Wednesday, July 15, 2009

The Massachusetts experiment

Medicare is a fiscal disaster headed for bankruptcy in less than ten years. TennCare has been a headache for Tennessee ever since its inception in the mid-1990s. And now Massachusetts is facing problems of its own following the state's enactment of a universal care model only a few years ago:
The new state budget in Massachusetts eliminates health care coverage for some 30,000 legal immigrants to help close a growing deficit, reversing progress toward universal coverage just as Congress looks to the state as a model for overhauling the nation’s health care system.

The affected immigrants, permanent residents who have had green cards for less than five years, are now covered under Commonwealth Care, a subsidized insurance program for low-income residents that is central to the groundbreaking health care law enacted here in 2006.

Gov. Deval Patrick has proposed restoring $70 million to the program, which would partly restore the immigrants’ coverage. But legislative leaders have balked, saying vital programs for other groups would have to be cut as a result. The cut, which would affect only nondisabled adults from 18 to 65 years old, would take effect in August unless the legislature approves Mr. Patrick’s proposal.

...Because of its three-year-old law, Massachusetts has the country’s lowest percentage of uninsured residents: 2.6 percent, compared with a national average of 15 percent. The law requires that almost every resident have insurance, and to meet that goal, the state subsidizes coverage for those earning up to three times the federal poverty level, or $66,150 for a family of four.

But the recession has made an already difficult experiment far more challenging. Enrollment in Commonwealth Care has risen sharply in recent months, to 181,000, as more people have lost jobs. That increase, combined with plummeting state revenues, made it impossible to maintain last year’s level of service, said Cyndi Roy, a spokeswoman for the state’s Executive Office for Administration and Finance.

In addition to dropping the immigrant insurance program, Commonwealth Care will save an estimated $63 million by no longer automatically enrolling low-income residents who fail to enroll themselves.
A few points:
  • The Massachusetts model is fairly similar to what is currently being proposed in Congress, combining a mandate with all people to buy insurance (or else pay a penalty) with a "public option" government-run insurance model (in this case Commonwealth Care).
  • Transferring health care to the government does not eliminate the problem of resource constraints. Money is finite and choices have to be made about who receives care.
  • This is an example of health care being rationed.
  • The fiscal track record of government interventions in the health care sector is poor. How the current federal health care legislation will avoid this is unclear.
  • Green card holders don't vote and the poor are the least likely (table B) income group to cast a ballot.

1 comment:

Paradigm Shifter said...

The Economist, no bastion of libertarians, came out today with full guns a'blazin at the House health care bill. Their recommendation: restore market sanity and eliminate the tax incentives for employee provided health care. It's nice to be in the company of such publications.