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Posted at 11:00 AM ET, 12/20/2010

Column: A world with an individual mandate

By Ezra Klein

GR2010121707635.gifUnless someone can drop into Anthony Kennedy's dreamspace and, "Inception"-style, either figure out what he thinks of the individual mandate or simply tell him what to think of the individual mandate, it's not worth spending much time speculating on the ultimate legal fate of the provision. The case will eventually make its way to the Supreme Court, and when it does, Kennedy will decide which side has the majority, and until that happens, the various legal decisions are little different from op-ed columns.

So rather than sit around and wonder about a world without an individual mandate, let's talk about a world that has one. We don't have to go into hypotheticals to get there. We just have to go to Massachusetts.

In 2006, then-governor Mitt Romney signed a major health-care reform bill into law. "An achievement like this comes around once in a generation," he said. "Today, Massachusetts is leading the way with health insurance for everyone, without a government takeover and without raising taxes."

Romney was right about all of that. And national Democrats took notice. The health-reform bill President Obama signed into law this year was explicitly based on the Massachusetts reforms. The theory was this: A plan that a Republican governor could sign into law would be a plan that could attract Republican votes.

The theory was wrong. An approach to universal coverage that represented "health insurance for everyone without a government takeover" when it was signed by a Republican governor in Massachusetts was spun by congressional Republicans as the missing final chapter of "The Communist Manifesto" when Democrats tried to scale it nationally.

Given that the plan was enacted anyway, it's time to check in on how Massachusetts is doing. And the answer, basically, is pretty well. This week, the state's health and human services agency released the results of a new, independent survey examining coverage in Massachusetts. More than 98 percent - 98 percent! - of the state's residents now have health insurance, as do more than 99 percent of the state's children.

Remarkably, those numbers have gotten better in recent years, with the number of uninsured residents in the state falling to 1.9 percent in 2010 from 2.6 percent in 2008. That's very unusual. Normally, the ranks of the uninsured swell during recessions as people lose their jobs and states cut back on public programs to balance their budgets. Nationally, the number of Americans who are uninsured rose to 16.76 percent in 2010 from 14.8 percent in 2008, according to Gallup.

That Massachusetts's reforms have survived, and even prospered, in this economic environment has left the law's architects feeling vindicated. "The goal of the law was covering people," says Jonathan Gruber, an MIT health economist who worked on the legislation, "and it couldn't have gone better."

By and large, that's reflected in the polling. The Massachusetts reforms have consistently polled between the high-50s and mid-60s. Perhaps their most impressive showing came amidst now-Sen. Scott Brown's candidacy, when a Washington Post-Kaiser-Harvard poll found that even though a majority of Massachusetts voters disapproved of the national reform effort, a majority of them - and even a majority of Brown's supporters - approved of the Massachusetts law.

The law does have its problems. In particular, it was not designed to control costs. "That's one of the areas where the federal bill is just better than the Massachusetts bill," Gruber says. So costs in the state have continued to rise - with one notable exception that has a lot to say about our current debate over the individual mandate.

Like the federal law, the Massachusetts law left most people's health arrangements alone. The exception: people who don't get their coverage through a large employer or a public program. That accounts for most of the uninsured. It's also where the individual mandate is primarily in play and where the "exchanges" - the purchasing markets that put individuals and small businesses in a single pool and force insurers to compete for their business and treat them fairly - really matter.

In Massachusetts, that market has worked better than expected. According to data from America's Health Insurance Plans, the largest health insurer trade group, premiums for that market have fallen by 40 percent since the reforms were put in place. Nationally, those premiums have risen by 14 percent.

There are a couple of reasons for Massachusetts's success. One is that the market is more transparent, and so insurers are competing more aggressively against one another. Jon Kingsdale, who ran the new health-care market, notes that the lower-cost plans have been much more popular than the higher-cost plans. The bigger reason is that the individual mandate - plus the combining of individual and small firms in the same insurance market - brought healthier, younger people into the mix, which brought average premiums down for everybody.

