Today Paul Krugman asks: What happens to health care after health care reform? (He assumes -- and I agree -- that its passage is a matter of when, not if.) Krugman writes:
If the Massachusetts experience is any guide, health care reform will have broad public support once it's in place and the scare stories are proved false. The new health care system will be criticized; people will demand changes and improvements; but only a small minority will want reform reversed.
I think it's more complicated than that.
Taking a closer look at Massachusetts, in the National Journal, Marilyn Weber Serafini wrote an indispensable review of the state's reform efforts from 2006. Like the bills moving through Congress, that law included both an individual mandate and new insurance regulations. Unlike the Democrats' bill, Massachusetts tried to put off cost control so that people would see the benefits of reform before having to pay the bill. Bay state public reaction is mixed: 70 percent of physicians support the bill, but only 26 percent of the public considers it a "success."
The Bay State's reform has expanded insurance to more than 300,000 citizens and its uninsured ranks are the smallest in the country. But all is not well in Massachusetts. Insurance prices have been higher than anticipated, safety-net hospitals are struggling, there's a marked shortage of primary care physicians, and the state is struggling to keep up with health care spending in the downturn (unlike the federal government, states can't run budget deficits).
This section of the piece should be especially required reading for those who've just finished Krugman's piece:
When the 2006 law was passed, the assumptions were that the price of insurance premiums would fall as young, healthy uninsured people joined the ranks of the insured and that fewer people would use hospital emergency rooms for non-emergencies. Those changes were supposed to save Massachusetts money.
Neither happened, according to state Sen. Eldridge [a Democrat], "at least not enough to produce the cost savings we were told we would see." Eldridge, a proponent of single-payer, national health care, notes that the law has cost the state more than expected. Spending on Commonwealth Care, the subsidized health program that the law created, is estimated at $1.3 billion in fiscal 2009, up from $1.1 billion in fiscal 2008.
The price of the four insurance plans offered under Commonwealth Care rose 9.4 percent in 2009, according to the report done for the Physicians for a National Health Program. The study's authors said that the law has done nothing to stem the overuse of high-tech care and the "underdevelopment" of primary care. "Indeed, one little-known provision of the reform actually shifted resources away from primary care by lowering Medicaid payment rates for such services, while raising them for high-tech, tertiary-care services," they said.
None of this is to say that the United States will see the Massachusetts' example become our future. A public option -- even a weak public option -- might control costs better than Massachusetts has managed. The excise tax on expensive health care plans could help cost containment in two ways: It could could collect billions from insurance companies and also encourage employers and families to switch to less expensive plans, which should move more of their compensation away from employer-provided health care (which is not taxed) into income (which is). But the bolded section above is an especially acute reminder that without significant delivery system reforms, we risk not only entrenching, but also exacerbating the screwy incentives of our pay-for-service system.
Finally, a note on politics. "If stakeholders feel the pain first, that could doom the bill," said Robert Blendon, a professor of health policy at Harvard. That explains yesterday's news that Dems are pushing to make more carrots available to voters in 2010:
Democrats are anxious to mix the good with the bad since some of the pain would be phased in early, including more than $100 billion in industry fees that critics say could be passed on to consumers..
Under the Democratic wish-list, senior citizens would receive discounts on brand-name drugs next year. Small businesses that provide insurance would see tax credits. And a $5 billion high-risk pool would cover people with preexisting conditions..The changes to Medicare funding, which Democrats say is aimed at redirecting wasteful spending but Republicans say would hit senior citizens, would be implemented immediately.
I was just discussing this issue with colleagues Megan McArdle and Dan Indiviglio on Friday. Dan expects voters to focus on the short-term costs of health care (eg. the excise tax, the mandate, the Medicare cuts) over the benefits in 2010. Megan is especially pessimistic about the excise tax hitting cushy union benefits and creating a migraine for lawmakers. Who's right is a question we're still months, or years, away from knowing. But if we're looking to Massachusetts for lessons, everybody can agree that the first one is: Let them eat carrots.