NCPA - National Center for Policy Analysis


June 16, 2009

As the national debate over health care reform begins, many in Congress are looking to Massachusetts as a model for what that reform might look like.  Indeed, from mandates and subsidies to some form of exchange or "connector," many of the key components of the Massachusetts reforms are likely to end up in the bill.  But three years after it was voted in, experience suggests the "Massachusetts model" actually provides an object lesson in how not to reform health care, says Michael Tanner, a senior fellow at the Cato Institute.

There is no doubt that the Massachusetts program has reduced the number of people without health insurance in the state -- but by how much is a matter of considerable dispute, says Tanner:

  • According to official statistics, the state's uninsured rate has declined from 10.4 percent in 2006 to just 2.6 percent today.
  • However, there are several reasons for doubting the accuracy of this number.
  • For example, a door-to-door survey by the Census Bureau in March 2008 estimated that 5.4 percent of state residents were uninsured, and an examination of state income-tax returns indicates that roughly 5 percent of residents were uninsured as of Jan. 1, 2008.
  • The best estimates suggest that more than 200,000 Massachusetts residents remain uninsured, out of the 670,000 uninsured in 2006.

Moreover, health care costs continue to rise much faster in Massachusetts than in the nation as a whole.  Much of the burden falls on individual policyholders, and despite one tax increase already, the program faces huge deficits in the future.

As a result, the state is considering caps on insurance premiums, cuts in reimbursements to providers and even the possibility of a "global budget" on health care spending, says Tanner.

Source: Michael D. Tanner, "How Not To Reform Health Care," Cato Institute/National Review, June 9, 2009.

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