All is not roses and waterlilies for Massachusetts, of course. The reforms didn't address a number of problems: The state had, on average, the highest health-care costs before reform, and it has the highest health-care costs today. (There are a variety of reasons for this, many of them having to do with the power of the state's renowned hospitals.) Waiting rooms were overcrowded before, and they're overcrowded today. And there are places where the reforms didn't work as hoped. Predictions that expensive emergency room visits would drop now that people could go to the doctor have not been borne out.

The national law is better on at least some of those counts. It has provisions to expand the medical workforce, particularly the ranks of general practitioners. It has a slew of cost-control efforts, including a tax on expensive health insurance plans, an independent board able to make cost-cutting reforms to Medicare, a vast array of changes to the health-care delivery system, changes designed to get us away from paying for volume and toward paying for quality and much more.

But the reality is that there's one way in which it could get much worse: if Republican judges strike out the individual mandate, and Republican congressmen refuse to work with Democrats on a replacement. In that world, the law can limp along, and it will still cover tens of millions of Americans, but premiums will be higher, the insurance markets will be less competitive and many of the bill's cost controls will not have the chance they need to work.

So repeat after me, "Justice Kennedy: You're getting very sleepy . . . "

By Ezra Klein  | December 20, 2010; 11:00 AM ET
Categories:  Health Reform  
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Comments

How does the Washinton Post comments policy work? When you get over 100 comments on an article telling you how incorrect the data is, you just repost the article so that casual readers might think this material is accurate?

Posted by: byrondennis | December 20, 2010 11:55 AM | Report abuse

@byrondennis

Please add info/links.

Posted by: eggnogfool | December 20, 2010 12:02 PM | Report abuse

My e-mail is atop the page if you think I have any of my data wrong. Meanwhile, the actual data sources in this article are linked, so unless you think AHIP doesn't know what its insurance costs are, or Gallup is misreading its own polling, or Urban can't conduct a survey, I'm not sure exactly which data here is supposed to be incorrect. But as I said, feel free to e-mail me if you have a concern.

Posted by: Ezra Klein | December 20, 2010 12:39 PM | Report abuse

The 2010 report ranking health on a state-by-state basis (United Health Foundation-sponsored) showed Massachusetts at the number 2 spot --and Hawaii at number 5. It seems that attempts of provide universal coverage pay off.

The ten states at the bottom of the list, headed by Texas at number 40 and ended by Mississippi at number 50, rely heavily on federal dollars to provide for their Medicaid populations and are nearly all Southern states. None in this bottom tier were characterized as "Blue" in the 2008 election. Some interesting contradictions here.

Posted by: HealthcareAnnotator | December 20, 2010 1:40 PM | Report abuse

The 2010 report ranking health on a state-by-state basis (United Health Foundation-sponsored) showed Massachusetts at the number 2 spot --and Hawaii at number 5. It seems that attempts of provide universal coverage pay off.

The ten states at the bottom of the list, headed by Texas at number 40 and ended by Mississippi at number 50, rely heavily on federal dollars to provide for their Medicaid populations and are nearly all Southern states. None in this bottom tier were characterized as "Blue" in the 2008 election. Some interesting contradictions here.

Posted by: HealthcareAnnotator | December 20, 2010 1:40 PM | Report abuse

very good post Ezra.

So are you now ready to admit that you were wrong when you (and other liberal commenters) stated that if you gave someone insurance they'd go to the doctor and not an expensive ER visit as that hasn't been borne out? That was a HUGE part of the convincing that was done by many liberals. It makes great theoretical sense but in practical terms doesn't bare out.

I'll take it a step further. Can you give them subsidies but it doesn't mean they actually USE the healthcare they are supposed to pay for. So we'll in that scenario be $450+ Billion in the hole per year in subsidy cost but people will STILL be over-burdening hospital ER's?

