The Massachusetts plan is working -- but the American health-care system is not

In recent weeks, critics of the Affordable Care Act have turned their attention to Massachusetts, where there's some evidence that the reforms signed into law by Mitt Romney in 2005 are struggling: Emergency room visits haven't dropped. Gov. Deval Patrick has been tussling with insurers over rates. There's anecdotal evidence of small employers dropping coverage (though recent studies show employer coverage expanding).

Before getting into isolated statistics and anecdata, let's do an overview: Between 2006 and the fall of 2009 (which is the most recent data [pdf] we have), insurance coverage among non-elderly adults jumped from 87.5 percent to 95.2 percent. Access to preventive care went from 70.9 percent to 77.7 percent. The gap in coverage between minority and non-minority residents disappeared. Out-of-pocket costs fell. These gains have persisted amid the recession, which is something of a surprise. State insurance plans tend to unravel during recessions.

Cost, however, is where things get complicated. In the non-group market -- which is where the reforms were concentrated -- premiums costs fell by 40 percent in Massachusetts even as they rose by 14 percent nationally, according to data from the insurance industry trade group AHIP. In the employer market, which did not see major reforms, costs have risen at about the national average: The increase in Massachusetts has been 21 percent, while the increase in the rest of the country has been 21 percent.

The plan's popularity also remains quite high: The Urban Institute study found approval at 67 percent in fall 2009.

Now, let's dig in a bit.

The Massachusetts reforms, unfortunately, were not designed to deal with cost. They weren't even designed to improve the delivery system. There was no excise tax, no independent commission to fast-track cost controls, no efforts to generate evidence for comparative effectiveness reviews or seed the system with medical records or spark a shift toward medical homes or accountable care organizations. "The initiative was to expand coverage and that still is going very well," says Sharon Long, who is studying the reforms for the Urban Institute. "They were very successful early on and they've managed to maintain that success despite the recession. The challenge is the cost issue, which they did not tackle in the initial reform."

Before the reforms, Massachusetts had the highest health-care costs in the nation. That's still true after the reforms. Massachusetts has an incredibly powerful hospital industry. Think of the legendary research hospitals in Boston -- Harvard and Tufts and Partners. Their reputation allows them to command huge premiums, and their centrality to the economy ensures them huge political power. Long mentions a survey that found one out of five households in Massachusetts gets some income from the health-care industry.

Some of the attention, however, is the product of politics, not policy. Various Massachusetts observers noted that Patrick has gone to war against the state's insurers -- but not because of the reform plan. Patrick is running for reelection against Charles Baker, the former CEO of Harvard Pilgrim, a large insurer in Massachusetts. So he's making the insurance industry an issue in the campaign. In fact, the insurer whose rates he overturned was ... Harvard Pilgrim. This all seems normal enough as a matter of politics, but because it's Massachusetts, it's become part of a conversation over the state's reforms.

But it doesn't really belong there. What we can say about Massachusetts now is pretty much what we've been able to say about Massachusetts since the early days of its implementation: It's been a successful attempt to expand coverage and reform the non-group market, and it was never an attempt to control costs. As such, costs in Massachusetts, much like costs nationally, are rising. Insofar as that contains lessons for the national effort, it's that we should stick to the law and make sure to implement the cost controls and delivery-system reforms.

