NCPA - National Center for Policy Analysis

The High Price of Massachusetts' Health Care Reform

July 18, 2011

In 2006, Massachusetts enacted landmark health care reform legislation that promised to extend health care coverage to all citizens while significantly lowering costs.  The law imposes mandates on residents to obtain health insurance and on employers with 11 or more employees to provide health insurance for their employees.   It also expands Medicaid coverage and establishes a health insurance subsidy program.  Additionally, it creates an insurance exchange, the Massachusetts Health Insurance Connector, which helps individuals who are not eligible for Medicaid purchase competitively‚Ä?priced health plans.

An assessment of the impact of the law on the state of Massachusetts was carried out by the Beacon Hill Institute.  In this study, researchers calculated the effect of health care reform on state and federal governments and the private health insurance markets, including employee contributions to their private insurance plans:

  • State health care expenditures have risen by $414 million over the period.
  • Private health insurance costs have risen by $4.311 billion over the period.
  • The federal government has spent an additional $2.418 billion on Medicaid for Massachusetts.
  • Over this period, Medicare expenditures increased by $1.426 billion.
  • This amounts to a total cumulative cost of $8.569 billion over the period.

The state has been able to shift the majority of the costs to the federal government.

Source: David Tuerck, Paul Bachman and Michael Head, "The High Price of Massachusetts Health Care Reform," Beacon Hill Institute, June 2011.

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