Healthcare: Going back to Massachussets?
Time for a political reality check. Government-run public health insurance that competes with private plans — a Democratic dream since President Truman suggested it in 1945 — may not be dead for now on Capitol Hill, but its vital signs are awfully faint.
Of course, many proponents are hoping to use the congressional August recess to rally the grassroots and the netroots for one final push come September. And maybe that will work.
But it’s more likely that Democratic leaders in Washington will use the break to tell the outside-the-Beltway crowd the cold truth: If they want something that can be legitimately called “healthcare reform” to pass in 2009, they need to quit wasting time, energy and money on the fading dream of a public plan and instead work to get other key elements passed.
And what might those elements be?
Analyst Daniel Clifton of Strategas Research makes an educated guess. He thinks President Obama may get the chance to sign an $800 billion (over 10 years) bill that would contain features such an individual mandate to buy health insurance, subsidies up to 300 percent of the poverty limit to purchase a regulated plan through a health insurance “exchange”, and an expansion of Medicaid.
Obama might even get his commission that would try to determine what Medicare pays doctors and hospitals — now that the Congressional Budget Office has determined it would pretty much be powerless.
As one lobbyist put it: “I would see this as mostly a symbolic victory (for Republicans), as the Dems can get most of what they want without calling it a public option. Frankly. it’s pretty close to the Massachusetts model.”
Ah yes, the Massachusetts model. The state passed sweeping reform in 2006 under Governor Mitt Romney. What would a similar approach mean for America?
Well, there would be a lot fewer uninsured people. Massachusetts has halved the number of people without health insurance, with just 2.6 percent not currently covered.
But the reform has been far less successful bringing down costs. For starters, original cost estimates for Commonwealth Care projected the program would cost $400 million in 2008 and $725 million in 2009. The actual numbers were $628 million in 2008 and $869 billion for this year.
Moreover, health insurance premium costs continue to rise at a rapid clip of 9.4 percent a year, compared with 7.7 percent for the United States on average. As the Urban Institute found: “Health spending in Massachusetts is higher than the United States on average and is growing at a faster rate. Furthermore, health insurance premiums are growing even faster than health care costs in the state.”
So America might find itself in 2012 with lots more people covered, but in an ever more expensive system. And President Obama might find himself doing what Romney’s Democratic successor, Governor Deval Patrick, is doing: cutting back the subsidies that allow poorer residents to buy insurance.
The state is also considering moving away from from fee-for-service medicine, where doctors are incentivized to perform lots of pricey procedures rather than focusing on results.
But Obama and Democrats might also make this argument: We expanded coverage and now it’s time to finish the job by getting costs under control. And the only way of doing that is … a public insurance option!
Indeed, the Urban Institute makes the same argument that Team Obama surely would: that the presence of a national plan would force insurers to compete with a plan with strong bargaining power and, as an arm of government, a powerful financial interest in containing costs.
What’s happening in Washington isn’t the end of healthcare reform, it’s merely the end of the beginning.