Arnold Kling  

Defending the Massachusetts Plan

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It's working, according to the Massachusetts Taxpayers Foundation, a non-partisan think tank that consistently advocates higher government spending and taxes in Massachusetts.


From a base of $1.04 billion in fiscal 2006, the state is projected to spend $1.75 billion on healthcare reform in fiscal 2010, an increase of about $700 million, half of which is supported by federal reimbursements. The $350 million state share translates into an average yearly increase of only $88 million.

...With individuals required to have health insurance, many have enrolled for the first time in their employer's plan or purchased private coverage on their own. Employer-sponsored enrollment has grown by 150,000 and individuals' private coverage by 40,000 since health reform was adopted. The Foundation estimates that the added cost to Massachusetts employers for newly insured employees and dependents is at least $750 million - more than double the $350 million increase in state spending under health reform.

So, the reform is "working" by mandating a shift in compensation from take-home pay to health insurance and by draining money from the Federal taxpayers. According to the Boston Globe, that makes it a great model for the nation. Thanks to Mark Thoma for the pointer.


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COMMENTS (5 to date)
dano writes:

With individuals required to have health insurance, many have enrolled for the first time in their employer's plan or purchased private coverage on their own. Employer-sponsored enrollment has grown by 150,000 and individuals' private coverage by 40,000 since health reform was adopted

So these citizens of Massachusetts could afford to buy insurance, just didn't want to eh?

Paul Kenworthy writes:

That report was such a crock. They deliberately obscure direct comparisons to advocate for their policy preferences:

1. They conflate health care spending and health insurance spending. Some of their numbers are one and some are the other.

2. They don't provide direct comparisons of amounts spent by the federal government, the state government, and individuals across the three years.

3. They try to obscure the fact that Medicaid and Medicare have been under-paying for a number of years. There were payments of $200mm per year made in the last two fiscal years to try to catch that up which are cut from their estimates for the next budget year. In other words, they claim that the federal government will cover half the cost increase, yet they neglect to mention that it does so by simply not paying bills it has incured.

4. They neglect to mention that Boston Medical Center, one of two public hospitals cited in their report, is suing the state for cutting its Medicaid payments significantly in order to use them for insurance payments. (Boston Globe, July 17)

In summary, the Massachusetts Taxpayers Foundation says the plan is a success because half of the spending increase in the last three years is paid for by the federal government. Who is going to pay that half for the federal version of this plan, the Chinese?

By the way, I live north of Boston. I had to get a prescription for antibiotics last week. My doctor told me he was writing the prescription for a generic that was on the $4 list at Wal-Mart. If I used my employer-provided insurance card, I would have to pay the $15 copay. If I went to Wal-Mart and didn't use my insurance, I would have to pay $4.

There you have it, three models:

1. The Medicaid model that will be fought out between the Commonwealth and BMC in the courts at taxpayer expense.

2. The employer-provided insurance model with the $15 copay.

3. The Wal-Mart model at $4.

I know which one I would chose.

RL writes:

"by draining money from the Federal taxpayers. According to the Boston Globe, that makes it a great model for the nation."

Whom will the Federal taxpayers drain the money from?

Steve writes:

From Mike Cannon @CATO

Here’s why the claim that the reforms cost Massachusetts taxpayers just $88 million per year is wrong.

According to the Massachusetts Taxpayers Foundation, $88 million is not the annual cost of the law, but the average year-to-year increase in state spending due to the law. It’s a marginal-cost estimate, not a total-cost estimate.

The foundation used (uncertain) future spending cuts to make the average annual increase in spending appear smaller. In 2009, the total cost to the state government, according to the foundation, will be $408 million, nearly five times what the Globe claims.

That $408 million is just the cost to the state government. According to the foundation’s estimates, the state government’s share amounts to just 20 percent of the law’s total cost of $2.1 billion in 2009. The remaining 80 percent is borne by the federal government (20 percent) and private individuals and employers complying with the law’s individual and employer mandates (60 percent). Since Massachusetts taxpayers also pay federal taxes and must comply with the law’s mandates, state taxpayers pay much more than $88 million to comply with the law. In fact, the total cost of the law is about 24 times what the Globe says it is.

Bob Calder writes:

Paul complained about the state program but in his conclusion related a story that lays out one reason health care is screwed up. Massive differentials in scale.

Mike lays out figures against those of the Mass Taxpayers' Foundation (MTF) and neither of them (Mike and MTF) are persuasive because the rest of us don't know how to compare the state's human services budget against anything. The numbers are useless. What's the state budget? What's the human services budget? How much is an average health insurance premium there? What was the burden of the uninsured on it's citizens? What has inflation done to costs there and how does it compare to other nearby states?

In Florida, the state budget spends one third on education, one third on human services, and one third on everything else. Yes, everything. Human servies and education are huge. To put it in perspective, Florida spends less than most other states on education.

Paul complained that the MTF shifted money from other human services line items to health care. Well, yes it does. And so it should. The citizens of my state pick up hospital bills for the uninsured because we don't let them die on the hospital steps. It's very expensive and it would be wonderful if we could get them to buy insurance like we got them to buy car insurance back in the 1970's. The cost of car insurance for those of us who are normal citizens didn't go up at the rate of states that didn't have mandatory car insurance. States that had good "financial responsibility" laws had better experience than others. Massachussets, New Jersey, New York, and Florida were the leaders.

So yeah, the cost goes up. But how does MA compare with New England averages? Was their cost shift efficient? Is the market going to support it in the long run?

Florida supported mandatory car insurance for over thirty years. Recently State Farm decided they didn't like it anymore. Meh. We kept it.

One of the larger issues is productivity increases due to better health and welfare. What benefit will we experience? Other countries with similar productivity experience better longevity. How does that balance?

I enjoy my freedom of choice and value that of others more than you might suppose. However I fail to appreciate paying for their doctor visits, lab tests, hospital bills, rehabilitation, long term care, hospice care, and funerals. Even the fire department budget reflets costs due to the uninsured. Lots of them use the fire department's EMTs for critical care providers and refuse trasportation to a medical facility and it's municipal tax that supports it.

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