Its like people eligible for Medicaid that don't go out and get it (you had a good post some time back explaining why this was the case partially).

Posted by: visionbrkr | December 20, 2010 2:05 PM | Report abuse

"In Massachusetts, that market has worked better than expected. According to data from America's Health Insurance Plans, the largest health insurer trade group, premiums for that market have fallen by 40 percent since the reforms were put in place."

Where is that data showing a 40 percent decline in the linked document?

When I search for Massachussetts, I get one result - a chart of average individual market premiums in the U.S. in 2009 by state. Massachusetts is at $5,143 for a single person, and $13,288 for a family.

Does this mean that in 2006, Mass. had premiums of $8,572 and $22,147, respectively?

That's crazy high but I don't have any data to dispute. That said, isn't the 40 percent decline in premiums a result of Massachussetts having guaranteed issue years before it had a mandate?

Posted by: justin84 | December 20, 2010 2:18 PM | Report abuse

****So are you now ready to admit that you were wrong when you (and other liberal commenters) stated that if you gave someone insurance they'd go to the doctor and not an expensive ER visit as that hasn't been borne out?******

Um, right there in the article Ezra concedes predictions about ER use were wrong. And in any event, it's not at all clear that folks aren't going "to the doctor." It seems likely that the previously uninsured in Massachusetts are consuming more healthcare in general. Some of that increase results in doctor appointments. And some of that increase results in trips to the ER they formerly would have been reluctant to make. In other words, it appears Massachusetts has managed a successful expansion of social insurance (the whole point, of which, of course, is to improve the quality of people's lives).

Posted by: Jasper999 | December 20, 2010 2:20 PM | Report abuse

Did the data delve further into the ER numbers? Specifically, did the amount of care provided by hospitals that goes uncompensated (because neither an insurance company or an individual is paying for it) decrease at all, even if total visits to the ER did not decline? That's the part of ER care that interests me most, since those uncompensated costs are ultimately passed along to the rest of us through higher hospital & medical costs, and ultimately in higher premium costs (or benefit cuts, to control premium costs).

Posted by: reach4astar2 | December 20, 2010 2:29 PM | Report abuse

"Predictions that expensive emergency room visits would drop now that people could go to the doctor have not been borne out."

NOT the full story here. A recent study by NBER says "hospital cost growth" is SLOWER under Massachusetts care than the nation as a whole -- hospitalizations for preventable conditions REDUCED, DECREASING length of stays in hospital, LESS admissions from emergency room. Among hospital discharges, the uninsured went down 36%.

Posted by: Lee_A_Arnold | December 20, 2010 3:40 PM | Report abuse

Maybe I'm missing the link, but when I read your post I take away two distinct points: (1) You think the individual mandate should be determined to be constitutional by the Supreme Court (specifically Justice Kennedy); and (2) you think the overall scheme, including the individual mandate as a means of adding lower-risk insureds into the insurance pool, is a good idea from a policy perspective (and that Massachusetts is proof of that). What I don't understand is the link between the two. Simply because something is a good (or even excellent) idea from a policy perspective does not mean that the federal government has the power to do it. As all of us know, the federal legislative power is an extremely limited one, and this measure must be consistent with the Supreme Court's Commerce Clause precedents to pass constitutional muster, regardless of whether it is good policy. The fact that Massachusetts enacted a substantially similar regime and that it has experienced success does not bear on the issue of whether it is within Congress's Commerce Clause authority. Of course, Massachusetts, or Arkansas, or any other state, could do exactly the same thing and it would not be subject to these attacks. The reason is that the power of the states over the health and safety of their citizens is virtually unlimited. The same cannot be said of the federal power. I am therefore left to wonder why commentators like you are still engaged in a policy debate that has been settled by the political branches--i.e., Congress enacted it, and the President signed it. The only question now is whether the federal government had the power to do what it did, and these policy issues are completely irrelevant to that issue.

