Will the Bay State’s Elected Officials Never Learn?

Published August 26, 2004

Philosopher George Santayana warned that those who ignore the lessons of history are doomed to repeat it.

He could have been writing about the Massachusetts legislature.

In mid-July, Bay State legislators acting in joint session approved a universal health care bill that would extend to ridiculous and expensive extremes the failed health care policies of the past. To undo the damage wrought by two decades’ worth of manipulation and over-regulation of the Massachusetts health insurance marketplace, 152 state elected officials voted for still more manipulation and over-regulation. Just 41 opposed increasing the government’s role in health care.

The July 14 vote was only one step in a constitutional amendment process in which the state’s voters have the final say. Before the amendment measure reaches them–in November 2006 at the earliest–it must be approved by the legislature that takes office in January. Time enough for concerned citizens to remind their elected officials of the state’s sorry health policy history.

Back in 1988, Massachusetts aimed to become the first state to create a single-payer health care system, passing the Universal Entitlement Act. That plan was never implemented, however. With state revenues down and private employers battered by the economic downturn of the early 1990s, the measure was repealed by the legislature in 1995.

Their wisdom did not last long, however. In 1996, Massachusetts legislators passed the Non-Group Health Insurance Reform Act, which did severe damage to the underwriting, pricing, and marketing of individual health insurance plans. The bill mandated community rating of health insurance premiums and guaranteed issue of health insurance policies in the individual market.

Guaranteed issue allows consumers to “game the system” by buying health insurance after the onset of an illness and then dropping coverage when positive health returns. Community rating forces insurers to raise premiums for younger and healthier people in order to subsidize premiums for older and less healthy people. Often, this causes lower-income people to drop their coverage.

The new insurance regulations in Massachusetts had predictable results. By 1998, approximately 20 health insurers had stopped marketing plans in Massachusetts. The number of uninsured persons in the state increased from 365,000 in 2000 to more than 500,000 today.

The share of persons insured in the state’s individual insurance market fell from more than 12 percent in 1992 to just 7 percent in 2002. Annual premiums for individual insurance policies range from about $4,000 for a 25-year-old individual to as high as $43,000 for a two-adult plan. Those rates are substantially higher than the national average premiums reported in the January/February 2004 issue of Healthplan magazine: $2,070 for single coverage and $4,009 for family coverage.

With so much evidence showing the damage done by the government’s past interference with the state’s health insurance market, does anyone really believe more interference is the answer? That calls to mind another old saw, this one attributed to Albert Einstein, that the definition of insanity is “doing the same thing over and over again and expecting different results.”

Other states have been more successful than Massachusetts in keeping health insurance premiums affordable, the uninsured rate low, and the quality of health care services high. They have established high-risk pools to provide insurance for the medically uninsurable. They have attracted insurers back to their states by repealing guaranteed issue and community rating mandates, and lowered premiums by allowing insurers to offer mandate-free or mandate-lite insurance polices. And they have encouraged consumers to take control of their own health care decision-making by giving public employees the option to choose Health Savings Accounts and providing state income tax deductions for deposits made to the accounts.

By now, Massachusetts policymakers should know better than to propose more state regulation as the solution to the state’s health insurance woes. Rules and regulations already on the books have driven up prices and reduced consumer choices. More of the same kind of regulation will only produce more of the same results.

Conrad F. Meier is managing editor of Health Care News, a monthly publication of The Heartland Institute. His email address is [email protected].