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Massachusetts Health Reform: The Myth Of Uncontrollable Costs’ by Michael J. Widmer

This article is more than 10 years old.

Fueled by ideology or misunderstanding, a virtual cottage industry of skeptics has arisen around Massachusetts’ landmark health reform law. And perhaps the favorite issue of the critics is the contention that the reform is unaffordable and will break the bank.

The Taxpayers Foundation has released a new report which debunks this myth. The analysis concludes that the public cost of achieving near universal access has been modest and well within early projections of how much the state would have to spend to implement the reform.

Based on actual and projected spending data for the first four years of health care reform, the Foundation concludes that state budget spending on health reform has grown from a base of $1.041 billion in fiscal 2006 to a projected $1.748 billion in fiscal 2010. That is an increase of $707 million, half of which is supported by federal reimbursements. The $353 million state share translates into an average yearly increase of only $88 million.

The analysis found that new spending for Commonwealth Care and MassHealth was largely offset by decreases in uncompensated care pool payments and in supplemental payments to Medicaid managed care organizations.

Fears that the initial rapid enrollment in Commonwealth Care would continue unabated never materialized.

CommCare enrollment peaked at 176,000 members in mid-2008, and the state will spend approximately $800 million on this program in fiscal 2009 compared to the once-projected $1.3 billion.

The key to the reform’s success has been shared participation; employer-sponsored enrollment has increased by 148,000 and the number of individuals buying private coverage directly has grown by 39,000.

The strong growth in privately funded coverage has helped dispel concerns that public programs would replace, or “crowd out,” private coverage. In fact, the Foundation estimates that the added cost to Massachusetts employers for newly insured employees and dependents is at least $750 million – more than double the $353 million increase in state spending since health reform was enacted.

The state is experiencing an enormous fiscal crisis that has everything to do with the collapse of tax revenues and almost nothing to do with the costs of health reform.

Michael J. Widmer
President, Massachusetts Taxpayers Foundation

This program aired on May 26, 2009. The audio for this program is not available.

Martha Bebinger Twitter Reporter
Martha Bebinger covers health care and other general assignments for WBUR.

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