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Lou Cannon: Learning from Massachusetts

The Bay State health-care experiment offers some promise, and pitfalls

In a famous dissenting opinion issued during the Great Depression, U.S. Supreme Court Justice Louis Brandeis defended the power of states to experiment with “economic practices and institutions to meet changing social needs.” As Brandeis put it: “It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic ideas without risk to the rest of the country.”

Lou Cannon
Lou Cannon

Brandeis’ favorable view of state experimentation had been formed as a lawyer in Massachusetts, which was rife with insurance scandals. He led an investigation that persuaded the state Legislature to make novel reforms. Later, Brandeis advised Woodrow Wilson who, as governor of New Jersey, pushed through a broad package of regulatory and other reforms, some of which were emulated nationally by President Franklin D. Roosevelt.

In our time Massachusetts has again become a cutting-edge state laboratory. Beginning in 2006, the Bay State launched a bold plan to provide universal health insurance with successful features that could usefully be copied by the federal government. But Massachusetts also provides a cautionary tale of what can happen when demand for medical services increases while the supply of physicians does not.

MassHealth, as the plan is called, was the brainchild of then-Gov. Mitt Romney, although one wouldn’t know it from state government Web sites or the Internet postings of leading legislative Democrats who refined the health-care plan. As a Republican who sought his party’s presidential nomination in 2008 and is expected to do so again in 2012, Romney has been as thoroughly expunged from contemporary Democratic accounts of health-care reform as Trotsky was from Soviet history by Stalin.

In a way, that’s a backhanded compliment to Romney, who saw an opportunity on health care that had eluded other governors and acted forcefully. Even MassHealth’s critics acknowledge that the program has broken vital ground. When it began, one in seven residents of the commonwealth had no health insurance, some because they couldn’t afford it and others because they were young and healthy and willing to gamble that they wouldn’t become ill. Today, 97.4 percent of the state’s residents have health insurance — the poorest of them obtain it through a state-run insurance program known as Commonwealth Care.

When MassHealth began, one conservative critic described it as a “disaster in the making.” This apprehension was based largely on the belief that private employers would drop health-care coverage en masse. It would have been easy to do so since the penalty for businesses that do not provide health coverage is a relative pittance, $295 per employee annually, with the money deposited into a fund for the uninsured. In comparison, the cost of a typical health-care plan in Massachusetts is about $5,000 a year for individuals and $14,000 for families. Some employers did indeed drop coverage, but they were more than offset by employers that enrolled thousands of additional workers in their health-care plans. Many of the new enrollees were workers who had previously disdained health-care coverage offered by their employers. What changed their minds was that MassHealth required everyone to sign up for health insurance or pay a fairly hefty fee, a provision that has been incorporated in pending federal legislation.

Mandated coverage was the stick. The carrot was the assurance that those who couldn’t afford to buy insurance would be subsidized by the state. As a result, almost everyone signed up. Today, 150,000 more Massachusetts workers are covered by employer-provided insurance than when MassHealth began. After earlier indecision, President Barack Obama has embraced a national mandate as part of his proposed health-care overhaul. On this important issue, Massachusetts has pointed the way.

An employer mandate is more problematic, especially during a recession. Although many congressional Democrats favor requiring employers to provide coverage, the Massachusetts experiment has succeeded without such compulsion. Indeed, a leading Democratic legislator, Massachusetts House member Peter J. Koutoujian, said an employer mandate would have upset a ”delicate political balance” and probably derailed the bill. Koutoujian, who was chairman of the House Health Committee at the time MassHealth was enacted, and Alan G. Macdonald, executive director of the Massachusetts Business Roundtable, said in separate interviews that the absence of an employer mandate was a principal reason that businesses have remained supportive and expanded health-care coverage.

The most persistent criticism of MassHealth is that it costs too much. It is a claim most often made by conservatives but recently embraced by some liberals, among them Howard Dean, a physician and former chairman of the Democratic National Committee. Close examination casts doubt on this contention. The nonprofit Massachusetts Taxpayers Foundation said the cost of the plan “has been relatively modest and well within early projections of how much the state would have to spend to implement reform.” (Click here for the foundation’s report, “Massachusetts Health Reform: The Myth of Uncontrolled Cost.”)

State and federal health care spending in Massachusetts has increased to $1.7 billion a year in fiscal 2010 from $1 billion a year in fiscal 2006. In a state with a total budget of $27 billion, this seems a reasonable price for obtaining near-universal coverage.

The bigger problem with MassHealth — indeed with any attempt at universal coverage — is that there are simply not enough primary-care doctors to go around. Because of compensation issues and long hours, the number of primary-care physicians is dwindling, and medical students overwhelmingly choose specialties that provide better pay and a more comfortable lifestyle. Staggering medical school debt, often in excess of $200,000, influences these choices. Under MassHealth, according to the Massachusetts Medical Society, the average wait time for a new patient seeking a primary-care doctor is from 36 to 50 days, with almost half of internal medicine doctors refusing to take any new patients.

Kevin Pho, a primary-care physician in Nashua, N.H., says accordingly that while universal coverage is a “sensible” goal, it “cannot succeed as long as there remains a shortage of primary-care physicians. When patients are required to wait for weeks to see a doctor, they often wind up in emergency rooms. According to data obtained by the Boston Globe, there has been a 7 percent increase in volume in Massachusetts emergency rooms under MassHealth.

Massachusetts is not oblivious to the physician shortage, as evidenced by previous laws allowing forgiveness of medical school loans, a limited program that needs to be expanded. State Sen. Richard T. Moore, chairman of the Senate Committee on Health Care Financing, said that hearings would soon begin on proposals to replace traditional fee-for-service care with new models in which primary-care physicians would be compensated for overall care of a patient. Such ideas are also being discussed in Congress but remain on the back burner of the health-care debate.

Massachusetts nonetheless sends warning signals. If this state, which has the highest concentration of primary-care physicians in America, has such long waiting times for appointments, what will happen in states with fewer doctors if Congress approves a health-care bill providing universal coverage? The problem is likely to be particularly acute in states such as California and New York, where there are large numbers of undocumented workers. True, these workers will be excluded from direct benefits of the health bill but hospitals are legally required to treat them, which means emergency rooms could be swamped. Hospitals are already under pressure. California hospitals alone lost $11.2 billion last year, two-thirds of it in Medicare and Medicaid, according to Duane Dauner, president of the California Hospital Association. Every pending version of the federal health-care bill would expand Medicaid, and states are worried they might be stuck with the additional costs.

Massachusetts does not offer a guide for dealing with all these issues, but there is nonetheless considerably more to cheer than deplore in the performance of MassHealth. It is imperative for Congress to examine both the strengths and deficiencies of this worthwhile experiment in the Bay State laboratory before sending a health care overhaul to Obama’s desk.

— Summerland resident Lou Cannon is a longtime national political writer and acclaimed presidential biographer. His most recent book — co-authored with his son, Carl — is Reagan’s Disciple: George W. Bush’s Troubled Quest for a Presidential Legacy. Cannon also is an editorial adviser to State Net Capitol Journal, which published this column originally.

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