Mass Appeal

Massachusetts is one of those states that opted for universal health care (signed into law by a Republican Governor, Mitt Romney, in 2006), and today, it is estimated that 97% of the State’s residents have some form of coverage. The thrust of the legislation is that citizens are required to have health insurance, and if they cannot afford it, the State subsidizes the tab depending on income. For employers that opt out of providing this benefit to workers, there is a “per capita” assessment, which is in turned used by the State to provide health benefits to those who cannot otherwise afford a plan. There are also open general pools of private insurance benefits, aggregated by the State, which individuals not covered through work can access.

The plan has, by and large, proven to be a success, raising the governmental cost on healthcare from $1 billion to $1.7 billion (the entire budget for Massachusetts’ State governmental budget is $27 billion). Rising medical costs, however, forced the State to reduce some benefits and raise cigarette taxes to generate extra revenue for the program. Federal contributions also help carry the load. Recent bumps along the way, such as the recession which caused a drop in the State’s tax base (which has impacted virtually every state in the union), have forced the State to adopt some drastic measures (like denying legal immigrants’ coverage) and turn even more toward addressing that seemingly never-ending spiral of medical costs.

There is much to be learned from Massachusetts, since this appears to be a model similar to what the Federal government is contemplating. The thresholds for a cut-off on subsidizing healthcare vary, however, between the Federal plan under consideration and the Massachusetts structure. For example, for a family of four, $66,000 is the limit for subsidies in the State, while the Federal plan currently targets $88,000 as the top limit.

But the good news actually is about “costs.” Federal budgetary projections tend to run wildly below what ultimately costs turn out to be; Americans are wary of such numbers and look at them with a jaundiced eye (maybe some health benefits could cure the jaundice!). However, the Massachusetts experience provides positive news; the cost of the program has pretty much stayed within the parameters of the initial projections.

As the plan was implemented, administrators had to tinker with the scope of benefits, the price structure and how to fund those portions of the program (like open admission to emergency rooms) that were not provided for at the inception of the policy. The early and current stages of Massachusetts’ healthcare provide the usual reimbursement of fees for service, but to control costs, that model may be abandoned in favor of a structure that does not reward prescribing more fees and services as a way to generate medical compensation.

The August 9^th New York Times: “A special commission has just recommended that the state try, within five years, to move its entire health care system away from reliance on fee-for-service medicine, in which doctors are paid more for each additional test or procedure they provide.

“In its place, the commission wants a system in which groups of doctors and hospitals would receive fixed sums to deliver whatever care a patient needed over the course of a year. The hope is that doctors would be motivated to deliver only the most appropriate care, not needless and excessively costly care, with safeguards to ensure that they do not skimp on quality.”

These experiments are valuable lessons that do not have to be “re-learned” as a Federal plan makes its way, past the loud protests at town hall meetings, to the floor of Congress. Undoubtedly, even after passage (if that occurs) of national healthcare legislation, adjustments and changes in overall direction must be expected. Will we someday look at all the brouhaha surrounding the current proposals before Congress with the same bored detachment we view social security or unemployment insurance benefits? Time will tell.

I’m Peter Dekom, and I thought you might want to know.