The answer to this well understood problem (called adverse selection) was a mandate that citizens purchase insurance, so that the costs of providing it to those who needed it most could be shared more broadly.
That 2006 reform is known as Romneycare, and in a post at?The Boston Business Journal, Managing Editor Craig Douglas asks whether it was worth it. Specifically, he asks:
But can anyone in Massachusetts with private insurance today, and who also had private insurance seven years ago before the state?s ?An Act Providing Access to Affordable, Quality, Accountable Health Care? was forged into law, attest to being better off when it comes to their personal cost and coverage for health care?
The answer, based on all available evidence, is yes.
Douglas alleges ? based on ?personal experience and many conversations with friends, family and fellow worker bees? ? that the quality of healthcare coverage has?deteriorated?and that costs for consumers are going up. The implication is that this is the fault Romneycare?s universal mandate.
Luckily, the Massachusetts reform has been the subject of considerable research, and the evidence suggests this is simply not the case.
Quality
Quality of medical care is unfortunately very difficult to measure, but a 2012?study commissioned by the National Bureau of Economic Research based on self-reported health measures found significant health improvements since reform. Yes, the gains include the benefits of more people being insured (an important thing!), but if quality was really dropping significantly it would have showed up in this research. Moreover, U.S. News & World Report recently ranked Massachusetts first in the nation based on the completeness and value of its insurance coverage.
Cost
Discussion about ?healthcare costs? can get confusing as it often blurs together several things. There?s aggregate spending ? how much, say, a state spends on healthcare. There are premiums ? how much an individual or employer pays monthly for an insurance plan. And there is, for lack of a better term, efficiency ? the amount paid either per unit of care or per unit of health outcome. The backdrop to any discussion has to be that aggregate healthcare spending is rising across the country.
Even on the simpler question of Massachusetts insurance premiums there are complications. Premiums have historically been high, but once you account for the state?s higher median income they look much more reasonable. And, as mentioned above, U.S. News rated the state?s plans as a good value, based on what you get for your money.
But did Romneycare make premiums rise, as Douglas implies? Actually, premium growth in Massachusetts has slowed in recent years?and looks relatively good by comparison to other states. There are a lot of factors tangled together here and so it?s tough to make any confident judgments, but in theory the inclusion of more healthy people in the insurance market should drive down premiums, and sure enough this has been true in the state?s non-group market.
Healthcare affordability remains a key challenge, though?research published in the journal Health Affairs illustrates?that it has not risen overall, as shown below.
This remaining challenge explains why Governor Deval Patrick is prioritizing cost control in recent legislation. But evidence that universal coverage is to blame for increasing premiums is scant.
Cost Shifting
One final point I want to address that Douglas claims:
Because government programs such as Medicare and Medicaid are notoriously stingy when it comes to reimbursing health providers ? often paying less than 70 cents on the dollar for the cost of care, according to state and federal data ? hospitals and other care givers are required to offset the difference by hosing the privately insured.
This is a compelling argument, but it is refuted by the data. As health economist Austin Frakt wrote in 2011, ?The best estimates in the literature suggest that today hospitals probably cost shift about 20 cents of each dollar shortfall in Medicare payments.? This doesn?t mean Medicare on the cheap isn?t a problem, just that it?s not to blame for higher private healthcare costs.
Conclusion
To return to Douglas? initial question: are we better off in Massachusetts thanks to universal health insurance? Yes. Health insurance is an important component to human welfare, and in exchange for the insurance mandate we can be assured that an accident or sudden illness likely won?t send us into bankruptcy. Moreover, the 2006 reform extended that comfort to lots of citizens who previously had limited access to healthcare, and they report being better off for it.
Contrary to Douglas, there is no evidence that the quality of our care has suffered; in fact, the state has some of the best healthcare in the nation. Healthcare costs ? premiums, aggregate spending, and efficiency ? remain a very real challenge, but they are rising as part of a broader national (and international) trend, not because of universal insurance.
The state?s reform efforts under Governor Romney set out to expand coverage and succeeded at its stated goal. Today we?re better off for it.
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Understanding Healthcare Costs in 5 Charts
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The U.S. spends the most per capita on healthcare of any industrialized nation, but the evidence suggests we don't get superior health outcomes from that spending. (Graph via The Commonwealth Fund.)
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You can see from this nice breakdown of where our federal taxes are spent that 21% of it goes to healthcare, in the form of Medicare, Medicaid, and CHIP (health insurance for children.) [Chart via the Center for Budget & Policy Priorities]
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Healthcare spending isn't distributed equally throughout the population. Instead, a small fraction of chronically sick people account for the majority of spending. This has a number of implications for health innovation and policy. [Chart via NIHCM]
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Unsurprisingly, healthcare spending skews toward the old. Look at how those top three blocks representing 55+ represent a huge fraction of the top 5% and top 1% of healthcare spenders. Demographics are putting strain on the healthcare system. [Chart via NIHCM]
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The 2006 reform passed in Mass. helped decrease the % of uninsured dramatically to under 2%. The key challenge today remains curbing costs. [Chart via Health Affairs]
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Understanding Healthcare Costs in 5 Charts
The U.S. vs. Other NationsThe U.S. spends the most per capita on healthcare of any industrialized nation, but the evidence suggests we don't get superior health outcomes from that spending. (Graph via The Commonwealth Fund.)
Taxes and HealthcareYou can see from this nice breakdown of where our federal taxes are spent that 21% of it goes to healthcare, in the form of Medicare, Medicaid, and CHIP (health insurance for children.) [Chart via the Center for Budget & Policy Priorities]
Chronically Sick People Cost a LotHealthcare spending isn't distributed equally throughout the population. Instead, a small fraction of chronically sick people account for the majority of spending. This has a number of implications for health innovation and policy. [Chart via NIHCM]
Age and SpendingUnsurprisingly, healthcare spending skews toward the old. Look at how those top three blocks representing 55+ represent a huge fraction of the top 5% and top 1% of healthcare spenders. Demographics are putting strain on the healthcare system. [Chart via NIHCM]
Mass. Healthcare ReformThe 2006 reform passed in Mass. helped decrease the % of uninsured dramatically to under 2%. The key challenge today remains curbing costs. [Chart via Health Affairs]
Source: http://bostinno.com/2013/01/03/universal-health-insurance-in-massachusetts-yes-were-better-off/
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