What We've Learned From the Massachusetts Health Plan

By Mitt Romney
Saturday, July 12, 2008

It may come as a surprise to some on the left, but it is the Bush administration that made the state of Massachusetts' health-care revolution a reality.

Health and Human Services Secretary Michael Leavitt, together with Massachusetts leaders from both parties, enabled our state to launch a health-care plan that is on track to get virtually every citizen insured. Moreover, Bay Staters are now able to own their own insurance with the same low rates that are paid by employers. And there is no more worrying that if you lose your job, you lose your health insurance.

The Bush administration will decide in the coming days whether to continue to facilitate this experiment by accepting the state's financial contribution as qualifying for federal matching funds as in the past. If the federal government refuses or reduces federal participation, the state could be forced to curtail the program.

The plan has critics as well as proponents; I hope both can agree that what we are learning is invaluable. Here's how I see it:

There is a misconception in this country that individuals who do not have health insurance also do not receive health care. But in fact, people without health insurance regularly show up at emergency rooms -- and by federal law, they are treated, usually at no cost to them. The cost is picked up by everyone else, and by government.

Our plan said no to "free-riders." Massachusetts residents are now required to have health insurance. For those earning less than 300% of the federal poverty level, there is a subsidized insurance program called Commonwealth Care. Individuals pay a share of their monthly premium, based upon their income level. This is private insurance, chosen by the individual. It is not Medicaid or Medicare.

For those earning over 300% of the federal poverty level, we created a "Connector" to enable individuals to purchase private insurance at lower rates, and with pretax dollars.

Already, the number of uninsured has been cut by 340,000 -- more than half. Some have signed up for Commonwealth Care, some have purchased insurance through the Connector, and some have purchased insurance through their employer. In fact, ours is the only state in the nation where the number of people purchasing through their employer has actually risen. Within two years, nearly every Massachusetts citizen will have health insurance.

The subsidized Commonwealth Care program accounts for about two-thirds of the new enrollments to date. This is as expected: We initiated this subsidized program well ahead of the unsubsidized program, and the incentives to purchase the unsubsidized insurance have only recently begun kicking in.

Hundreds of thousands of people are receiving better health care, including preventive care and treatment for chronic ailments. These people will be far less likely to suffer acute -- and expensive -- conditions in the future.

When fully implemented, almost everyone who is not on a federal entitlement program will be paying for all or a portion of their health-insurance cost. We have tackled the free-rider problem.

The cost and value of health insurance for individuals who purchase their own insurance has improved markedly. Before our plan, a healthy 37 year old (the median age of our insured population) paid $355 a month for insurance. Now, the Connector reports that that same individual can purchase insurance at just over half the cost and with double the benefits.

The cost of the insurance policies that are offered through the Connector is actually less than what was originally forecast. Market forces are beginning to go to work in health care.

Still, there are corrections that are needed. The Massachusetts plan is more costly than it needs to be. Critics overstate the cost problem by ignoring the hundreds of millions it saves by replacing prior programs for the uninsured. Even so, mid-course corrections can significantly lower cost and improve the program. Here are a few:

- Require everyone to pay something. My plan did just that, but the state legislature decided that the poor (those earning at or below the federal poverty level) should pay nothing. If people get something for free, they don't value it and they overuse it. Further, the individual's share of the Commonwealth Care premium must be regularly adjusted for both fairness and budget.

- Remove coverage mandates. Mandates such as unlimited in vitro fertilization drive up the cost to the state and to the individual. In an abundance of caution, the legislature voted to keep all mandates in place even as it put a moratorium on any new mandates. Now that the plan is working, the governor and the legislature should revisit this issue.

- Phase out direct payments. We must follow through on the agreement to end direct state payments to the hospitals that care primarily for low-income patients. The legislation calls for the last payment of $160 million to be paid in 2009. Stick to this phaseout, as agreed.

- Strict enforcement. Tighten the requirements for the free care that is still being provided by hospitals, and follow up with strict enforcement. Hospitals have grown accustomed to these dollars and will resist giving them up. Large opaque payments to hospitals must be replaced by the subsidy that is given to individuals who purchase their own insurance.

- Cost containment. Vigorously promote the cost containment features that were contemplated in the original legislation, including cost and quality transparency among providers and co-insurance options for purchasers.

Health-care reform is working in Massachusetts. The people of the state, having the closest view of the plan, are the most positive: A recent poll shows favorable opinions outnumber unfavorable by three to one.

The left argues that to get everyone insured, the federal government must take over health care. Leaders from both parties in Massachusetts and the Bush administration have proven them wrong -- this will be one of their signature achievements. It would be a mistake to walk away from it now.