Little-Acorn
Well-Known Member
An instructive article from CNN, written shortly after Obamacare was passed and signed into law a few years ago.
Mitt Romney was governor of Massachusetts, and signed the Massachusetts socialized-health-care plan into law for that state. He has maintained to this day, that while it was "right for Massachusetts", it is very wrong (and unconstitutional) for the entire country. He has promised many times, to grant waviers to every state from Obamacare as soon as he becomes President, and then to work to repeal the whole thing.
This CNN report shows that Romney is only half right. It is certainly wrong for the country... but it is also very wrong for Massachusetts. That state is experiencing soaring costs, soaring taxes, and falline quality of service, as well as corruption as various provides jockey for favors with controlling government officials.
We are already seeing a lot of that with Obamacare - and that is long before the entire program goes into effect.
Socialized programs by starry-eyed liberals never work - something we have seen over and over, whether on a state level or (now) nationwide. The biggest embarrassment, is that this time we had plenty of warning, found in Massachussets' failing program, as well as abortive attempts in Oregon and other areas... yet some liberals went ahead and pushed it through on a nationwide basis anyway. Fool us once, shame on you. Fool us twice, shame on....
-------------------------------------------------
http://money.cnn.com/2010/06/15/news/economy/massachusetts_healthcare_reform.fortune/index.htm
5 painful health-care lessons from Massachusetts
by Shawn Tully, senior editor at large
June 16, 2010: 4:54 PM ET
FORTUNE -- The best guide to how President Obama's historic health-care legislation will reshape the nation's medical marketplace and fiscal future is the pioneering model in Massachusetts. The Bay State's reform program started in late 2006, and it shares virtually all the major features of the new federal plan.
Both programs greatly expand Medicaid coverage for low-earners, and provide heavily subsidized policies for a broad swath of the middle class. They tightly restrict the range of premiums for customers of different ages and medical conditions; they bar insurers from charging older patients, or even couch potatoes who abuse their health, anywhere near their actual cost. Both plans impose a long list of expensive benefits insurers must provide whether patients want to pay for them or not, ranging in Massachusetts from in-vitro fertilization to chiropractic services.
At the same time the plans offer lavish subsidies that swell the demand for health care, they do nothing to increase the supply of medical services in a market suffering from shortages of everything from family doctors to nurses to hospital beds. Two years after enacting health-care reform to rein in costs, Massachusetts strengthened "certificate of need laws" that prevent hospitals and other providers from competing with high-cost, entrenched suppliers. The state now requires that ambulatory surgical centers and outpatient treatment facilities get permission from regulators before they can enter the market. Their rivals invariably lobby the regulators to block competition, and usually win.
Thirty-six states, from Florida to Georgia to Washington, have similar price-inflating laws on the books. The Obama bill does nothing to eliminate regulations that effectively cartelize the market.
The combination of heavily subsidized demand and tight, over-regulated supply is a textbook formula for perpetuating the big, chronic price increases that bedevil today's health-care system.
Instead of attacking the real causes of the explosion in costs -- the combination of overly generous state aid and a dearth of competition among hospitals and physician groups -- Massachusetts is vilifying prestigious, non-profit insurers, and punishing them, believe it nor not, with price controls. In April, Governor Deval Patrick refused the request of carriers such as Harvard Pilgrim, the top-rated plan in the country, for premium increases of 8% to 32%. Instead, his administration is refusing all rate hikes over 7.7%; any rate requests the administration rejects are automatically held at 2009 levels.
In explosive emails released last week, Robert Dynan, chief of the financial analysis unit at the Division of Insurance, told Commissioner Joseph Murphy that the price caps would cause a "potential train wreck" and threatened "catastrophic consequences for the non-profit industry." Dynan warned that the non-profits, unlike national giants such as WellPoint (WLP, Fortune 500), operate on such slim margins that the controls could drive them into bankruptcy. Even now, four of the biggest insurers are threatening to stop taking new patients at rates so low they lose money on each new enrollee.
The battle in Massachusetts may foreshadow the results of the new federal law. It threatens to mirror precisely the cycle we're witnessing in the Bay State: spiraling costs that make coverage unaffordable for both patients and businesses, followed by price controls that drive private providers from the market. "This could repeat itself on the national level, and become the beginning of government-run health care," says Lora Pellegrini, chief of the Massachusetts Association of Health Plans.
That disaster scenario may sound far-fetched. But an examination of the Massachusetts plan yields five important lessons that show the dangers ahead for the Obama health-care blueprint.
Lesson 1: The Massachusetts plan does not control costs.
