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What lessons Massachusetts holds for US healthcare reform

Healthcare reform came to Massachusetts in 2006. More residents now have insurance, but healthcare costs have not come down.

By Staff writer / October 21, 2009

Serviced: William Linscott (r.), a patient at Whittier Street Health Center in Boston's Roxbury neighborhood, receives free healthcare for disability and doesn't expect to be affected by national reform.

Sarah Beth Glicksteen/The Christian Science Monitor

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A mandate on individuals to buy health insurance can work – just don’t expect it to reduce the cost of care.

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That, in a nutshell, may be the lesson from Massachusetts as Americans consider healthcare reform ideas backed by President Obama.

The message is significant, because Democratic proposals in Congress have big similarities to reforms that Massachusetts adopted in 2006.

Common elements include:

•A mandate on individuals to buy insurance.

•Subsidies to help lower-income people pay for it.

•Exemptions for people who don’t qualify for subsidies and can’t afford insurance.

•An “exchange” where people shop for state-approved policies.

The goal is to slash the number of people who are uninsured.

In the heat of national debate, the Bay State’s experience has inspired Rorschach-like interpretations. Supporters see a model for the nation. Detractors say it’s a model of failure, not for imitation.

No havoc due to individual mandate

Amid the din, however, health policy experts generally agree on some basic lessons:
First, a mandate for individuals to buy insurance can be imposed without causing havoc. Hospitals and individuals have adapted. Employers haven’t dropped the health plans they sponsor.

Second, the mandate, while expanding coverage to many uninsured, doesn’t solve the deeper problem of escalating healthcare costs.

“Cost control is clearly much more difficult to solve” than is expanding access to insurance, says Katherine Baicker, an economist at the Harvard School of Public Health in Boston.

She notes that the 2006 reforms in Massachusetts focused squarely on access, not on medical-cost inflation. So it’s unfair to call the Bay State’s law a failure on that front.

But both the state and the nation are now forced to at least begin to grapple with that question.

Taming costs is tougher on two fronts than expanding access: There’s less certainty about how to do it, and it’s more difficult to build political support as legislators get caught between healthcare-industry lobbyists and wary voters.

Some 97 percent are insured

On access to care, Massachusetts can claim big strides but not truly universal coverage. Some 97 percent of residents have insurance, according to the Connector, the state-run exchange for buying insurance. That’s well above any other state. Nationwide, 85 percent of Americans are insured.

The rise of a state-run insurance pool and subsidies for individuals haven’t caused employers to drop their own health plans, as skeptics had feared. One reason: The law requires businesses with more than 10 employees to either offer coverage or pay $295 a month per worker to the state. Another reason is that a business that drops coverage might have trouble holding onto skilled workers.

“Right away they’d be at a disadvantage relative to all of their competitors,” says Jim Klocke of the Greater Boston Chamber of Commerce. “People like the coverage they get from their employer.”

The Massachusetts law, passed by a Democratic legislature and signed by Republican then-Gov. Mitt Romney, has expanded the ranks of insured at all levels. Some 163,000 residents bought policies using new “Commonwealth Care” subsidies. Another 190,000 enrolled in employer plans or bought insurance privately, without subsidies. Even MassHealth, the Medicaid program for the poor, expanded its rolls by 76,000, as of the start of this year – in part by adding more children.