CALPIRG Blog

Policy wonks who care about health reform spend a lot of time waiting with bated breath for the latest news out of Massachusetts. That's because two years ago they passed a landmark reform plan that's proved the template for a lot of the efforts that followed -- including California's own stalled attempt at reform, ABX1-1.

It's always interesting to see what successes and setbacks they've experienced, and useful for trying to figure out how to improve on their model. But this week's update reports some truly astonishing results.

We support Massachusetts-style reform because our analysis shows that in addition to covering most of the state's uninsured, it would also go far to bring rising costs under control. Opponents disagree, and say that the plan would increase, not decrease, costs.

The opponents won out in California last time, but the latest news from Masachussets shows that they were wrong about the costs. First off, it's true that their plan has cost more than initially anticipated. But the cost overruns are due to the fact that they're covering even more uninsured people than they initially anticipated. In some ways, they're victims of their own success at getting the word out and bringing people into the system faster than they thought they'd be able to. Massachusetts has had to budget more money to pay for the increased number of enrollees, but that's hardly because the plan's failed to contain costs. In fact, they've been able to provide health care for even less money per enrollee than initially projected!

But that's only half of the story. A controversial part of the Massachusetts plan -- and the aborted California legislation -- was the requirement that everybody have health insurance. Again, opponents argued that this would put consumers at the mercy of the insurance companies, who would waste no time jacking up their prices (never mind the substantial insurer regulations also included in the package).

Once again, the facts on the ground show that these counterarguments just don't hold up. Since the Massachusetts reform went into effect, the average uninsured resident of the state saw prices on the individual insurance market fall by almost 50%! Not only were their premiums cut nearly in half for the least-expensive option (you need to pick one plan for comparisons, because the variety of plans makes it very hard to compare apples-to-apples -- but that's a different problem for a different post), but the deductible also fell by 60%, and prescription drug coverage was added to even the least-comprehensive package.

We likely wouldn't see results that dramatic in California -- Massachusetts residents used to face inflated health insurance prices because the state required insurers to cover all comers, without similarly requiring everybody to have insurance. As a result, healthy people could remain uninsured until they got sick, which drives up the price of coverage. But the verdict of experience is clear: bringing more people into the system does help reduce the price of insurance, and a well-designed mandate can be an important part of making coverage affordable.

With the national economy weakening, and our state's budget in crisis, it's impossible not to worry about the costs of health care -- they're a major part of both private and public spending. But what Massachusetts is showing us is that the right plan can help us get those costs under control, and expand coverage while keeping it affordable.