Posted on February 18, 2009

Massachusetts' plan is the wrong model for the U.S.


Massachusetts’ Plan: A Failed Model for Health Care Reform

Prepared by Dr. Rachel Nardin, Assistant Professor of Neurology, Harvard Medical School, with Drs. David Himmelstein and Steffie Woolhandler (both Associate Professors of Medicine, Harvard Medical School)
February 18, 2009

Executive Summary

The Massachusetts Health Reform Law of 2006 expanded Medicaid coverage for the poor and made available subsidized, Medicaid-like coverage for additional poor and near-poor residents of the state. It also mandated that middle-income uninsured people either purchase private health insurance or pay a substantial fine ($1,068 in 2009). Smaller fines (up to $295 per employee) were also levied on employers who fail to offer insurance benefits.

The reform law has not achieved universal health insurance coverage, although half or more of the previously uninsured now have some type of insurance policy.

The reform has been more expensive than expected, costing $1.1 billion in fiscal 2008 and $1.3 billion in fiscal 2009. In the face of a state budget crisis in fall 2008, Gov. Deval Patrick announced that he will keep the reform afloat by draining money from safety-net providers such as public hospitals and community clinics.

While the number of people lacking health insurance in Massachusetts has been reduced, several recent surveys demonstrate that substantial problems in access to care remain in the state. While the new health insurance improved access to care for some residents, many low-income patients who previously received completely free care under the state’s old free care program now face co-payments, premiums and deductibles that stop them from getting needed care.

In addition, cuts to safety-net providers have reduced health resources available to the state’s remaining uninsured, as well as to others who rely on safety-net providers for services in short supply in the private sector. These safety-net services include emergency room care, chronic mental health care, and primary care. The net effect of this expensive reform on access to care is at best modest, and for some patients, negative.

By mandating that uninsured residents purchase private health insurance, the law reinforced the economic and political power of health insurance firms. Thus, the reform augments the already high administrative costs of health care. Moreover, the agency that administers the new law (the “Connector”) adds an extra 4 to 5 percentage points to the already high overhead of private health insurance policies.

The reform failed to reduce overreliance on expensive, high-technology services. Indeed, some of its provisions such as changes in Medicaid rates and cuts to safety-net providers (who do more primary care) have further tilted health spending toward expensive, high-technology care.

A single-payer system of non-profit national health insurance could save about $8-$10 billion annually in the state through reduced administrative costs. This money could be used to cover all of the state’s uninsured residents and to improve coverage for those who now have insurance, without any increase in total health care costs.

The Massachusetts reform law is not providing universal access to care, even in a state with highly favorable circumstances, including previously high levels of spending on health care for the poor, high personal incomes, and low rates of uninsurance. It is not a model for the nation.

Report: Massachusetts’ Plan: A Failed Model for Health Care Reform

Press release: Massachusetts Is No Model for National Health Care Reform


By Don McCanne, MD

Those supporting the leading Democratic model for reform frequently cite the Massachusetts plan as an example of how building on our current system of health care financing is the best path to success. Unfortunately, they use selected positive numbers to define success, while ignoring the fact that Massachusetts has failed in its efforts to achieve the real goals of reform. You can understand how pathological the politics of reform has become when they have to dig into the data of a failed reform effort in order to redefine failure as a success.

Let’s look at some of the goals, and how Massachusetts has fared:

  • Everyone should be included - We should quit being dishonest when we say universal, and start demanding that universal means absolutely everyone. The Massachusetts model has left perhaps five percent of individuals without any coverage whatsoever, and there is little likelihood that the numbers of uninsured will be reduced further because of serious flaws in their model.
  • The growth in health care costs must be slowed - The Massachusetts model has been ineffective in addressing the primary causes of excess cost escalation.
  • Health care must be affordable for each individual - Insurance premiums and cost sharing in private plans have remained unaffordable for many in Massachusetts, impairing access to care. Insurmountable debt or personal bankruptcy from medical bills remains a very real threat in Massachusetts.
  • Under-insurance must be eliminated - Massachusetts has expanded the problem of under-insurance in an attempt to make premiums affordable, failing to achieve either goal of adequate plans or affordable premiums.
  • Administrative waste must be reduced - Massachusetts has added complexity to an already complex financing system, significantly increasing the administrative waste in their system.
  • Coverage should be automatic, portable, and permanent - Massachusetts has provided further confirmation that no model built on our dysfunctional financing system can achieve these goals.
  • Health care must be accessible - The Massachusetts model has further exacerbated the deficiencies in the state’s primary care infrastructure, resulting in increased difficulty in accessing their system. Their fragmented financing model has very little capability of realigning resource allocation to improve access.
  • Private intermediaries that waste resources and impair access must be eliminated - But isn’t this what the Massachusetts plan is all about? Their view is that we must use our public agencies and tax funds in an all-out effort to protect the private insurance industry, regardless of the harm to patients in the form of physical suffering and financial hardship.

Suppose Congress and the administration accept the message that the Massachusetts plan is the wrong model for reform. Will they then move forward with a single payer national health program - a model that would actually achieve our goals? It is unlikely, based on all signals emitting from Washington. Instead, they will develop a uniquely American plan designed for Americans.

It will be a plan built on our uniquely American, dysfunctional, fragmented system of financing health care. But it won’t be like the Massachusetts plan that was developed in a wealthy state with greater health care resources, and with fewer financing problems than the rest of the nation. No, it won’t be like Massachusetts. It will be much worse… much, much worse.