American Elephants


The Health Care Drama in Massachusetts is Turning to Tragedy, or Farce. by The Elephant's Child
April 9, 2010, 11:58 am
Filed under: Economy, Health Care, Taxes | Tags: , ,

The health care drama in Massachusetts continues.  Governor Deval Patrick kicked off his re–election campaign by rejecting most of the premium increases that the state’s insurance companies had asked regulators to approve.   Mr. Patrick rejected the increases, and now claims that price controls are the correct response to “industry greed.”

In Massachusetts, all of the major insurance companies are nonprofits.  Three of the largest four posted operating losses in 2009.  In an emergency lawsuit in Boston superior court yesterday, they argued that the arbitrary rate cap would result in another $100 million in collective losses, and make it impossible to pay the expected cost of claims.  Even the solvency of some companies may be threatened. So, until the matter is settled, the insurers have just stopped selling new policies.

State officials have demanded that the insurers resume offering policies, under threat of fines or regulatory punishment.  Amazing!  The situation is so bad that the Governor has to threaten companies to make them sell their products at less than market cost.

The state’s Attorney General and his insurance regulators have concluded that the reason why Massachusetts insurance premiums are the highest in the nation is the underlying cost of health care, not greedy insurance companies that Mr. Patrick and Mr. Obama like to cite.

Central to Massachusetts health care are mandates requiring insurers to cover anyone who applies regardless of their state of health or pre-existing conditions, and to charge everyone the same rate.  Surprise! This allows people to wait until they’re about to face major medical bills to purchase insurance.  Between April 2008 and March 2009, about 40% of new enrollees at Harvard Pilgrim Health Plan stayed with it for fewer than five months and on average, ran up costs about 600% higher than the company would otherwise expect.  Blue Cross Blue Shield has had similar experience.

This kind of thing will soon be coming to your insurance market.  Democrats chose to regard all Republicans’ warnings about unworkable mandates, underestimated costs and ignored savings as simply more right-wing troublemaking.  Keep watching Massachusetts.  It will be instructive.



Massachusetts Health Care is Bankrupting the State, National Health Care Could Bankrupt the Country. by The Elephant's Child

Massachusetts Care was supposed to be the model for national health care.  It has not, however, worked out so well.  After only 3 years, Massachusetts health insurance premiums are the highest in the nation.  Governor Deval Patrick has called for price controls.  Doctors have fled the state. And state treasurer Tim Cahill says the universal health care law is bankrupting Massachusetts, and will do the same thing nationally if  Congress passes a similar plan to cover far more people.

Massachusetts state treasurer Tim Cahill recently left the Democrat Party to run for governor as an independent.

State Treasurer Timothy P. Cahill, an independent candidate for governor, today offered a wide-ranging and scathing criticism of the state’s universal health care law, saying it is bankrupting Massachusetts and will do the same nationally, if a similar plan is passed in Congress.

“If President Obama and the Democrats repeat the mistake of the health insurance reform here in Massachusetts on a national level, they will threaten to wipe out the American economy within four years,” Cahill said in a press conference in his office.

Echoing criticism leveled by Congressional Republicans in recent weeks, Cahill said, “It is time for the president, the Democratic leadership, to go back to the drawing board and come up with a new plan that does not threaten to bankrupt this country.”

Cahill said that health care costs have increased by $4.2 billion over what they were spending previously, and income has declined.    “We haven’t done anything about driving down costs,” Cahill said.  “We haven’t helped small business.  We haven’t changed the way we pay for health care and the way we deliver it.”



And Now It’s Price Controls! Doesn’t Anyone Ever Pay Attention to the Evidence? by The Elephant's Child

Massachusetts Health Care was put in place in 2006, and it was to be the prototype for ObamaCare.  It has been instructive, and we all should pay attention.  “Universal coverage” has run up all sorts of bills, and they are now coming due.  The developing cost crisis began almost at once.

Average Massachusetts insurance premiums are now the highest in the nation.  They have climbed at an annual rate of 30% in the individual market.  The costs for small business have increased by 5.8%.  Health spending per capita is now 27% higher than the national average, and the growth rate is faster.

Last month Democrat Governor Deval Patrick proposed hard price controls across almost all of the state’s health care.  Regulators already have the power to cap insurance premiums, which the governor is activating.  He also filed a bill that would give regulators the power to control the rates for hospitals, physician groups and some specialty practices.

For fiscal 2010 taxpayer costs are already $47 million over budget.  As in Washington, politicians attempt to blame insurers.  The real culprit is the state’s insurance regulation.  On average insurers pay $1.12 in benefits for every $1 in premiums.  Making sure that everyone was insured was expected to lower medical costs by cutting back on emergency room visits.  But emergency room visits have increased instead.  State regulations  have mandated that insurance coverage be more generous than the rest of the country.  The average deductible is 28% lower than the  U.S. average, and benefits are more generous with less cost-sharing — thus patients are even more unaware of the actual cost of care.

Massachusetts health care with so many medical schools and high-quality specialists is one of the world’s most envied.

The  Wall Street Journal notes of Gov. Patrick’s price controls:

The goal is to engineer a cheaper system through brute force so government can pay for health care for all. What inevitably suffers is the quality of care for individual patients. Thirty states imposed hospital rate setting in the 1970s and 1980s. Except for Maryland, every one of them eventually eliminated it—including Massachusetts, in 1991—partly because it didn’t control costs.  And partly because it killed people. A 1988 study in the Journal of New England Medicine found that the states with the most stringent rate-setting had mortality rates 6% to 10% higher than those that didn’t.

All of this is merely a preview of what the entire country will face if Democrats succeed with their plan to pound ObamaCare into law in anything like its current form. Massachusetts is teaching the country a valuable lesson in how not to reform health care, if only anyone would pay attention.




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