The forbidding arithmetic of healthcare reform
THE FUZZY math behind the Massachusetts universal healthcare law is starting to add up - just as Washington studies the law as a possible model for the nation.
Because of a recession-related drop in state revenues and a surge in enrollment by the recently unemployed, the truth is emerging at an inconvenient time. Massachusetts doesn’t have enough money to pay for the coverage envisioned by the law.
In June, state officials announced they are cutting $100 million from Commonwealth Care, which subsidizes premiums for needy residents. The poorest residents, along with the newest - legal immigrants - will take the hit.
This outcome is not surprising, but it is instructive as President Obama pushes for a national healthcare plan.
On the day that Republican Governor Mitt Romney, for once, made Bay State Democrats happy, by signing the sweeping new healthcare bill into law, the Globe headline said it all: “Joy, worries on healthcare. As Romney signs bill, doubts arise about revenues.’’
In Massachusetts, the numbers never added up, as everyone involved in crafting the new law understood. But for a variety of reasons, ranging from Romney’s presidential aspirations to Senator Edward M. Kennedy’s longstanding commitment to healthcare reform, everyone smiled for the cameras and hoped for the best out of this noble experiment.
Today, the current governor, Deval Patrick, a Democrat, is skeptical about the end product. Asked during a televised town hall meeting in March if he believes national healthcare legislation should be patterned after the Massachusetts plan, he said, “I don’t know. I had real misgivings about it as a candidate. . . . I’m proud of it, but I don’t know if it’s a model for the nation.’’
The foundation of the Massachusetts law is the so-called individual mandate. That means everyone must have health insurance. From that perspective, the Massachusetts experiment is a success. The percentage of residents without insurance was down to 2.6 after two years.
But, the law never provided an absolute way to pay for the expanded coverage, and it never addressed how to reduce costs.
“They decoupled the access issue from the cost issue,’’ said Philip Johnston, chairman of the Blue Cross Blue Shield of Massachusetts Foundation, which played a key role in expanding healthcare coverage here. “The lesson is, there needs to be a dedicated revenue source to support health reform.’’
An even bigger lesson is that to make health reform happen, all the players must be invested from the start - and must stay invested. “Getting it done is politics. That means dealing with all the elements that are necessary for near-universal access and cost management, but not overreaching in any one area, so that major stakeholders turn from supporting the effort to opposing it,’’ said John Sasso, who represented Partners Healthcare, the largest healthcare provider in Massachusetts, and Blue Cross Blue Shield, the state’s largest insurer, during the reform process.
The stakeholders are still at the table, trying to make the numbers work better, he points out.
It’s true that Massachusetts built a dream house of a healthcare plan, without knowing the exact cost or how to pay for it. But that doesn’t mean it should be dramatically downsized, as state Treasurer Timothy P. Cahill proposes as he positions himself for a gubernatorial run.
A recent report by the Massachusetts Taxpayers Foundation, a business-funded group that advocated for the healthcare law, found that state spending increased by about $88 million annually since it was implemented. Is that too much to absorb, within the context of a $28 billion state budget?
As Patrick also said about the state’s healthcare law at that town hall meeting, “The great story about Massachusetts is instead of waiting for the perfect solution . . . or doing nothing . . . we tried something.’’
Washington can’t be as adventurous. Costing out a national healthcare plan, and figuring out how to fund it, is the current fault line for Obama. The president insists he can overhaul the healthcare system without adding to the deficit.
He should take this final lesson out of Massachusetts: Be honest about cost in the good times and make sure you can cover it in the bad.
Joan Vennochi can be reached at email@example.com.