"A Model for Failure" By Michael Tanner

This article is more than 12 years old.

When Massachusetts passed its new health care law, the plan was hailed as a potential model for the nation. But as we see it in action, it becomes increasingly clear that the plan does not live up to the hype.

* Slightly less than half of Massachusetts' uninsured population actually complied with the mandate. True, the number of people without health insurance was reduced from 13% of the state's population to 7%, but when the bill was passed, advocates promised that "all Massachusetts citizens will have health insurance." Of course health care reform should not be judged solely by whether it achieves universal coverage, but it is fair to judge a plan by its advocates' criteria.

* Most of those who are signing up are low-income individuals, whose coverage is fully or partially subsidized, proving once again that if you give something away for free people will take it. It certainly appears that it is the expensive and generous Massachusetts subsidies, not the unprecedented individual mandate that is responsible for much of the increased coverage.

* Adverse selection remains a big problem, with the young and healthy failing to comply with the mandate. The state refused to change its community rating laws which drive up the cost of insurance for young, healthy individuals. Not surprisingly, they don't find this a good deal.

* The program is far exceeding its projected costs, with at least a $128 million budget overrun in its first year.

Future shortfalls could run as much as $4 billion over the next 10 years. Already the state has had to raise cigarette taxes and Governor Patrick is
seeking $130 million in new business, hospital, and insurer contributions (read: taxes).

* Although the state has browbeaten insurers into holding down premiums so far, few observers expect that to continue, especially since the Connector authority has been requiring new benefits (such as prescription drug coverage).

* The program has increased demand for health care services without increasing the supply of providers. As a result, patients are having trouble finding providers and waiting lists are beginning to develop.

If that is a national model, it is a model for failure.

Michael Tanner
Senior Fellow
Cato Institute

Have you read my new book, Leviathan on the Right: How Big Government Conservatism Brought down the Republican Revolution?

This program aired on August 13, 2008. The audio for this program is not available.