In 2006, Massachusetts under Governor Mitt Romney enacted a healthcare bill (Romneycare) offering subsidized or free care to those without health insurance, establishing a state-run exchange(the Connector) to improve access for individuals and small businesses, and mandating that everyone buy insurance. Since this legislation has a lot in common with the recently passed national health care bill, it is worth asking what effects, positive or negative, the bill produced. Here are some statistics and then some personal anecdotes.
The number of uninsured has dropped from around 6% to 3%. That’s good. The number of emergency room visits has increased, despite predictions to the contrary. That’s bad. And the amount of ‘free care’ provided has dropped by about 40%, though it is unclear if that is due to the free care pool being capped by law, or some free care being displaced by greater coverage. It hasn’t disappeared or shrunk as much as expected. Premiums are still rising rapidly. There is growing evidence that people are gaming the individual mandate, buying a policy when they need care and then dropping it. And the bill has cost the state more than the projections.
I have had insurance through Blue Cross Massachusetts (BC), a non-profit, for over 20 years. For ten years or so, my small company has had a small group policy. In the last 2 years, I faced dramatic premium increases, well over 20%, for the same policy. I kept the increases manageable by changing the policy, first from a PPO with no referral required to an HMO with only statewide coverage and required referrals, then to an HMO plan with co-insurance for many services and higher co-pays, though there are reasonable (several $1000) caps on out-of-pocket deductibles, co-pays, and co-insurance. I don’t think there is any more room to adjust the plan to reduce costs, next year. But the future is unclear. Governor Patrick recently blocked rate increases by health insurance companies, even though most lost money last year ! I remember living through wage and price controls under President Nixon, intended to beat inflation. They didn’t work and were dropped in under a year. And in case you were wondering, I did check out the plans available through the Connector but they were more expensive than what BC already offered me.
But this anecdote probably sums up what is wrong with Romneycare and Obamacare. I don’t get regular checkups (yet) but wanted to get one upon turning 50. I had to wait the better part of a year for an appointment with my internist. Most established primary care doctors do not take new patients, and getting appointments with any doctor or specialist takes a lot of work. This was a problem before Romneycare passed and it has gotten significantly worse.
The laws of economics and human behavior are immutable. Passing a bill doesn’t change the laws of supply and demand. Giving people free or subsidized access to care increases utilization and cost in the near term. Doing so without increasing healthcare providers leads to shortages. Politicians always underestimate entitlement program costs. And people always react to new laws by changing their behavior to their advantage. I’ll have more to say about rising health care costs, Obamacare, and reforms I would like to see in future posts.