The Affordable Care Act is now six years old. Perhaps more important for Massachusetts, this month marks the 10th anniversary of “Romneycare,” making it a good time to review that law’s impact.
Governor Mitt Romney’s original proposal was simple: Stop subsidizing hospital care and redirect the money to ensure that all residents have “minimum coverage” — in his mind, catastrophic insurance. Individuals could choose and pay for anything beyond that. The premise was that taxpayers should not have to cover the cost of care for those unwilling to pay for it.
A Health Connector was to serve as an exchange where individuals could buy insurance directly and which would test-drive market reforms.
Unlike President Obama, Romney did not implement his creation. In Governor Patrick’s hands, Romney’s “minimum coverage” soon rivaled the most generous plans in other states, and a large portion of enrollees in the exchange paid no premiums. The Legislature expanded catastrophic coverage to include 20 additional mandates on small businesses and individuals.
Today the Connector’s few offerings are over-standardized, with little variety or innovation in plan design. The exchange has attracted principally subsidized enrollees, and the remaining private market is very expensive.
Obamacare further altered Romneycare. Massachusetts’ troubled implementation of the ACA — including creation of a new exchange that became an IT disaster and triggered an ongoing FBI investigation — should disabuse anyone of the notion that these were parallel laws. Consider Massachusetts’ half dozen waiver requests from the federal law (one citing the fear of “extreme premium increases”); the introduction of accountable care organizations; $10 billion in new taxes on medical devices, insurance, payroll for Medicare and Medicaid over 10 years; and a $14 billion reduction in Medicare Advantage payments.
A “Cadillac Tax,” scheduled to take effect in 2020, is expected to affect up to half the Commonwealth’s population. (The state wants to negotiate a broader ACA waiver in 2017.)
Survey results show variations in the uninsured population, but the rate appears to have dropped from around 9 percent to 3 or 4 percent. The rise in the number insured has plateaued, with a tenth of the population lacking coverage at some point during any given year.
The increased coverage was achieved almost exclusively through taxpayer-funded Medicaid (MassHealth). In fiscal year 2007 MassHealth served just over a million enrollees at a cost of $7 billion. The governor’s 2017 budget projects it will serve almost 1.9 million individuals, 30 percent of the state population, for $15 billion.
Spending billions on higher Medicaid enrollments and generous exchange subsidies is a fiscally irresponsible way to increase coverage, especially without offsetting savings from reform of the costly Health Safety Net pool and with continuing billion-dollar “supplemental payments” to hospitals.
The dramatic rise in MassHealth enrollments dwarfs the 300,000 fewer Massachusetts residents who report being uninsured compared to 2006, and underscores the fact that fewer individuals have private insurance today.
Meanwhile, the number who report having employer-based coverage has declined by about 10 percent. In recent years, small businesses have experienced a punishing cost squeeze. Smaller companies have raised deductibles and shifted costs to employees.
For individuals, access remains an issue. Fewer report a routine source of care, doctor’s office wait times are long, and in some regions even insured patients struggle to locate doctors with availability in their practices. Over half of low-income individuals, many enrolled in free or heavily subsidized coverage, went without needed care last year, largely due to costs and access issues. Residents report difficulty paying their medical bills at virtually the same rate as in 2006.
Ten years into Massachusetts’ experiment with an “exchange,” the results demonstrate that it is time to re-think the Health Connector.
Josh Archambault is a senior fellow at Pioneer Institute; Jim Stergios is the institute’s executive director.