FactCheck.org: ‘RomneyCare’ Facts and Falsehoods

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A reporter from FactCheck.org visited Pioneer’s office a couple of weeks ago to learn more about the Massachusetts health reform law. Without a doubt this will be a big issue in the 2012 presidential campaign. I give the Annenberg Public Policy Center at UPenn and their FactCheck.org project credit for attempting to get ahead of the curve here. A few thoughts on the article:


  1. More Research Needed:

There are still a lot of unknowns in Massachusetts. The data in the state is improving but much is still unclear. Pioneer has attempted to capture key metric in its Report Card Series. Interim Report Cards on Massachusetts Health Care Reform

A) Increasing Access

B) Equitable and Sustainable Financing

C) Administrative Efficiency

D) Cost-Effective Quality

2.      Cost Containment:

… the national law included many steps aimed at decreasing the growth in health spending, while the law Romney signed purposefully did not.

The Romney bill laid some of the ground work for cost containment, most of it revolving around transparency in prices and quality. However, the Legislature and current Administration gutted staff/funding for the agency responsible for these efforts, and have only recently restored some of it. Many folks, including myself, think that the proper use of data could help contain costs because it empowers consumers, tracks utilization, and informs better insurance product design.

The 2006 reform certainly did not go far enough on cost containment, but it did have latent elements. As supporters of the federal law will tell you, the “solutions” in the law are pilots and experiments on cost containment, they don’t really know if they will work. (See Gruber at minute 58.)

3. Implementation:

Implementation changes in Massachusetts played a major role in leading the state to where it is today. Huge policy decisions have taken place in implementation that moved reform away from some of the original vision behind the bill. These should be attributed to Governor Patrick and the Connector, instead of being linked to the original bill.

If you don’t, it would be similar to looking at a final mural once a second artist has taken the brush for 4 years, and trying to figure out what the first artist did. You really need to look back at the original plans (or in this case the bill) to see what has changed over the last four years, and who has made those decisions.

4. Romneycare vs Obamacare

One portion left out in the article when comparing the state and federal law is the amount of subsidy on the table. This difference at the federal level will significantly impact employer behavior nationally, especially when the federal law does not contain an employer firewall as Massachusetts does. [An employer firewall prevents employees with employer based insurance from buying from the exchange.]  This has led some to estimate that the price tag of the federal law could easily double.

Former CBO Director Douglas Holtz-Eakin, spoke on this issue at Pioneer’s Annual Hewitt Health Care Lecture:

If you do the arithmetic, you can easily come up with a situation for anyone that is at 300% FPL or below- in which it will be cheaper for the employer to drop the insurance, pay the penalty under the law, give the individual employee a raise, send them off to the exchange, where they can take their raise and their federal subsidies ….up to 10% of their income…and the employer can come out ahead…..We won’t see this (ACA) cost $1 trillion in 10 years, but $2-2.5 trillion.

Secondly, the financing of the two laws is different. Transferring subsidies from hospitals to individuals with a federal waiver in Massachusetts is very different when compared to $500 billion in new taxes and Medicare cuts at the federal level.

5. Small Business Plans

The Connector missed the boat on small business plans. The Connector and its Board, and the Administration at large– was extremely late to open a small business program, and made policy decision after policy decision (some with their eyes wide open, some unforeseen) to limit choice, diversity, and innovation in the small group market within the Connector. Pioneer is trying to start an informed discussion about the matter with its latest research: Fixing the Massachusetts Health Exchange.

The quote from Sarah Iselin in the piece illustrates my point about misplaced priorities:

Iselin, who was commissioner of the Division of Health Care Finance and Policy from March 2007 until November 2009, says that helping small businesses wasn’t a main focus of the law. “There was a recognition that we needed to be thinking about it,” she says. “There were clearly provisions in the law that set the Connector up to begin to kind of, you know, step into that space. It was by no means the emphasis [or] the focus of the final law.

The three groups targeted under the reform were young adults, the poor, and employees of small companies that could not take advantage of the tax benefit for health insurance granted under federal law. The Connector was set up the way it was to allow employees of smaller companies to delink insurance from employment status and to allow a defined contribution system. If the focus was just the poor uninsured, why wouldn’t the state just expand Medicaid?

6. Will We Follow Massachusetts?

Finally, and probably most important, is the comparison game.  It is really important to stress, at every level possible, that what has taken place in Massachusetts will most likely not take place in other states the same way. Massachusetts is a high-income, relatively high density, high medical infrastructure, highly educated, high IT infrastructure, sizable small employer based(185,000), robust safety net state– in which pre-reform was– highly insured, with a strong commitment from our employer base to offer health insurance.

For these reasons and more, I think both those on the right and left have very little wiggle room to draw direct comparisons from the experiment in Massachusetts to other states. Surely our state offers some lessons, but every state has very different demographics and insurance markets, and should deliver insurance with those differences in mind. I think we can all agree MA is not TX.