NCPA - National Center for Policy Analysis


July 28, 2009

The Massachusetts experiment in health care reform offers many lessons that are applicable to the current debate in Congress.  The goals of the Massachusetts plan are similar to proposals supported by Democratic congressional leaders and the Obama administration: universal health insurance coverage through greater access to health insurance, says Greg Scandlen, director of Consumers for Health Care Choices at the Heartland Institute.

The Obama proposals would use similar means to achieve these goals: requiring individuals to purchase insurance and creating an "insurance exchange" where they can buy heavily regulated, heavily subsidized health insurance. 

The Massachusetts reform, however, has raised costs, not lowered them.  The state has indeed lowered the number of uninsured dramatically -- down to 2.6 percent of the population by some estimates.  But it has done so in a very expensive way that does nothing to control costs, says Scandlen. 

Massachusetts has relied primarily on two factors to fund its plan:

  • State premium subsidies for almost everyone who has gained coverage.
  • The requirement that individuals enroll.

This is a huge burden on taxpayers and on anyone who pays directly for health care, says Scandlen:

  • The state was able to get the federal government to pay for much of these new costs, but even with that help, state government spending has increased 42 percent since 2006.
  • The Massachusetts program has cost about one-third more than projected when the law was passed.
  • Before the Massachusetts health insurance reform plan was implemented in 2005, total per capita health care spending in the state was 33 percent above the national average.
  • In just two years under the Massachusetts reforms, from 2005 to 2007, health care spending per capita rose an additional 23 percent.

Source: Greg Scandlen, "Three Lessons from Massachusetts," National Center for Policy Analysis, Brief Analysis, No. 667, July 28, 2009.

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