Naysayers on MA health reform will have to wait a little longer to celebrate

Free-market ideologues like Sally Pipes from the Pacific Research Institute salivate over the opportunity to point out failures of government intervention in the market place, especially in liberal bastions like MA and CA with turncoat Republican governors! They’re so hot and bothered about MA’s health reform law that they are jumping the gun. This is from Pipe’s op-ed piece in last week’s Wall Street Journal (Intensive Care for RomneyCare)

When then-Gov. Mitt Romney, a Republican, introduced a universal health-insurance plan in the Bay State early last year, it was widely acclaimed. But less than a year after passage, RomneyCare is in the intensive care unit, soon to be wheeled into hospice.

Reality fully hit in late January of this year, when private insurers submitted bids to the bureaucracy that would administer the new program. The average premium for the unsubsidized plans was not $200 per month — as Mr. Romney promised from the stump — but rather $380. That’s more than 15% of the target audiences’ income — and for a plan with a $2,000 deductible and a total cost sharing of $5,000. People were stunned, outraged. Naturally, “greedy” private insurers were blamed. Politicians called for price controls.

As John McDonough from Health Care for All (HCFA) points out, the $380 wasn’t a real average anyway. It included high bids from plans that weren’t interested in playing. And new Governor Deval Patrick has since jumped in and jawboned the plans into offering premiums that actually get pretty close to the $200 and in some cases go below. (If you want to understand this whole topic in serious detail, you must check out HCFA’s A Healthy Blog.)

I’m a strong free market guy myself, but let’s not fool ourselves that the answer to the social and economic problems of the US health care system can be divined from strict ideological principles.

The MA health reform bill–and it’s really not RomneyCare– is an excellent idea for MA. It can work here because we already have low levels of uninsured and extra money devoted to uncompensated care. It’s not going to work like that on a national level.

So as much as I think the whole edifice of employer-sponsored health care is likely to fall apart over the next decade, it still makes sense to promulgate the MA, employer-based mandate. The way I see it, once (almost) everyone is insured –and it could happen in the next year or so–  the focus will turn to how to improve efficiency and quality in health care delivery. With luck we’ll shift away from what the Boston Globe calls the “arcane demographic data and risk assumptions” of actuarial science that goes into the calculation of premiums and into the very tangible and sometimes personal aspects of how health care is delivered.

It’s no bad thing that the deductibles for the new plans are going to be relatively high –something like $2000 for an individual or $4000 for a family. It will help create a cost and service oriented market in routine services. MinuteClinic start your engines!

And Governor Patrick did exactly the right thing by twisting the plans arms to alter their assumptions and bring the price down. The plans are going to have to suck it up, or spread costs to other customers in the name of getting everyone on the books in the near term. Though Pipes may wince, the Governor is part of the market, too.

March 6, 2007

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