Massachusetts Hospital Association’s New Recipe for Fudge

An amazing story in the usually reliable Boston Globe by Steve LeBlanc made me gulp: might I have to recant my position on the ineffective and expensive Massachusetts health reform? Luckily, no: a report by the Massachusetts Hospital Association on the reform’s “success” manages to fudge the numbers just enough to convince the casual reader that the “reform” is achieving its primary objective: reducing hospitals’ so-called “uncompensated” care (actually quite well compensated by taxpayers), by enrolling uninsured residents into mandatory health insurance.

Through some kind of magic understandable to politicians, this insurance would transform these folks into responsible patients who would consult with doctors as soon as they felt poorly, instead of waiting until their illnesses turned critical and they crashed the emergency room, only to check out without paying the bill.

Sadly,the MHA’s exquisite recipe for fudge did rope in Mr. LeBlanc:

It was a key premise of the state’s landmark health care law — the more uninsured people who were enrolled in subsidized health care plans, the fewer uninsured people would show up at hospital emergency rooms for routine care. Now a new study says that’s exactly what’s happening. The report by the Massachusetts Hospital Association finds that the number of so-called “free care” visits to hospitals have declined by 28 percent over the past three years. That mirrors a 28 percent increase in enrollment in subsidized health care programs, MassHealth and the new Commonwealth Care program, which was created by the law.

It’s hard to know where to begin dissecting this outrageous claim. Obviously, the exact mirror-image of savings versus cost increase, 28%, should make any reader suspect that the numbers are being cooked. Here’s a list of the ingredients for the fudge recipe:

  1. The 28% decrease in hospital free care visits is from October 2004 to September 2007, versus the same combined increase in MassHealth and Commonwealth Connector enrolment. But MassHealth is just the state’s Medicaid program. The “reform” is the Commonwealth Connector, which did not start enrolling people until January 2007. So, the time period, while conveniently resulting in a balanced ledger, is quite irrelevent to the effect of the “reform”.
  2. Neither of the 28% figures are dollar costs: they are both head-counts: enrolment in MassHealth and Commonwealth Connector plans, and uncompensated care patient accounts in hospitals. Obviously, comparing the two is meaningless.
  3. A graph on page 3 of the report shows the dollar decline in hospital uncompensated care costs: from just under $700 million (FY2004) to $613.5 million (FY 2007): about 12%, in current dollars. (In order to stretch this figure, the report also notes constant dollars, for which it claims a reduction of 23%, but what difference does this make, as it does not report dollars spent on MassHealth and Commonwealth Care, only heads counted?)

So, what really happened to hospitals’ uncompensated care costs during the relevent period? We can’t quite tell, but the report does state actual savings from July 1, 2006 to June 30, 2007 of a (sarcasm alert) whopping $10.1 million! Because the Commonwealth Connector launched in January 2007, only the last six months of the fiscal year are relevent. So, let’s be generous and guesstimate that savings will have increased to $15 million for the first operating year of the Commonwealth Connector.

Ho, hum…..Is this all that Bay Staters get for a reform for which Governor Patrick is requesting $400 million this year? Uncompensated care savings that barely stretch into the double digits?

We have already busted the Commonwealth Connector’s boss for cooking up a rotten story about the program’s originally budgeted costs. Now, the main beneficiary of the plan’s handouts contributes its sugary recipe for fudge to the menu.

Well, if you can’t stand the heat, get out of the kitchen – or the state, I suppose. At least that’s what many small businesses will do if this “reform” keeps boiling over with new taxes to fund ineffective change – or no real change at all.

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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