Sunday, April 4, 2010

Model Massachusetts?

Cross-posted from Critical Condition on National Review Online.

If you wonder what will happen to health insurers under Obamacare, all you have to do is look at Massachusetts. Despite the fact that 97 percent of Massachusetts residents have health insurance, the cost of that insurance is the highest in the nation. A 2009 study from the Commonwealth Fund found that the average employer-sponsored family plan cost $13,788 in Massachusetts in 2008, 12 percent above the national average.

 But did near-universal coverage reduce the cost of health insurance over time? No. In fact, the cost of family health insurance increased 40 percent in Massachusetts from 2003 to 2008, 21 percent faster than the rate of growth nationally.

And in Boston, just as in Washington, politicians don’t take responsibility for their role in causing the problem. Instead, they blame it all on the insurance companies. The Associated Press is reporting today that Massachusetts insurance commissioner Joseph Murphy is effectively instituting insurance price controls statewide, forcing insurers to absorb health-care inflation by themselves (h/t Mike Shedlock):
Insurance Commissioner Joseph Murphy said he had rejected 235 of 274 proposed rate increases because they included “excessive increases and rates unreasonable relative to the benefits provided.”

Blue Cross Blue Shield of Massachusetts, the state’s largest private insurer, said in a statement: “We share concerns about the current rate of premium increases, but arbitrary government price controls will not solve the problem and will likely cause unintended harmful consequences.”

Michael Widmer, president of the Massachusetts Taxpayers Foundation, which represents insurers, health care providers and an array of area businesses, termed the action “arbitrary and capricious.”
Is it conceivable that politics played a role in Murphy’s ruling?
The announcement had political overtones: Gov. Deval Patrick, a Democrat, is seeking re-election this fall against a field that includes Republican Charles Baker, the former president of Harvard Pilgrim Health Care.

Patrick is staking himself out as the guardian of small businesses and middle-class voters, and trying to cast Baker as an industry protector. The governor argues that small businesses are limiting their hiring because they cannot cope with double-digit health care premium increases…

“The governor’s actions today represent an election-year gimmick which fails to address the underlying causes of increased health care costs,” said Baker spokesman Rick Gorka.

Patrick aides sought to bring attention to the governor’s announcement by inviting reporters to his appearance at the Chelsea Clock Co. It occurred moments after the Division of Insurance released its statement.

The theatrics harkened back to testimony Patrick gave last month before a legislative committee reviewing the provider cost-increase cap. Aides also assembled reporters for that event, and Patrick emerged to accuse Baker and Treasurer Timothy Cahill, waging an independent run for governor, of inaction on the issue.

The insurance division rejected the rate filings through an emergency regulation announced by Governor Patrick in February.

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