The United States of Massachusetts

The June 19, 2009 issue of the Wall Street Journal contains the following statement in an editorial.

“Mitt Romney pitched his 2006 health reform — which Democrats view as a model for universal coverage — as modest and affordable, yet already its public option is annihilating the Massachusetts fisc. The original cost estimate for last year was $472 million; final spending came in at $628 million. Spending this year is at least $75 million over initial budget, while projections for next year range as high as $880 million — and even those are probably too low.”

I wrote the following article in March 2008, do you see a pattern?  As the federal government moves in this direction, be prepared for unintended consequences.  Expanding coverage without addressing the underlying causes of health care costs is a recipe for disaster.

Guess Where? 

State officials, struggling to keep down the cost of the subsidized insurance program at the heart of healthcare law changes, abruptly pulled back from new contracts with insurers this week, according to three sources close to the bidding process. 

In December, before bidding began, authority staff predicted that state costs per member could rise as much as 14 percent without any changes in coverage or co-payments, an increase officials said was unsustainable. Initial bids from some insurers came in even higher, sources said, followed by second bids that were more moderate, but apparently still too high for the state. 

Governor XXXXX, in his proposed budget for next year, included $869 million for the subsidized program, called Commonwealth Care, up from $618 million this year. The program currently serves more than 170,000 low-income people and is expected to grow to 225,000 by June 2009. 

In addition, the board has been considering raising premiums and co-payments to help reduce the state’s costs. 

Over the last few weeks, as the state negotiated new contracts with four insurers who have managed the program since it began in October 2006, lobbying intensified against the proposed premium increases. 

The authority’s staff had proposed that the premiums and co-payments be adjusted depending on the insurers’ final bids. About 75 percent of members currently pay no premium, while the rest pay $35 and up a month. The state has proposed increases of $5, $10, or $15 a month, along with similar increases in co-payments. Higher bids could mean higher premiums and co-payments to offset the state cost. 

Three sources close to the bidding process, who asked for anonymity because of the confidentiality of the negotiations, said some of the four insurers’ initial bids came in even higher than 14 percent increases and were rejected by the state. After a second round of bids, the state and insurers reached preliminary agreement on new contracts with at least a 10 percent increase for some of the plans, the sources said. 

Celia Wcislo, assistant division director of Local 1199 of the Service Employees International Union, said the state needs to look broadly for ways to pay for growing costs. 

“If the bids are high, extreme co-pay and premium increases for low-income families are not a morally or fiscally sound solution,” she said. “Massachusetts healthcare reform, which has been successful so far, was built on a foundation of shared responsibility.” 

Excerpts from the Boston Globe © Bay State pulls back on health contractsOfficials struggle with rising costs of subsidized plan Officials struggle with rising costs of subsidized plan By Alice Dembner Globe Staff / February 29, 2008 

It is Massachusetts, surprised. 

Wave a magic wand and costs will come under control, just look for other ways to pay for growing costs, health care reform was built on a foundation of shared responsibility…reform you say. What reforms in Mass control costs? Mandating coverage, and allowing people to pay premiums based on their age, has nothing to do with health care costs.  The problem now in good old Massachusetts, where I sit at the moment, is that they don’t know the difference between premiums and costs and perhaps have not made the connection that the cost of health care drives premiums. 

March 2008

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