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Bay State model bodes ill for the nation - Pacific Research Institute

Bay State model bodes ill for the nation

Sunday Republican (Springfield, MA), April 6, 2008

Barack Obama and Hillary Clinton are creating quite a spectacle as they joust over the minutia of their respective health care plans in their attempts to secure the Democratic vote. To witness the real action in health care politics and policy – and catch a glimpse of the future under either Obama or Hillary and a Democratic-controlled congress – we should turn our attention to Massachusetts.

The Bay State is almost two years into a plan on which both Obama’s and Hillary’s are based. It includes a new government bureaucracy that offers health plans, increased Medicaid access, taxpayer subsidies to those earning less than three times the poverty level, and, of course, vague promises of cost control.

The Massachusetts plan also features individual and employer mandates, which Hillary supports. It should be noted, however, that Obama says he opposes Massachusetts- style mandates, although he would create a law forcing parents to insure their children.

The results of the Massachusetts experiment have been as bad as they were predictable. The program is only two years old, yet the regulatory body is already canceling important meetings due to an inability to find funding, control costs, and appease welfare-rights groups that say $5 per month is too expensive for a comprehensive health care package.

And it’s not as if it’s achieved anything close to universal insurance. The plan’s supporters are celebrating over 293,000 newly insured individuals, conveniently ignoring the fact that 160,000 are enrolled in free or almost-free plans. Another 70,000 were simply put on Medicaid.

A mere 63,000 – one in five newly insured – has actually purchased a private plan. And these paying customers are proving to be heavy users of the insurance, driving the costs of the plans up for everyone else through increased premiums.

Moreover, bureaucrats exempted 60,000 people from the insurance mandate on account of plans being deemed unaffordable at last year’s prices. This number will surely jump as the new premium increases prompt additional pleas for relief. The fine for not shelling out up to 10 percent of one’s income on premiums for government-approved health plans jumped to $912 this year.

Amazingly, this massive expansion of government health care – designed by bureaucrats, financed by taxpayers, and enforced at the threat of fines – was largely done with federal dollars. It was done in plain sight with strong bipartisan support. And it was overseen by a Republican governor.

Cost control was never really on the design table. There was supposed to be a mass infusion of cash into the system as young uninsured signed up for health insurance, thus subsidizing their parents’ artificially low premiums. But that never happened. It turns out that the heavy insurance users were mentally ill adults with substance abuse problems, not snowboarders with sprained ankles.

So almost two years into its journey, Massachusetts is in crisis. Renewal bids are coming in higher than expected; the federal government is contemplating capping the credit line; and welfare advocates are up in arms at even the slightest increase in costs being passed on to subsidized plan recipients.

In short, the state has another unaffordable entitlement on its hands, and the only solution is more government mandates and controls. Calls are going out for a return to the most restrictive form of managed care, cutting pay to providers and jacking up taxes on businesses.

All this should prove instructive in this year’s presidential race. Massachusetts’ swift decline demonstrates once again that wishful thinking gets policy makers only so far. Eventually, they need real dollars to finance their schemes, which always prove more expensive than originally advertised.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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