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Study: Massachusetts Health Reform is a Failed Model

Les Masterson, for HealthLeaders Media, February 19, 2009

The single-payer healthcare system was once the reform flavor of the moment, but it has been largely pushed to the rear and replaced by talk of a public insurance option and individual mandate.

Massachusetts' healthcare reform, which included an individual mandate that required residents to purchase insurance, has increased coverage, but critics charge that the plan has not decreased costs or improved access to care.

In a study released Wednesday, two organizations say the Massachusetts health system is a failure and national policymakers should not look to that model as a possible solution. Instead, they propose a single-payer "Medicare for all" system as a better alternative.

Physicians for a National Health Program and Public Citizen, which support a single-payer health system, charged the Massachusetts project has not covered as many people as claimed, not contained costs, and hurt safety-net providers like public hospitals and community clinics.

In fact, the individual mandate is merely a "new tax on the uninsured," according to the study.

"We are facing a healthcare crisis in this country because private insurers are driving up costs with unnecessary overhead, bloated executive salaries, and an unquenchable quest for profits--all at the expense of American consumers," says Sidney Wolfe, MD, director of Public Citizen's Health Research Group in Washington, DC, at a press conference announcing the study Wednesday. "Massachusetts' failed attempt at reform is little more than a repeat of experiments that haven't worked in other states. To repeat that model on a national scale would be nothing short of Einstein's definition of insanity."

The reform law, which was enacted in 2006 with unanimous support from the Democratic-controlled Massachusetts Legislature and then Republican Governor Mitt Romney, requires residents to have health insurance and fines businesses that do not provide coverage.

In the study, the two groups said the individual mandate meant more business for health insurers, but didn't address administrative costs associated with private health insurance. In fact, the Massachusetts Connector, which was created to promote the program and help link people to the health plan options, adds 4-5 percentage points to private insurer policies, according to the study.

Though the reform has added to the number of insured residents in the commonwealth, the study's authors said the total is not as high as promoted. The Urban Institute found that 2.6% of Massachusetts respondents said they were uninsured in a mid-2008 phone survey. However, two other sources claim the percentage is about twice that number, according to the study.

Jon Kingsdale, executive director of the Massachusetts Connector, says Wednesday the state is confident with the 2.6% figure because they went "to great lengths" to accurately survey the uninsured.

"This low level of uninsured is consistent with the stated goal of health reform to achieve near-universal coverage and is only a point or so above the uninsurance rates reported by many European countries with so-called universal access," says Kingsdale.

Rising costs
The study's authors say another problem with the initial Massachusetts reform is that it did not address rising healthcare costs. Healthcare costs, in turn, will increase from $1.1 billion in fiscal 2008 to $1.3 billion in fiscal 2009.

On the flip side, if the state had created a public single-payer system, it could save about $8-$10 billion annually through reduced insurer administrative costs, which could go to covering uninsured residents and improving coverage for those with health insurance, according to the study.

The major problem is that policymakers created incremental healthcare reform while maintaining the same private health insurance system, says Rachel Nardin, MD, president of the Massachusetts chapter of Physicians for a National Health Program, assistant professor of neurology at Harvard Medical School, and study co-author.

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