When Massachusetts launched its reform program in 2006, it already had the highest medical costs in the nation. Today, the burden is still rising far faster than wages or inflation, from those already lofty levels. A report from that state attorney general in March -- remember, this is a Democratic administration -- asked rhetorically "Can we expect the existing health-care market in Massachusetts to successfully contain health-care costs?" The report concluded, "To date, the answer is an unequivocal 'no.'"
Costs are rising relentlessly for both families and for the state government. The median annual premium for family plans jumped 10% from 2007 to 2009 to $14,300 -- again, that's a substantial rise on top of an already enormous number. For small businesses, the increase was 12%. In 2006, the state spent around $1 billion on Medicaid, subsidies for medium-to-lower earners, and other health-care programs. Today, the figure is $1.75 billion. The federal government absorbed half of the increase.
Hence reform's proponents boast that expenses have risen only $354 million or around 6% a year. But the real increase is double that, including the federal share. And it's highly possible that given the current budget pressures, the U.S. will reduce the contribution that has encouraged the state to spend so lavishly.
Lesson 2: Community rating, guaranteed issue and mandated benefits swell costs.
How did costs in Massachusetts get so big to begin with? A major reason is the adoption of guaranteed issue and community rating in the mid-1990s. The new federal bill would expand those rules to the entire nation. Under guaranteed issue, insurers must accept all enrollees regardless of their medical condition; under community rating, they must charge all customers similar premiums, even if their costs are far different. The result is that prices rise steeply for young, healthy customers, who must pay far more than their actual costs. It also give them a strong incentive to drop insurance; then they can "game the system" by signing up any time they need surgery or get diabetes.
Hence the pool of insured people gets older and sicker as the healthy drop out. That's what happened in Massachusetts, and it contributed to soaring premiums. The 2006 reform plan was supposed to solve the problem by requiring that everyone buy coverage or pay a fine of around $1,000. It worked, but only in part: Of the 600,000 uninsured in 2005, around 450,000 are now covered. But a large share of 150,000 who still lack coverage are young residents who choose to pay the fine instead of high premiums. Insurers are also getting socked by people who sign up for insurance to get expensive care mandated under state law, including hospitalization for childbirth or hip replacements, and then depart once the procedure is completed.
In the federal bill, the fines for going uninsured are even lower than in Massachusetts -- and anyone who can't find an inexpensive plan is exempted from all penalties. Hence the "adverse selection" problem could prove far worse.
Lesson 3: Huge subsidies for low-to-medium earners could prove extremely expensive.
(snip)
(Full text of the article can be read at the above URL)
Mitt Romney was governor of Massachusetts, and signed the Massachusetts socialized-health-care plan into law for that state. He has maintained to this day, that while it was "right for Massachusetts", it is very wrong (and unconstitutional) for the entire country. He has promised many times, to grant waviers to every state from Obamacare as soon as he becomes President, and then to work to repeal the whole thing.
This CNN report shows that Romney is only half right. It is certainly wrong for the country... but it is also very wrong for Massachusetts. That state is experiencing soaring costs, soaring taxes, and falline quality of service, as well as corruption as various provides jockey for favors with controlling government officials.
We are already seeing a lot of that with Obamacare - and that is long before the entire program goes into effect.
Socialized programs by starry-eyed liberals never work - something we have seen over and over, whether on a state level or (now) nationwide. The biggest embarrassment, is that this time we had plenty of warning, found in Massachussets' failing program, as well as abortive attempts in Oregon and other areas... yet some liberals went ahead and pushed it through on a nationwide basis anyway. Fool us once, shame on you. Fool us twice, shame on....
-------------------------------------------------
http://money.cnn.com/2010/06/15/news/economy/massachusetts_healthcare_reform.fortune/index.htm
5 painful health-care lessons from Massachusetts
by Shawn Tully, senior editor at large
June 16, 2010: 4:54 PM ET
FORTUNE -- The best guide to how President Obama's historic health-care legislation will reshape the nation's medical marketplace and fiscal future is the pioneering model in Massachusetts. The Bay State's reform program started in late 2006, and it shares virtually all the major features of the new federal plan.
Both programs greatly expand Medicaid coverage for low-earners, and provide heavily subsidized policies for a broad swath of the middle class. They tightly restrict the range of premiums for customers of different ages and medical conditions; they bar insurers from charging older patients, or even couch potatoes who abuse their health, anywhere near their actual cost. Both plans impose a long list of expensive benefits insurers must provide whether patients want to pay for them or not, ranging in Massachusetts from in-vitro fertilization to chiropractic services.
At the same time the plans offer lavish subsidies that swell the demand for health care, they do nothing to increase the supply of medical services in a market suffering from shortages of everything from family doctors to nurses to hospital beds. Two years after enacting health-care reform to rein in costs, Massachusetts strengthened "certificate of need laws" that prevent hospitals and other providers from competing with high-cost, entrenched suppliers. The state now requires that ambulatory surgical centers and outpatient treatment facilities get permission from regulators before they can enter the market. Their rivals invariably lobby the regulators to block competition, and usually win.
