by Mitt Romney
Even with these added costs and policy choices by the legislature and the new governor, the plan is working. Of the 500,000 to 600,000 previously uninsured, approximately 440,000 have now obtained insurance—meaning that roughly 98 percent of Massachusetts citizens are insured. When the bill was passed, the conferees estimated that the program’s gross cost would be 725 million in 2009; at 723 million, next year’s forecast is pretty much on target. The net cost of the program to the state is about 350 million—just over 1 percent of the state budget.
In the June 26, 2008 issue of the widely respected New England Journal of Medicine, Dr. Robert Steinbrook surveyed Massachusetts reforms and concluded:
[T]he good news is that the new programs have ramped up rapidly, the number of people without health insurance has been substantially reduced, and overall public and political support remains broad. Early data suggest that access to care has improved, especially among low-income adults; there have also been reductions in out-of-pocket health care spending, problems paying medical bills, and medical debt.
A 2009 comprehensive study by the Massachusetts Taxpayers Foundation—a think tank funded by business—determined that the plan’s cost is relatively modest and well within initial projections.
The board that manages the program has begun making the adjustments needed to keep the program on solid financial footing, and health insurance premiums for individual purchasers have declined, just as the companies predicted. The average reduction in the premium for individual purchasers has been approximately 20 percent; for young single persons, the premiums have declined by nearly half.
The Massachusetts Model
In 2009, the national health-care policy supported by President Barack Obama was often and erroneously reported as being based up on the plan we had enacted in Massachusetts. There were some very big differences—in particular, our plan did not include a public insurance option. The notion of getting the federal government into the health-insurance business is a very bad idea. Government-supplied insurance would inevitably be subsidized at great cost to the taxpayers and, combined with Medicare and Medicaid, it would give government the kind of monopoly we would never allow a private entity to claim. Clearly, the public insurance option is simply a transitional step toward the president’s stated goal of creating a single-payer system, one in which the nation’s sole health insurer would be the federal government.
The success we achieved in Massachusetts proves that to get everyone insured, you don’t have to create a government-run health-care system or government insurance. The basics for creating a workable, affordable system that insures everyone and keeps private insurance and personal choice intact are these: First, create incentives for those who can afford insurance to actually purchase it, which can be done by reducing tax deductions for people who don’t buy insurance—as we did in Massachusetts—or by giving tax credits to all those who do. And it is important to allow people to opt out of buying insurance if they can demonstrate their ability to pay their own health-care bills.
Second, create an exchange to help make buying insurance easier for individual—as opposed to corporate—buyers. The exchange lowers premiums and enables individuals to buy health insurance in pretax dollars, just as companies are able to do.
Third, help the poor buy their own private insurance with a sliding-scale subsidy. The government’s share of the cost comes from redirecting the federal funds that are currently sent to providers.
My own preference would be to let each state fashion its own program to meet the distinct needs of its citizens. States could follow the Massachusetts model if they choose, or they could develop plans of their own. These plans, tested in the state laboratories of democracy, could be evaluated, compared, improved upon, and adopted by others. But the creation of a national plan is the direction in which Washington currently is moving. If a national approach is ultimately adopted, we should permit individuals to purchase insurance from companies in other states in order to expand choice and competition.
What we accomplished surprised us: 440,000 people who previously had no health insurance became insured, many paying their own way. We made it possible for each newly insured person to have better care, and ultimately healthier and longer lives. From now on, no one in Massachusetts has to worry about losing his or her health insurance if there is a job change or a loss in income; everyone is insured and pays only what he or she can afford. It’s portable, affordable health insurance—something people have been talking about for decades. We can accomplish the same thing for everyone in the country, and it can be done without letting government take over health care.