Posted by: Balexandria | December 20, 2010 3:46 PM | Report abuse

****NOT the full story here. A recent study by NBER says "hospital cost growth" is SLOWER under Massachusetts care than the nation as a whole*****

This makes sense. It's not surprising that Massachusetts saw a one time bump up in utilization of some kinds of healthcare services (including ER use) as hundreds of thousands of previously uninsured Bay Staters got coverage. But it's actually logical that hospital cost growth in Mass. would now be rising more slowly than in the nation as a whole, because an increasingly large percentage of the state's population can get care before a given medical situation becomes acute and requires hospitalization (also, you'd expect that Massachusetts hospitals' "uncompensated care" cost -- surely a major expense -- to be moderating, as well).

Posted by: Jasper999 | December 20, 2010 3:52 PM | Report abuse

Justin -- http://www.ahipresearch.org/pdfs/Individual_Market_Survey_December_2007.pdf

Posted by: Ezra Klein | December 20, 2010 4:43 PM | Report abuse

Thanks Ezra

Posted by: justin84 | December 20, 2010 6:00 PM | Report abuse


I think that health care reform is a great idea. I have type 1 diabetes and for me to get insurance, it was a nightmare until I found "Wise Health Insurance" search for them online and you can get affordable health insurance instantly.

Posted by: williamstaerk | December 21, 2010 1:50 AM | Report abuse

@ ezra klein

My point vis a vis the comment above is that you ran this same column on Saturday and almost 100 people (including me) commented telling you of the errors in the piece. I included in my comment the correct data from the "official" Massachusetts report on the subject of growth in individual premium costs since implementation of Romneycare (see page 22 on http://www.mass.gov/Eeohhs2/docs/dhcfp/r/pubs/10/key_indicators_august_2010.pdf).

Separately you ran information about the so-called increasing universality of healthcare insurance in Massachusetts on Wednesday and I commented there providing the "correct" data. The point being that there is no correct data because there are about five different competing surveys and it doesn't matter anyways because Massachusetts has always had a high rate of insured; healthcare insurance was invented here. (As an aside, I can't find your 3-2.9-2.4 numbers from your graph in the Urban Institute report but as I said, it doesn't matter. In this case it really doesn't matter because the numbers are not significantly different statistically. . I don’t see any data that trends straight down over the three years and of course three years are not enough to tell anything.)

So your approach, given so many people pointing out your errors: simply re-post the column with no comments.

Posted by: byrondennis | December 21, 2010 8:00 AM | Report abuse

At the request of some of the above comments, here are meaningful sources of data about Massachusetts "healthcare reform" (in quotes because of course Romneycare was only about healthcare insurance not healthcare delivery):

Quarterly Key Indicators report from the Massachusetts Department of Healthcare Finance and Policy (see http://www.mass.gov/Eeohhs2/docs/dhcfp/r/pubs/10/key_indicators_august_2010.pdf )

This is a good report for its consistency quarter to quarter over the history of Romneycare but it has some limitations, most egregious of which is that it understates the number of Mass. residents on Medicaid. For an explanation, see http://www.statehousenews.com/cgi/as_web.exe?rev2010+D+15040366 which illustrates that 20% of the Massachusetts population is on Medicare.

And combining the two reports, we find that the actual number of people who have bought insurance with money out of their pockets since Romneycare was inititated dropped by 50,000. All Romneycare was about was taking taxpayer money out of was called the Free Care Pool and using it to "insurance." Instead of giving it to big bad hospitals the politicians decided to give it to big bad insurance companies.

How to go, Mitt!

(P.S. The web site where the Key Indicators report linked to above can be found has lots of other good data. It's government propaganda of course but it is consistent period to period.)

Posted by: byrondennis | December 21, 2010 8:34 AM | Report abuse

Sorry but the above comment should say 20% of the population is on Medicaid not Medicare.

Posted by: byrondennis | December 21, 2010 8:36 AM | Report abuse

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