Healthcare Lifeboats

By David U. Himmelstein & Steffie Woolhandler

Massachusetts’s 2006 healthcare reform plan, often cited as a model for the nation, is sailing through choppy waters. Governor Deval Patrick is keeping it afloat by throwing away the lifeboats: public hospitals and clinics. Freighted with tax-funded windfalls that brought private insurers and hospitals on board, the reform has proved far more expensive than politicians forecast—costing the state $1.3 billion this fiscal year, according to the state’s report to its bondholders.

Yet despite the threat of a $1,068 fine for being uninsured, hundreds of thousands remain uncovered in Massachusetts, and the number of uninsured patients showing up at hospitals and clinics has fallen by only one-third. Moreover, according to surveys one in five state residents (including many with insurance) cannot afford care, and those directly affected by the reform are more likely to say it has hurt than helped them.

High costs and skimpy coverage are in the reform’s DNA; private insurers drafted its blueprint, cementing their dominant role. As a result, the plan forfeited the savings on bureaucracy that a single-payer plan could realize—an estimated $7.8 billion annually in Massachusetts alone. The public-plan option that Massachusetts’s reform offers to the near-poor hasn’t trimmed bureaucracy—a warning that this option, pushed as a compromise at the federal level by erstwhile single-payer supporters, would yield scant savings. Indeed, Massachusetts’s reform has actually increased bureaucratic costs; the new insurance exchange (similar to that touted by President Obama and Senate Finance Committee chair Max Baucus) has added 4 percent to insurers’ already high overhead. Promised savings through prevention, care management and computerization (also mainstays of Obama’s plan) haven’t materialized. Consequently, much of the new coverage has come with unaffordable out-of-pocket costs. And cost overruns have drained state funding for care of those who remain uninsured.

From the Nation.