It is too early to write a definitive evaluation of the Massachusetts reform, and as noted, much depends on the commitment of state officials to continuously monitor and improve the system. One early view is presented in the January 26, 2009 New Yorker by Dr. Atul Gawande, a respected author, a Rhodes scholar, a Harvard School of Public Health professor, and a practicing physician at Boston’s esteemed Brigham and Women’s Hospital. I quote Dr. Gawande’s article at length because it was a balanced portrait from a moment in time before the debate became politicized:
Massachusetts, where I live and work, recently became the first state to adopt a system of universal health coverage for its residents. It didn’t organize a government takeover of the state’s hospitals or insurance companies, or force people into a new system of state-run clinics. It built on what existed. On July 1, 2007, the state began offering an online choice of four private insurance plans for people without health coverage. The cost is zero for the poor; for the rest, it is limited to no more than about 8 percent of income. The vast majority of families, who had insurance through work, didn’t notice a thing when the program was launched. But those who had no coverage had to enroll in a plan or incur a tax penalty.The results have been remarkable. After a year, 97.4 percent of Massachusetts residents had coverage, and the remaining gap continues to close. Despite the requirement that individuals buy insurance and that employers either provide coverage or pay a tax, the program has remained extremely popular. Repeated surveys have found that at least two-thirds of the state’s residents support the reform.The Massachusetts plan didn’t do anything about medical costs, however, and, with layoffs accelerating, more people require subsidized care than the state predicted. Insurance premiums continue to rise here, just as they do elsewhere in the country. Many residents also complain that eight percent of their income is too much to pay for health insurance, even though, on average, premiums amount to twice that much. The experience has shown national policymakers that they will have to be serious about reducing costs.For all that, the majority of state residents would not go back to the old system. I’m among them. For years, about one in ten of my patients—I specialize in cancer surgery—had no insurance. Even though I’d waive my fee, they struggled to pay for their tests, medications, and hospital stay.I once took care of a nineteen-year-old college student who had maxed out her insurance coverage. She had a treatable but metastatic cancer. But neither she nor her parents could afford the radiation therapy that she required. I made calls to find state programs, charities—anything that could help her—to no avail. She put off the treatment for almost a year because she didn’t want to force her parents to take out a second mortgage on their home. But eventually they had to choose between their daughter and their life’s savings.For the past year, I haven’t had a single Massachusetts patient who has had to ask how much the necessary tests will cost; not one who has told me he needed to put off his cancer operation until he found a job that provided insurance coverage. And that’s a remarkable change: a glimpse of American health care without the routine cruelty.It will be no utopia. People will still face co-payments and premiums. There may still be agonizing disputes over coverage for nonstandard treatments. Whatever the system’s contours, we will still find it exasperating, even disappointing. We’re not going to get perfection. But we can have transformation—which is to say, a heal
th-care system that works. And there are ways to get there that start from where we are.Taming the Beast
The Massachusetts plan succeeded in getting our citizens insured without breaking the bank. It reduced health-care insurance costs for those who had been uninsured. And by removing the burden of free riders on everyone else, it lowered this health-care cost as well. But like all the measures that help to reduce health-care cost—malpractice reform, electronic medical records, transparency, etc.—achieving universal access alone cannot drive overall health-care costs for everyone to actually go down. That is the task that remains. As Michael J. Widmer of the Massachusetts Taxpayer Foundation said in The Wall Street Journal, Virtually all stakeholders involved in the passage of the 2006 law understood that its principal intent was to achieve near universal access, and that the next chapter would be to deal with escalating health-care costs. . . . no informed observer ever said that the Massachusetts plan would lower health-care costs for everyone. It is the overall health-care cost for everyone that is the intractable problem in health care.
Over the last three decades, health-care spending per person has been growing 2.1 percent faster than the rest of the economy per capita. That’s why health care has grown from 5 percent of the economy in 1960 to about 18 percent today. At this rate, the Council of Economic Advisers calculates that total health-care costs will constitute more than a third of the economy by 2040.
I do not believe America can remain the economic and military leader of the world if we approach that level of health spending. Even now, the fact that we spend far more per capita on health care than any other nation places an enormous burden on our employers and on the economy. Our current health spending is 6.3 percent of the GDP greater than the average developed nation. To put that in context, our entire defense budget is approximately 3.8 percent of the GDP.
The impact of runaway health-care spending is already being felt by families and employers. The average employer pays more than 12,000 annually for an employee’s family coverage, almost double the cost of a decade ago, even after adjusting for inflation. Prior to its bankruptcy reorganization, General Motors was spending 1,400 per automobile on employee health insurance—more than the cost of steel. Not surprisingly, employers are dropping more and more employees from health-insurance plans in an attempt to stay competitive. And those employees who have been able to keep their insurance face ever higher copays, premiums, and deductibles. Most families are feeling a real squeeze and many are genuinely afraid and not just for themselves, but also for their children now and in the years ahead, when they are providing for themselves.
All levels of government are acutely aware of what health-care inflation is doing to their budgets as well. Medicare, Medicaid, and health-care coverage for the burgeoning number of government employees and retirees are ravaging federal, state, and local budgets. In thirty years, Medicare and Medicaid alone will grow from 6 percent of the GDP today to 15 percent, consuming three-quarters of all federal spending unless we dramatically change course.
