Massachusetts—the laboratory of Obamacare

I knew that Mitt Romney had signed a public health care plan in Massachusetts, and I knew that this was a serious problem for him in Republican politics heading toward 2012. What I didn’t know was how similar the Massachusetts law is to the federal health care law that’s just been passed. As Richard Lowry brings out in the below column, and as Obama himself has recently insisted, the two plans are very similar, including, most significantly, the requirement on insurance companies that they sell insurance to persons with pre-existing conditions. Even more interesting, Massachusetts’ non-profit health insurance companies have recently been pushed by the state into an unsustainable position in which they will be forced to go out of business, for exactly the same reasons that Kristor and others said that Obamacare would quickly drive insurance companies out of business.

With health care the number one national issue at the moment and probably for some time to come, it is impossible to see Romney as a plausible candidate for the 2012 nomination. And I say that as someone who supported him for the ‘08 nomination. Wait—there is one way that Romney (and, incidentally, all of us) can be saved: if the Supreme Court declares Obamacare unconstitutional, making the issue go away. Other than that, I think Romney’s presidential prospects are kaput.

And here is Romney trying to suggest differences that matter between Obamacare and Romneycare. It’s not going to sell. Accept it, Mr. Romney. You’re not going to be president. And here’s another prediction. I think that he will accept it, and that he will not become a candidate.

UPDATE (4/11/10)

However, if Romney’s competition consists of the whacko anti-American Ron Paul, the useless motor-mouth Newt Gingrich, and the cliche spouting Sarah Palin, he might come in a narrow first, as he did in the straw poll at the Southern Republican Leadership conference, where he beat Paul by one vote, 439 to 438 (24 percent each), with Gingrich and Palin coming in at 18 percent each.

So I have to qualify my prediction. If the likes of Palin, Gingrich, and Paul are his main competition, Romney could be the nominee after all.

Obamacare’s already had a disastrous preview
By Richard Lowry
National Review
04/09/2010

President Barack Obama has an unsettling defense of his health-care reform—it’s merely a version of the plan implemented by Massachusetts.

Obama wants to associate his reform with the one championed by Mitt Romney in 2006 when he was governor of the Bay State. If the liberal Democrat Obama and the conservative Republican Romney passed similar plans, what can be so radical about Obama’s reform?

This is superficially clever. It not only gives Obama’s plan a centrist patina, it shines a light on a significant obstacle to Romney’s likely repeat bid for the Republican presidential nomination. Except for the fact the Massachusetts reform is spiraling out of control.

If the states are the laboratories of democracy, Obamacare’s Menlo Park is about to blow up. Unsustainably high costs and high insurance premiums are leading inexorably toward price controls and rationing. Obama might as well boast that he’s adopted a version of the California fiscal plan, or the Michigan economic-recovery plan.

Obama is correct that his plan and Romney’s share essential features: a mandate that individuals buy insurance, fines on business for not offering coverage, heavily regulated insurance exchanges, and large-scale insurance subsidies and Medicaid expansion. They share something else—utterly fanciful notions of cost control.

Romney believed—and still maintains to this day—that emergency-room visits by the uninsured shifted costs onto everyone

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else. Never mind that in post-reform Massachusetts there are just as many non-emergency visits to the emergency room as previously, even though only 3 percent of people are uninsured. Many of these patients simply have trouble finding a doctor, a shortage the Massachusetts reform only exacerbates.

Massachusetts has created a different cost-shift problem through its Obamacare-style guarantee that people can wait to get coverage until they’re sick or want medical procedures. The Boston Globe reports, “Thousands of consumers are gaming Massachusetts’ 2006 health insurance law by buying insurance when they need to cover pricey medical care, such as fertility treatments and knee surgery, and then swiftly dropping coverage, a practice that insurance executives say is driving up costs for other people and small businesses.”

Predictably, costs in Massachusetts—always high—have only gone higher; the state now spends about 30 percent more per capita on health care than the rest of the nation. Predictably, the insurance regulations have only made insurance more expensive, as has been the case elsewhere; premiums in the individual market have been growing at a 30 percent annual rate. Predictably, the new health-care program has cost more than expected; spending grew by about 40 percent from 2006 to 2009.

At first, Massachusetts plugged the holes with more taxes and fees. Now, just as Obama is hailing the state as his opening act, it is moving to the next inevitable phase: unapologetic price controls.

The state’s regulators have rejected 235 of 274 premium increases proposed by insurers, in an extraordinary exercise of a power that had sat idle on the books since 1977. As The Wall Street Journal points out, the big insurers in Massachusetts are nonprofits like Blue Cross Blue Shield and Harvard Pilgrim, hardly the comic-book villains of liberal rhetoric. The state’s arbitrary clamp-down on rates will force insurers to cut access to care, or go out of business. As subtle as a kneecapping, the state’s move is rationing by proxy.

Insurers have taken to the courts, and most of them stopped offering new coverage for individuals and small businesses pending a ruling on their request for an injunction. Massachusetts Gov. Deval Patrick, meanwhile, wants the power to review the rates of hospitals and doctors and disallow those deemed too high.

And so the free lunch promised Massachusetts in 2006 devolves toward a fiscally beleaguered government setting prices and limiting care, exactly the downward spiral critics fear from Obamacare. At least Romney can say he didn’t know how his experiment would end. Obama has been warned, and still embraces Massachusetts as our national future.

Posted by Lawrence Auster at April 10, 2010 01:45 AM | Send