More Health Care Ills from Massachusetts

Much of ObamaCare was based on RomneyCare in Massachusetts.

One of the big problems of each is the guaranteed issue mandate. Guaranteed issue means that individuals may not be turned down for health insurance coverage no matter the condition of their health or risk status. This obviously provides no incentives for people to purchase health insurance before they become ill. A guaranteed issue mandate raises health care costs.

On June 30, the Boston Globe reported the following fallout on guaranteed issue in Massachusetts:

The number of people who appear to be gaming the state’s health insurance system by purchasing coverage only when they are sick quadrupled from 2006 to 2008, according to a long-awaited report released yesterday from the Massachusetts Division of Insurance. The result is that insured residents of Massachusetts wind up paying more for health care, according to the report…

The number of people engaging in this phenomenon — dumping their coverage within six months — jumped from 3,508 in 2006, when the law was passed, to 17,177 in 2008, the most recent year for which data are available…

When state lawmakers overhauled the health care system in 2006, they combined into a single insurance pool consumers who buy coverage on their own with those who get insurance through their jobs at small businesses that employ 50 or fewer people. The aim was to make insurance more affordable for the individuals buying coverage on their own, who tended to be sicker and therefore had been paying very high premiums. And the hope was that having small businesses and their workers absorb some of the cost of covering this group would raise their premiums only modestly. But insurers said consumers who work for small businesses are shouldering a much larger burden. Part of the reason, they said, are these short-term buyers of insurance.

Unfortunate, costly, but completely predictable.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

More on the Massachusetts Health Care Mess

The mess just keeps getting … well … messier when it comes to the big government health care in Massachusetts.

The Wall Street Journal’s editorial page on April 9 noted that price controls imposed by Governor Deval Patrick halted the sale of health insurance to small businesses and individuals last week. It was noted:

The Massachusetts small-group market that serves about 800,000 residents shut down after Mr. Patrick kicked off his re-election campaign by presumptively rejecting about 90% of the premium increases the state's insurers had asked regulators to approve. Health costs have run off the rails since former GOP Governor Mitt Romney and Beacon Hill passed universal coverage in 2006, and Mr. Patrick now claims price controls are the sensible response to this ostensibly industry greed. Yet all of the major Massachusetts insurers are nonprofits…

A court decision is expected by Monday, but state officials have demanded that the insurers—under the threat of fines and other regulatory punishments—resume offering quotes by today and to revert to year-old base premiums. Let that one sink in: Mr. Patrick has made the health insurance business so painful the government actually has to order private companies to sell their products (albeit at sub-market costs).

So what happened with that court decision? The Boston Herald reported:

A Suffolk Superior Court judge ruled in favor of state regulators yesterday in a high-stakes dispute with health insurers over the cost of health care for small businesses and individuals in Massachusetts. Judge Stephen E. Neel said the six health insurers that took the state to court must use the state’s appeals process to resolve their dispute. “Because plaintiffs have not exhausted their administrative remedies, and because they have not demonstrated that they are otherwise entitled to injunctive relief, their motion for preliminary injunction will be denied,” Neel wrote in his decision.

And the Governor’s response? He “applauded the ruling, calling it ‘a welcome decision for small businesses and working families who need immediate relief from excessive and unreasonable increases in their health-care costs.’”

Well, that is, if small businesses and working families can find someone to sell them a policy. And given the government mandates and regulations that jack up costs, how long any private entities will be able to sell policies remains in doubt. The insurers pledge to fight on against the price controls.

By the way, take note. This is what ObamaCare will impose nationally.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

Small Biz Health Care Daily: Massachusetts and Health Care

When it comes to the health care issue, Massachusetts certainly is a hot spot.

Earlier this week, of course, State Senator Scott Brown pulled off a historic upset in the race to succeed Ted Kennedy in the U.S. Senate, with the health care issue playing a central role in the campaign.

But there’s more. In 2006, Massachusetts passed a health care measure that has served as one of the examples upon which the health care measures being pushed in Congress are based.

The Cato Institute has just published a new report by Aaron Yelowitz and Michael F. Cannon titled “The Massachusetts Plan: Much Pain, Little Gain.”

The authors conclude:

Our analysis of CPS data for 2008 shows that Massachusetts’ health law has had a smaller impact on insurance coverage levels and a much higher cost than supporters claim. Gains in coverage have been overstated by nearly 50 percent, while costs have been understated by at least one-third, and likely more. The law has done little to improve overall self-reported health, though it does appear to have crowded out private health insurance and made Massachusetts a less attractive place to relocate, particularly for young people.

These findings hold lessons for the legis- lation moving through Congress, which largely resembles the Massachusetts law. As in Massachusetts, there has been no effort to estimate the full cost of the legislation—that is, including the mandates it would impose on individuals and employers. The costs of that legislation are therefore far greater than members of Congress and voters believe, while the benefits may be smaller than the conventional wisdom about Massachusetts suggests.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

Small Biz Health Care Daily: Massachusetts Bad Example for the Nation

An August 22 Boston Globe report noted: “Massachusetts has the most expensive family health insurance premiums in the country, according to a new analysis that highlights the state’s challenge in trying to rein in medical costs after passage of a landmark 2006 law that mandated coverage for nearly everyone. The report by the Commonwealth Fund, a nonprofit health care foundation, showed that the average family premium for plans offered by employers in Massachusetts was $13,788 in 2008, 40 percent higher than in 2003. Over the same period, premiums nationwide rose an average of 33 percent.”

Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council, points out:

“Massachusetts just keeps providing information showing that more government mandates, regulations and programs in health care do not work. We’ve seen that taxpayer costs have skyrocketed, and now data shows that Massachusetts’ health insurance costs are highest in the nation. Given this economic reality, why in the world are our national elected officials so keen on following the Massachusetts example, including an individual mandate to purchase or have health insurance, or a ‘pay or play’ mandate on business?”

Massachusetts Care: Whoops

With its individual health insurance mandate, “play-or-pay” mandate on businesses (either provide employees health insurance or pay a tax), and expanded government funding, Massachusetts’ health care package passed in 2006 has been something of a model for those advocating more government involvement in health care at the national level.

But now comes the following news, as reported in the July 15 New York Times:

The new state budget in Massachusetts eliminates health care coverage for some 30,000 legal immigrants to help close a growing deficit, reversing progress toward universal coverage just as Congress looks to the state as a model for overhauling the nation’s health care system. The affected immigrants, permanent residents who have had green cards for less than five years, are now covered under Commonwealth Care, a subsidized insurance program for low-income residents that is central to the groundbreaking health care law enacted here in 2006…

In addition to dropping the immigrant insurance program, Commonwealth Care will save an estimated $63 million by no longer automatically enrolling low-income residents who fail to enroll themselves.

What can be said? Whoops.

Maybe more government involvement in health care – including mandates and more spending – isn’t such great ideas after all.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

The New "Schedule HC": A Federal Form Someday?

Meet the new Schedule HC form courtesy of the state of Massachusetts. This is the form that residents must fill out to prove they have health insurance. As noted by the form: “Those who did not have health insurance by December 31, 2007 may lose their personal exemption. This schedule must by completed by all full-year residents and certain part-year residents (see instructions) age 18 and over to determine the amount of personal exemption.”

Too bad Hillary Clinton’s campaign is sinking (as some supporters of universal health care must be thinking). After all, if she did become president and an individual mandate became law, a federal “Schedule HC” would have been emboldened with her initials. Conspiracy anyone??

To view the form, click here.