The Massachusetts "model" moves to price controls

Natural experiments are rare in politics, but few are as instructive as the prototype for ObamaCare that Massachusetts set in motion in 2006. The bills for "universal coverage" are now coming due, and it appears the state political class is prepared to do lasting damage to one of America's top-flight health care systems, says the Wall Street Journal.

Last month, Democratic Governor Deval Patrick proposed hard price controls across almost all Massachusetts health care:

State regulators already have the power to cap insurance premiums, which Patrick is activating.

He also filed a bill that would give state regulators the power to review the rates of hospitals, physician groups and some specialty providers.

Those that are deemed too high "shall be presumptively disapproved."
The administered prices of Medicare and Medicaid already shift costs to private patients while below-cost reimbursement creates balance-sheet havoc among providers. Now the governor wants to import these distortions to save the state's heavily subsidized insurance program as costs explode, says the Journal.

Ironically, former Governor Mitt Romney (like President Obama) sold this plan as a way to control spending. As with all new entitlements, the rolling cost crisis began almost immediately, says the Journal:

For fiscal 2010 taxpayer costs are $47 million over budget, in part due to the recession, and while the $913 million Patrick requested for 2011 is a 5 percent increase over 2010, spending has grown on average 6.7 percent per year.

Meanwhile, average Massachusetts insurance premiums are now the highest in the nation; since 2006, they've climbed at an annual rate of 30 percent in the individual market.

Small business costs have increased by 5.8 percent.

Per capita health spending in Massachusetts is now 27 percent higher than the national average, and 15 percent higher even after adjusting for local wages and academic research grants.

All of this is merely a preview of what the entire country will face if Democrats succeed with their plan to pound ObamaCare into law in anything like its current form. Massachusetts is teaching the country a valuable lesson in how not to reform health care, if only anyone would pay attention, says the Journal.

Source: Editorial, Back to the ObamaCare Future: The Massachusetts 'model' moves to price controls, Wall Street Journal, March 1, 2010.

For text: http://online.wsj.com/article/SB10001424052748703444804575071294139286892.html

For more on Health Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=16

First published by the National Center for Policy Analysis, Dallas and Washington, USA

FMF Policy Bulletin/ 02 March 2010