Romney vulnerable on Massachusetts health care costs? Not really

Politico argues that Mitt Romney may be haunted by Massachusetts health care costs. I disagree for a couple reasons:

  • As the article mentioned, the Massachusetts health reform law Romney signed was about getting people into coverage, not reducing costs
  • Although Massachusetts health insurance costs are high relative to other states, that’s not due to the health reform law and doesn’t take into account affordability compared to income

One reason health reform wasn’t passed until 2006 was that opponents argued we had to get costs under control first, and only then take on universal coverage. After a couple decades of that thinking the state decided to try to do things the other way around, an approach I think is more likely to succeed. Universal coverage improved the environment for long-term cost control by getting everyone into the system and making it clear that cost containment would be needed to sustain the gains of reform. Although it would be great to have achieved cost containment in the five years since the law went into effect, it takes longer than that to change health care. Efforts by private health plans to control costs with innovative approaches such as Blue Cross’s Alternative Quality Contract are showing promise. Meanwhile the state is moving forward –albeit slowly– on payment reform and cost control.

Massachusetts insurance costs were high before reform and remain high. Key drivers are our overuse of academic medical centers for primary care, extensive benefits mandates, and guaranteed issue/community rating requirements, which mean that people with pre-existing conditions can purchase insurance –even though it drives up costs for everyone. Overall Massachusetts is a high cost state and health insurance is no exception. But incomes are high, too. Only Connecticut had a higher per capita personal income in 2010.

Statewide health care reform isn’t sufficient, since states can’t control Medicare policies and have only partial control of Medicaid. That’s why federal reform is necessary for Massachusetts and other states to succeed in cost containment, quality improvement and universal coverage.


October 27, 2011

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