The second installment of The Boston Globe‘s three part series on Romneycare ran this past Sunday under the header, ‘RomneyCare’ — a revolution that basically worked.
Mooney’s bottom line: “Perhaps the best way to assess the Massachusetts overhaul is to examine each of the major questions commonly raised about it, starting with the effort’s most fundamental goal — providing access to coverage.”
But there is just one problem: expanding coverage was not the only goal of Romneycare. In an April 2006 Wall Street Journal op-ed Romney claimed: “Every uninsured citizen in Massachusetts will soon have affordable health insurance and the costs of health care will be reduced.” As Mooney’s own reporting goes on to document, Romneycare has completely failed to achieve half of what Romney said it would.
But first, it must be noted that Romneycare’s health insurance coverage gains are not all that impressive. Before Romneycare became law, already only 6.4 percent of Massachusetts residents did not have health insurance. By 2010 Romneycare drove the number down to 1.9 percent. That’s just a 4.5 percent gain. And nearly 80 percent of those who gained coverage did so through taxpayer funded government programs.
And those government programs are proving far more expensive than projected. Last year the program cost $2.12 billion, but Massachusetts only ended up picking up 18 percent of the tab. Thanks to waivers, special deals with the federal government, and stimulus dollars, the federal government picked up another 64 percent of the costs while private health insurance consumers picked up the rest of the tab (through higher premiums and co-pays passed on by hospitals and insurers). Looking ahead to next year, the state is expected to be almost $200 million short of paying for the program. Overall, total state health care spending has grown from 30 percent of the budget in 2006 to 40 percent today. The national average is 25 percent.
So why did Romneycare completely fail to reduce health care spending? For the exact same reasons that Obamacare will also fail to reduce health care spending: price controls do not work.
Romneycare and Obamacare both plan to reduce costs by changing the way health care is paid for. Romneycare placed health care providers on a “global payment system” that puts providers on a per-patient monthly budget. But a a new report issued by the Massachusetts Attorney General shows that this new payment system is not lowering health spending. In fact, The Boston Globe reports, that spending actually increased:
The yearlong review of what six large Massachusetts insurers paid providers in 2009 found that doctors working under the new “global payment” system — which puts them on a per-patient monthly budget — generally did not cost less than doctors paid the standard way. And in some cases, large doctors groups such as Atrius Health and Mount Auburn Cambridge were far more expensive than physicians paid under the fee-for-service system, despite being put on a budget.
Like Romneycare, Obamacare is set to increase the percentage of Americans who have health insurance. If judged by that narrow criteria, then yes, Romneycare has been a success and Obamacare will be too. But if, as both Obama and Romney claimed, their health plans were are also meant to reduce health care spending, then both policies are tremendous failures.