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
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.