If Americans enjoyed better health and longevity than people in other countries, it might be reasonable to argue that our excessive health-care spending is simply a rational consumer choice. But the life span of the average American is less than that of people in nations that spend far less. Japanese men outlive American men by five years; Frenchmen outlive us by three years. To put it bluntly, we spend more and die sooner. Most of the difference is explained by Americans’ unhealthy lifestyles—we eat far too much of the wrong foods—but that’s no excuse. We could be spending far more wisely if we worked hard to dissuade Americans from eating their way to an early grave.
New Methods, New Outcomes
The big-government politicians and bureaucrats haven’t sat idly by in the midst of this crisis: they have been vigorously applying the tools that have been tried and tested time and again—and that have never worked. Price controls and regulations have been implemented in health care more than in any other sector of the economy. And the result over three decades? No improvement whatsoever in the rate of health-care cost inflation. Predictably, these politicians’ prescription for the future is to apply more of the same. As Albert Einstein is reputed to have said, insanity is doing the same thing over and over again and expecting different results.
Today’s conventional wisdom adds some new tools to the fight. Information technology is one hot new idea: Politicians glibly calculate that if computers and electronic medical records replaced medical paperwork, they could save almost a third of our total health-care costs.
This is an idea with a big and very unrealistic if. Information technology is indeed critical to the future of health care, but it will not replace the time and cost of medical administration in our lifetimes. According to Dr. James J. Mongan, the president and CEO of Partners HealthCare, a multibillion-dollar hospital and health-care conglomerate in Massachusetts, his organization’s cost savings have been modest despite spending over 100 million on electronic medical records. The same story comes from others who have made similar investments. Computers and digitalized data alone are not the panacea that many tout them to be.
There’s a similar buzz surrounding the idea of transparency—the online reporting of the cost and quality of medical procedures performed at different hospitals or by different practitioners. As with the hype around information technology, so is the hope that transparency alone will drive down health-care costs. Thus far, even major efforts at such practices have had little impact on health spending. Transparency can lower costs only if people actually look at the data and are incentivized to act based on what they find.
By contrast, malpractice reform has made a significant difference in the few places where it has been tried because it removes an incentive for doctors to practice defensive medicine. There’s a great deal more to be done, and not just because of the savings that will result. Patients actually injured by a doctor’s negligence stand to benefit from genuine reform because today victims receive only 28 percent of all the money that goes into our malpractice system. Most of it goes to lawyers instead.
The burden of our broken tort law system on physicians is overwhelming. A Maryland study found that 70 percent of obstetricians have been sued at least once, with average awards topping 1 million; 50 percent of Maryland neurosurgeons are sued every year. The malpractice system actually causes doctors to exit badly needed practices: the American College of Obstetricians and Gynecologists reports that one in every ten obstetricians have stopped delivering babies due to the high cost of malpractice insurance. Professor Christopher Conover at Duke University estimates that in addition to the direct costs of our current malpractice-award system, 70 billion is spent annually on defensive medicine—tests, procedures, and treatments that are medically unnecessary, but which reduce the physician’s likelihood of being sued. The American Medical Association puts the number for defensive medicine at 200 billion. This is staggering waste. Defensive medicine also leads to unnecessary treatments that carry risk to the patient. Reforms that limit non-economic damages, assign malpractice cases to special health courts, and provide awards or indemnity according to a predetermined schedule can reduce the burden and ought to be widely implemented; states like Mississippi, Texas, and California are models. What prevents the adoption of malpractice reform, of course, is the massive financial contribution of the trial lawyers to the Democratic Party. This truly is an example of putting profits ahead of people.
Confronted by the sheer magnitude of the health-care cost problem—our overspending compared to the Organisation for Economic Co-operation and Development (OECD) average is about 750 billion a year—an increasing number of observers recognize that small measures simply will not get the job done. Robert Samuelson, a left-of-center columnist at Newsweek and The Washington Post, framed our predicament well. President Obama’s health care ‘reform’ is naive, hypocritical, or simply dishonest, Samuelson wrote. [W]hat’s being promoted as health care ‘reform’ almost certai
nly won’t suppress spending and, quite probably, will do the opposite. He continued, In the past, scattershot measures have barely affected health spending. What’s needed is a fundamental remaking of the health care sector—a sweeping restructuring.
For some liberals, the answer to Samuelson’s searing critique is simply to apply more government. They favor a single-payer system, where government and its taxpayers become the single payer. Government takes over the entire health-care industry. These big-government advocates once pointed to Canada and the United Kingdom as models, but a closer look at these two countries has revealed downsides these supporters would like us to forget. Rationing is at the center of the cost-control approach of a single-payer system. By limiting the availability of new technologies and physicians, costs are held down by effectively denying care to certain terminal or elderly patients. And in some cases, explicit cost-benefit calculations are applied to deny treatment.