abuse

Hey Ezra, I see some of your JournoList buddies posts here. Guess you need all the support you can get.

Posted by: Jimbo77 | July 26, 2010 8:17 PM | Report abuse

It is awkward for Mitt isn't it? Trying to pretend that his state run health care plan was "completely different" from the one congress passed is a tough sell even to the faith based truth crowd. Does this mean that if the Mittster were to become President in 2012 that he would try and get his version passed and Obama's repealed? Because, if so, then all this is about is which party can take credit for health reform and not health reform itself. A vicious and basically meaningless extended political fight? Thank you William Kristol, you creep

Posted by: rkerg | July 26, 2010 8:36 PM | Report abuse

But Ezra, where is the reduction in medical premiums (was it not $2300 for a family of four) that your hero promised us over and over??

I'm absolutely shocked to see a state system similar to the One's HCR is undergoing cost INCREASES!!

Posted by: Curmudgeon10 | July 27, 2010 5:09 AM | Report abuse

Posted by: byrondennis "I can't comment on the centralized planning aspects of this blog post. You either want socialism or you don't; it doesn't really matter what it costs because you have no choice.

But there is no proponent or opponent of romneycare in Massachusetts that is claiming costs have come down. Everyone says just the opposite. Costs have gone through the roof both on the provider and payer (insurance company and me) sides. It is absurd for the Washington Post to say this."
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You misssed the point of this article. He is not saying that the cost have not increased. He flatly states they most definitely have. But what Mr. Cannon wrote in his article "premiums rose faster [in Massachusetts] post-RomneyCare than anywhere else; 21-46 percent faster than the national average."

They did not. If you take the tinme period after Romney-care started, the costs rose the same amount as the rest of the country, not faster or higher. By including the 4 years prior to Romney-care's activation, Mr Cannon falsely inflates the cost comparison and by using a great portion of data from before than during.


Posted by: schnauzer2 | July 27, 2010 8:24 AM | Report abuse

Great post, I remember reading the Mass data sometime back while the health care legislation was being decided in Congress. Furthermore, politic is about who takes credit for doing something about it and trash the opposition.

I remember hearing Romney exaggerate the virtue of his plan ignoring the fact that cost containment was not built-in. Secondly, Romney and American Enterprise Institute(AEI) were silenced by the Republican opponents which they advocated
the exact thing Congress eventually voted on.

The premise of Cannon's article is including the years prior to implementation of Romney Care to prove a point that cost went up dramatically when it has slowed down. It tells me that he is not reading the data correctly and used slanted argument something Cato Institute has the tendency to do.

Posted by: beeker25 | July 27, 2010 11:20 AM | Report abuse

"Between 2003 and 2005, costs rise by 16 percent. Between 2005 and 2007, it's 14 percent. Between 2007 and 2009 -- the Romney Care years -- the growth is 10.1 percent. So there's a clear slowdown."

Nonsense. First of all, all these increases need to be normalized to the increase that was going on in the rest of the nation. You try to do that in the next section but you're still comparing apples and oranges. Statistics are pointless when they're not precise and the differences are so small to begin with. Second of all, the time scales are so short that the comparisons are meaningless as we're still in an equilibration phase. Along the same lines, prices might have artificially accelerated just prior to Romney care as insurers 'priced in' rate increases beforehand. There's just not enough data to draw conclusions either way.

Posted by: merkytimes | July 27, 2010 12:12 PM | Report abuse

I can't comment on the centralized planning aspects of this blog post. You either want socialism or you don't; it doesn't really matter what it costs because you have no choice.

But there is no proponent or opponent of romneycare in Massachusetts that is claiming costs have come down. Everyone says just the opposite. Costs have gone through the roof both on the provider and payer (insurance company and me) sides. It is absurd for the Washington Post to say this.
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Read the post again. No one is saying the costs went down. The costs have not gone up as much as in other parts of the country, and they have nor risen as fast as pre-Romney Care.

Posted by: jimbom | July 27, 2010 12:22 PM | Report abuse

"Additionally, company owners say, it has become far cheaper to pay the state penalty for not covering their workers — roughly $295 annually per employee — than to pay thousands more in premiums.

In New Bedford, the Early Learning Child Care center is now paying $1,500 quarterly in fines to the state, instead of the $30,000 it contributed quarterly toward 13 workers’ health insurance premiums. When Executive Director Judy Knox terminated the company’s health plan late last year, she asked Fields, the consultant, to help 10 of those workers enroll in Commonwealth Care. The other three went on spouses’ plans or were eligible for Medicare.

“We had had, in the three previous years, between 17 and 18 percent increases every year,’’ Knox said. “I was so worried about the staff and their coverage, but for most of them, Commonwealth Care seems to be working out very well.’’ The state program covers people with incomes up to 300 percent of the federal poverty level.

Come 2014, when the bulk of the federal health care law goes into effect, the penalties for small companies that do not provide health insurance coverage will be less onerous than those in Massachusetts. That could tempt more small companies to opt out nationally, sending more workers to the public rolls — if health care costs can’t be restrained, some analysts said.

http://www.boston.com/news/health/articles/2010/07/18/firms_cancel_health_coverage/

I don't know where Ezra gets his stats, but they are contradicted by the facts. If you look at the rate increases requested by the insurers, the biggest were both requesting rate increases over 10%. Rate increases for the plans that rollover in the current quarter are running up to 8-37%. The State complains that the localized medical inflation rate is only 5.1% so the insurers should be raising their rates so much, failing to realize that the restrictions they put on the plans are causing people to NOT shop for value, to choose higher priced options, and to over consume. If all of the doctor's cost me a $20 co-pay, why would I choose the less expensive one? Why do we create plans that don't allow people to shop for good values??

Posted by: staticvars | July 27, 2010 5:05 PM | Report abuse

"the centralized UK model used as an example is rapidly disappearing in favor of more sensible approaches..."

Uh huh. Except, as has been noted in the UK, giving GPs budgetary control over the commissioning of hospital services is like putting waiters in charge of managing supplies and orders for a large restaurant.

Three-quarters of British GPs in a recent survey said that they didn't feel properly equipped to handle services for the severely mentally ill; should they be controlling local hospital budgets for those services? That's not a reflection on their training, but on the reality that many aspects of healthcare bypass the family doctor / GP triaging system, and thus don't suit a bottom-up provisioning structure.

Posted by: pseudonymousinnc | July 27, 2010 6:21 PM | Report abuse

Gee, Ezra, can you spell rationing? To post those figures and NOT say they spend less because they ration care is disingenuous, to say the least. Would you really give up your current care for the National Health Service?? Please.

Posted by: dlampo | July 27, 2010 6:40 PM | Report abuse

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