When MassCare passed, it was supposed to lower the average cost of health care by getting relatively cheap young people into the system, and ending the inefficiencies of caring for the uninsured. Unfortunately, it hasn't quite worked out that way. The bill for the uninsured only dropped by about 40%; the young, cheap people turned out to almost all need subsidies, and worse, some of them figured out how to game the system by buying insurance, getting a bunch of expensive procedures, and then dropping the insurance again. There was a brief improvement in insurance prices for the individual market, because Massachusetts, with its community rating and guaranteed issue, had had a pretty sizable problem with adverse selection. But after a few years, insurance costs were still marching briskly upward, rates were among the highest in the country, and the system was putting heavy pressure on a budget that was already strained to the limit by the recession...
It's hard to simultaneously expand demand, while lowering the incentives for supply (i.e. Medicare reimbursements), without having some pretty dramatic mismatches between the two. There's an old adage common in restaurants and engineering that goes "Good. Fast. Cheap. Pick Two." Change that middle word to "Universal" and you've got a pretty good summation of the problem that Massachusetts now faces--and that the rest of us soon will.
Tuesday, May 18, 2010
How Much Does Free Health Insurance Cost?
From The Atlantic: