When Mitt Romney signed Massachusetts’ health care reform law in 2006, he surely didn’t realize the political consequences down the road.
Many conservative and libertarian observers have expressed frustration at his inability to recognize the negative outcomes that resulted from “Romneycare.” Taxes, costs, and political interference in medical decisions have all increased, while access to medical care has deteriorated.
The 2006 reform jeopardized the solvency of private health plans in the Bay State. Unfortunately, insurers’ solvency is not something patients, physicians, and voters have reason to observe closely, so the political class suffers from perverse incentives once it starts micromanaging health insurance. As a result, higher costs have been passed on through higher per capita spending and premium growth.
According to the state’s 2010 annual report, today “per capita spending on health care in Massachusetts is 15 percent higher than the rest of the nation, even when accounting for wages and spending on medical research and education in Massachusetts.” Indeed, Professor John F. Cogan of Stanford University has concluded the 2006 reform led to premium growth 6 percent higher in Massachusetts than in the rest of the United States between 2006 and 2008.
Top-Down Price Controls
Because it was politically intolerable to allow premiums to rise in line with the costs of Romneycare, the state’s insurance commissioner denied 235 of 276 rate increase requests in April 2010. For a short time, no new policies were offered, and plans suffered significant losses. The next month, Blue Cross Blue Shield of Massachusetts, the state’s largest carrier, announced a $55 million provision for anticipated losses in the second quarter alone.
Of the 12 largest carriers, five were already operating at a loss. At this point, even if the state allows Blue Cross Blue Shield of Massachusetts to increase rates in line with medical costs, my analysis concludes the carrier will become insolvent in the vicinity of 2017. Other carriers will soon follow.
Public Disappointed in Romneycare
Five years after Romney signed his law to great fanfare, the people of the Bay State are beginning to recognize that more government control over health care in the name of universal coverage costs more than advertised.
An April poll conducted by Suffolk University and Boston’s WHDH-TV reported that 49 percent of respondents do not believe Romneycare has helped, while only 38 percent believe it is working. And 54 percent said Romney’s signing of the law likely hurt his presidential chances, while only 22 percent believed it helped.
This is a dramatic shift from a July 2008 poll, conducted two years after the law was signed, which showed 69 percent favoring the law and only 22 percent opposed.
It’s now apparent Romney did not give Massachusetts universal private health coverage. Instead, he put the state on a glide-path to a single-payer, government monopoly health system—the same path Obamacare now follows at the national level.
John R. Graham ([email protected]) is director of health care studies at the Pacific Research Institute.