Reader Question – What can we learn from Massachusetts?

A reader writes:

A friend of mine has been arguing against the Baucus bill by pointing to the downfalls of the current MA health care framework.

His basic argument is that gov’t fixed prices decreases competition and efficiency. This in turn leads to higher premiums and reduced choices. What is a good response to his claim?

First of all, I agree that looking at Massachusetts is a decent way to figure out what will happen with reform as currently proposed. Although the specifics differ, basically, what the Massachusetts plan does is increase the coverage of the safety nets, institute community ratings, make coverage mandatory, provide subsidies, and put insurance in an exchange. Sounds familiar, right?

What happened? Coverage went way up. Quality is sort of unchanged. And the cost is getting too high. Which is exactly what I have said will happen with national reform.

It’s not that government fixed prices decreases competition and efficiency. I’ve talked about that previously. What is leading to increased costs is a focus on universal coverage while maintaining quality. It’s patching the system under the constraints of the iron triangle. Costs are going to go up.

No one is addressing costs. No one was in Massachusetts. And so now in Massachusetts they are realizing they need to take drastic action to save money.

The same doesn’t have to happen nationally. We could choose to work on costs right now. That takes shared sacrifice, though, and no one seems willing to tackle it.

Bottom line – Massachusetts is a good example of what will happen with national reform. But it’s not because of increased government involvement; it’s because we aren’t addressing costs.

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