NCPA - National Center for Policy Analysis


July 23, 2009

While Congress debates how to finance coverage for the nation's uninsured, Massachusetts, which instituted universal coverage three years ago, wants to end the practice of reimbursing for every medical procedure and doctor visit.  Providers would instead get a yearly fee for each patient, thus eliminating financial incentives to overtreat, says BusinessWeek.

The motivation for this switch is simple desperation -- and it should be a warning to Washington, says BusinessWeek:

  • When Massachusetts enacted the most comprehensive insurance-for-all bill in the United States in 2006, it did nothing to address rapidly rising costs.
  • Three years later the rate of uninsured residents has dropped from 8 percent to 2.6 percent, the lowest of all 50 states.
  • But the cost of covering an additional 428,000 residents is wreaking havoc on the state's finances.

Long one of the most expensive states for medical care, Massachusetts' costs have risen even higher since passing universal coverage, says BusinessWeek:

  • The state will spend $595 million more on health insurance this year than it did three years ago, a 42 percent increase.
  • Its latest budget proposal calls for eliminating insurance subsidies for 30,000 legal immigrants in an effort to save money.
  • "There is a clear consensus in the health-care community and among elected officials that if we don't do something about rising costs, our universal coverage will be jeopardized," says Andrew Dreyfus, executive vice-president for health-care services at Blue Cross Blue Shield of Massachusetts.

State legislators deliberately did not include cost-cutting measures when they pushed through universal coverage in 2006, recognizing it would be politically risky to try to pass both at once.  Policymakers say they always planned to address the problem down the road, and within a few years ballooning costs left them no choice, says BusinessWeek.

State officials need look no further than neighboring Maine to see what will happen if they don't act, says BuisnessWeek:

  • Maine enacted universal coverage in 2005, also with no cost constraints.
  • Premiums for the state-financed insurance plan have risen 74 percent since, and many residents have dropped coverage.
  • Maine's uninsured rate is back at 10 percent, barely lower than the pre-reform level.

Source: Catherine Arnst, "A Massachusetts Model to Fix Health Care?" BusinessWeek, July 16, 2009

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