Thirty-six states, from Florida to Georgia to Washington, have similar price-inflating laws on the books. The Obama bill does nothing to eliminate regulations that effectively cartelize the market.
The combination of heavily subsidized demand and tight, over-regulated supply is a textbook formula for perpetuating the big, chronic price increases that bedevil today's health-care system.
Instead of attacking the real causes of the explosion in costs -- the combination of overly generous state aid and a dearth of competition among hospitals and physician groups -- Massachusetts is vilifying prestigious, non-profit insurers, and punishing them, believe it nor not, with price controls. In April, Governor Deval Patrick refused the request of carriers such as Harvard Pilgrim, the top-rated plan in the country, for premium increases of 8% to 32%. Instead, his administration is refusing all rate hikes over 7.7%; any rate requests the administration rejects are automatically held at 2009 levels.
In explosive emails released last week, Robert Dynan, chief of the financial analysis unit at the Division of Insurance, told Commissioner Joseph Murphy that the price caps would cause a "potential train wreck" and threatened "catastrophic consequences for the non-profit industry." Dynan warned that the non-profits, unlike national giants such as WellPoint (WLP, Fortune 500), operate on such slim margins that the controls could drive them into bankruptcy. Even now, four of the biggest insurers are threatening to stop taking new patients at rates so low they lose money on each new enrollee.
The battle in Massachusetts may foreshadow the results of the new federal law. It threatens to mirror precisely the cycle we're witnessing in the Bay State: spiraling costs that make coverage unaffordable for both patients and businesses, followed by price controls that drive private providers from the market. "This could repeat itself on the national level, and become the beginning of government-run health care," says Lora Pellegrini, chief of the Massachusetts Association of Health Plans.
That disaster scenario may sound far-fetched. But an examination of the Massachusetts plan yields five important lessons that show the dangers ahead for the Obama health-care blueprint.
Lesson 1: The Massachusetts plan does not control costs.
When Massachusetts launched its reform program in 2006, it already had the highest medical costs in the nation. Today, the burden is still rising far faster than wages or inflation, from those already lofty levels. A report from that state attorney general in March -- remember, this is a Democratic administration -- asked rhetorically "Can we expect the existing health-care market in Massachusetts to successfully contain health-care costs?" The report concluded, "To date, the answer is an unequivocal 'no.'"
Costs are rising relentlessly for both families and for the state government. The median annual premium for family plans jumped 10% from 2007 to 2009 to $14,300 -- again, that's a substantial rise on top of an already enormous number. For small businesses, the increase was 12%. In 2006, the state spent around $1 billion on Medicaid, subsidies for medium-to-lower earners, and other health-care programs. Today, the figure is $1.75 billion. The federal government absorbed half of the increase.
Hence reform's proponents boast that expenses have risen only $354 million or around 6% a year. But the real increase is double that, including the federal share. And it's highly possible that given the current budget pressures, the U.S. will reduce the contribution that has encouraged the state to spend so lavishly.
Lesson 2: Community rating, guaranteed issue and mandated benefits swell costs.
How did costs in Massachusetts get so big to begin with? A major reason is the adoption of guaranteed issue and community rating in the mid-1990s. The new federal bill would expand those rules to the entire nation. Under guaranteed issue, insurers must accept all enrollees regardless of their medical condition; under community rating, they must charge all customers similar premiums, even if their costs are far different. The result is that prices rise steeply for young, healthy customers, who must pay far more than their actual costs. It also give them a strong incentive to drop insurance; then they can "game the system" by signing up any time they need surgery or get diabetes.
Hence the pool of insured people gets older and sicker as the healthy drop out. That's what happened in Massachusetts, and it contributed to soaring premiums. The 2006 reform plan was supposed to solve the problem by requiring that everyone buy coverage or pay a fine of around $1,000. It worked, but only in part: Of the 600,000 uninsured in 2005, around 450,000 are now covered. But a large share of 150,000 who still lack coverage are young residents who choose to pay the fine instead of high premiums. Insurers are also getting socked by people who sign up for insurance to get expensive care mandated under state law, including hospitalization for childbirth or hip replacements, and then depart once the procedure is completed.
In the federal bill, the fines for going uninsured are even lower than in Massachusetts -- and anyone who can't find an inexpensive plan is exempted from all penalties. Hence the "adverse selection" problem could prove far worse.
Lesson 3: Huge subsidies for low-to-medium earners could prove extremely expensive.
(snip)
(Full text of the article can be read at the above URL)
