Health care in Massachusetts: a warning for America
The Bay State's mandatory insurance law is raising costs, limiting access, and lowering care.
In his recent speech to Congress, President Obama could have promoted healthcare reforms that tapped the power of a truly free market to lower costs and improve access. Instead, he chose to offer a national version of the failing "Massachusetts plan" based on mandatory health insurance. This is a recipe for disaster.
Three years ago, Massachusetts adopted a plan requiring all residents to purchase health insurance, with state subsidies for lower-income residents. But rather than creating a utopia of high-quality affordable healthcare, the result has been the exact opposite – skyrocketing costs, worsened access, and lower quality care.
Under any system of mandatory insurance, the government must necessarily define what constitutes acceptable insurance. In Massachusetts, this has created a giant magnet for special interest groups seeking to have their own pet benefits included in the required package. Massachusetts residents are thus forced to purchase benefits they may neither need nor want, such as in vitro fertilization, chiropractor services, and autism treatment – raising insurance costs for everyone to reward a few with sufficient political "pull."
Although similar problems exist in other states, Massachusetts' system of mandatory insurance delivers the entire state population to the special interests. Since 2006, providers have successfully lobbied to include 16 new benefits in the mandatory package (including lay midwives, orthotics, and drug-abuse treatment), and the state legislature is considering 70 more.
The Massachusetts plan thus violates the individual's right to spend his own money according to his best judgment for his own benefit. Instead, individuals are forced to choose from a limited set of insurance plans on terms set by lobbyists and bureaucrats, rather than those based on a rational assessment of individual needs.
Because the state-mandated health insurance is so expensive, the government must also subsidize the costs for lower-income residents. In response, the state government has cut payments to doctors and hospitals. With such poor reimbursements, physicians are increasingly reluctant to take on new patients.
Some patients in western Massachusetts must wait more than a year for a routine physical exam. Waiting times for specialists in Boston are longer than in comparable cities in other states and have gotten worse. Some desperate patients have even resorted to "group appointments" where the doctor sees several patients at once (without the privacy necessary to allow the physician to remove the patient's clothing and perform a proper physical exam). These patients all have "coverage," but that's not the same as actual medical care.
The Massachusetts plan is also breaking the state budget. Since 2006, health insurance costs in Massachusetts have risen nearly twice as fast as the national average. The state expects to spend $595 million more in 2009 on its health insurance program than it did in 2006, a 42 percent increase. Those higher health costs help explain why the state faced a $5 billion budget gap this summer. To help close it, lawmakers raised taxes sharply.
Costs have risen so much that a special state commission has recommended eliminating fee-for-service medicine, instead paying physicians and hospitals a single annual fee to cover all of a patient's needs for that year – in other words, rationing.
Despite raising state taxes, the Massachusetts plan is kept afloat only by hundreds of millions of dollars of financial waivers and assistance from the federal government – i.e., by the taxpayers of the other 49 states. If the Massachusetts plan were adopted at the national level, it's unlikely that China or Russia would bail out the United States.
Mr. Obama's plan is based on the faulty premise that the government should guarantee a "right" to healthcare. But healthcare is not a "right." Rights are freedoms of action (such as the right to free speech), not automatic claims on goods and services that must be produced by another. There is no such thing as a right to a car – or a tonsillectomy.
Individuals do have the right to seek healthcare and health insurance in the free market from any willing providers. The president's plan would violate this right, for example by forbidding individuals from purchasing low-cost "catastrophic" insurance that only covered unlikely-but-expensive accidents and illnesses.
In his address, Obama stressed the need for choice and competition in health insurance. But his plan would destroy such choice and competition.
Instead of mandatory health insurance, America needs free-market reforms. Some examples include eliminating mandatory insurance benefits, repealing laws that forbid purchasing health insurance across state lines, and allowing individuals to use health savings accounts for routine expenses and low cost, catastrophic-only insurance for major expenses.
Such reforms would respect individual rights, lower costs, and make health insurance available to millions who currently cannot afford it. And only such free-market reforms can provide the choice and competition that the president says he wants.
Now that would be change I could believe in.
Paul Hsieh, MD, practices in the South Denver metro area and is a cofounder of Freedom and Individual Rights in Medicine (FIRM).