US health care reform: Massachusetts or California style?

At Wesleyan in the mid-1980s I was editor of the main newspaper, the Argus. It was a left of center campus and the Argus reflected that sentiment. But there was also an alternative socialist paper called Hermes. (In mythology Hermes slayed Argus, so the Hermes folks thought they were being pretty clever. Of course the way Hermes did it was by telling a long boring story so Argus closed all 100 eyes and fell asleep. That’s pretty much what the writing was like in the Hermes, too.)

In any case, we Argus editors generally found the Hermes folks pretty insufferable, but there was one reporter we respected, Jordan Rau. Unlike most of the rest of us who went into business or law, Jordan continued his journalistic path and now writes for the Los Angeles Times and Kaiser Health News.

In an excellent piece published today (Analysis: Can What Killed California Health Reform Strike Again?) he ponders the fate of federal health reform. The feds are following a similar model to what we have in Massachusetts: introducing employer and individual mandates along with subsidies and insurance regulation to achieve near universal coverage that’s somewhat affordable. As Rau points out, a year after Massachusetts enacted health reform California started down a similar path with leadership from Governor Schwarzenegger. However, California reform failed and Rau detects a number of similarities with the current debate at the federal level.

In particular, in both California and in DC:

  • The plan had reasonable public support at the outset, and industry wasn’t opposed
  • The Governor/President tried hard to win bipartisan support, but failed to make progress and waited too long to go it alone
  • Those to the left of the Governor/President criticized the plan for not going far enough toward single payer
  • Opponents on the right became highly energized while supporters became “apologetic”
  • Budget analysts attached hefty price tags to reform
  • Subsidies were too limited initially, and had to be raised to ensure affordability

However, Rau ends on an optimistic tone (not the style I remember from college):

Despite all the similarities, the overhaul effort in Washington has achieved a momentum that eluded Schwarzenegger. Democrats in Congress still have a shot at snagging a few GOP supporters. Dissenters on the left have stopped short of saying they won’t back a plan that falls short of their dreams. Congress has more options to finance the plan than California did. And the 1994 GOP takeover of Congress — coming on the heels of the failure of the Clinton health plan — remains a terrifying lesson for Democrats on the political costs of doing nothing.

There is another important difference, however, that makes the California situation closer to the federal situation than to Massachusetts. As I wrote back in 2006:

California Health Care Foundation analyzed the potential to apply a Massachusetts-style universal coverage model to California. The bottom line: it would be doable, but significantly more expensive. Why?

  • Overall, the uninsured rate among the non-elderly is 21% in CA v. 13% in MA and 18% in the US overall
  • In CA, 56% of employers provide coverage v. 69% in MA and 63% in the US overall
  • Both states have high average incomes, but CA has a higher percentage of low income residents (43% in CA v. 29% in MA v. 39% in the US overall make less than 250% of the Federal Poverty Level)
  • Among those making less than 250% of the Federal Poverty Level, 32% of CA residents are uninsured v. 22% in MA and 29% in the US overall

The reason MA can move toward universal coverage is that the state has already done a reasonably good job of seeing that health insurance is widely available. Part of that is demographics, part is policy, part is cultural. Other states may find they need to walk first; they may fall flat on their faces if they try running to keep up with Massachusetts.

The federal government is much better positioned than California to sustain significant deficit spending, which is what it will take to implement the kind of plan that’s being discussed.

October 1, 2009

3 thoughts on “US health care reform: Massachusetts or California style?”

  1. So from the statistics presented above it would seem that MA v. CA has a higher income ratio. So why again is it that the public option for health care was voted down when there are numbers in the 30% range of uninsured Americans, who also fall under the poverty line? With the yearly revenue brought in by health care industry it should be moral obligation to see that every American has access to proper care.
    The key to this debate does not lie fully on the shoulders of the insurance companies either, but rather the overall medical industry.
    I found an page that interviews 23 medical professionals from both sides of the argument, and in an interview with Lee Rabbitt, benefits manager for Watkins Insurance Group, she says “Yes, there are problems with the current system but it is not the availability of “health care” … we have plenty of doctors and hospitals … it is the cost of the health care and thus the cost of the health insurance coverage.”,com_sectionex/Itemid,200076/id,8/view,category/#catid107
    This has been the basis of many discussions I have recently read. Providing insurance for all would not nor should it be the hardest part of the debate, but rather finding a way to reign in the whole medical industry and stabilize procedural costs across the board. Private insurance companies, should not go with accountability, but the current costs of procedures have sky rocketed and insurance premiums are a good indicator of that, having risen about 125% since 1999. Why should health costs have been allowed to going above and beyond the rate of inflation over the past 10 years? Let us finally address this issue and seek some solutions before we allow another decade to pass in which the medical field can run away from the people it was founded to provide for in the first place.

  2. The other big difference in California (versus Mass.) is that you have a vibrant (albeit imperfect) individual health insurance market with both for profit and not-for-profit insurers. The left would not compromise on the holy grail of single payer, and the right was energized by the insurers.

    In Mass, there are no for profit insurers (Blue Cross, Tufts, Harvard Pilgrim) and the left had an easier time of relenting on single payer. Mitt Romney also gets some credit here for pushing the plan early.

    Obama’s fundamental challenge for passage is convincing the left that a half a loaf is better than nothing. No need to convince the right. Go get’em Bam!

  3. I enjoyed reading your analysis of the different healthcare reform methods. Both sides of the argument are very valid. Thank you for the article!

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