Tag: romneycare

RomneyCare’s ‘Connector’ a ‘Legal Pit Bull’ Forcing Fed-Up Mass. Residents to Pay

According to the Boston Herald:

The state’s health insurance connector — the highly touted agency that aims to bring cheap medical care to the masses — has turned into a legal pit bull by aggressively going after a growing number of Bay Staters who say they can’t afford mandated insurance — or the penalties imposed for not having it.

The Commonwealth Health Insurance Connector Authority is cracking down on more than 3,000 residents who are fighting state fines, and has even hired a private law firm to force the health insurance scofflaws to pay penalties of up to $2,000 a year.

All told, more than 7,700 people have appealed state fines for not having health insurance, according to connector spokesman Richard Powers. The agency has hired several private attorneys at $50 an hour to hear many of the appeals, and some 3,150 of them have been denied — and the losers told to pay up.

The connector has also hired the Hub law firm Bowman & Penski — at $125 an hour — to defend itself against 13 lawsuits filed by fed-up taxpayers who insist they can’t afford state required insurance premiums or the escalating fines.

For more on RomneyCare, see “The Massachusetts Health Plan: Much Pain, Little Gain.”

Tea Party Not Keen on RomneyCare

The following exchange took place yesterday on the Christian Broadcasting Network between host David Brody and Tea Party Express Chairwoman Amy Kremer.

Brody: Mitt Romney…on the Massachusetts health care situation, you’re going to tell me that’s going to fly in the Tea Party movement?

Kremer: Absolutely not…I’m being honest here…You can’t get away from that.  And that’s the thing is, the days of people being able to do one thing in their state in front of a microphone, and then going to Washington and doing something else. I mean, the Internet, and 24-hour news cycles changed it all, and these people don’t have short memories, they’re digging up everything from the past, and they’re not going to let go of the health care.

Hmm.  I wonder why…


Video of the CBN exchange is available here.  For more on RomneyCare, read “The Massachusetts Health Plan: Much Pain, Little Gain.”

Giving Power to Experts Is No Way to Reform Health Care

In the latest Cato Policy Report, Cato adjunct scholar Arnold Kling’s essay on the (mis)rule of experts explains why ObamaCare will fail:

Despite the many pages contained in the health care legislation that Congress enacted, the health care system that will result is for the most part to be determined. The design and implementation of health care reform was delegated to unelected bureaucrats, as was done in Massachusetts.

In Massachusetts, the promises of proponents have proven false, and the predictions of skeptics have been borne out. Costs have not been contained; they have shot up. Emergency room visits have not been curtailed; they have increased. The mandate to purchase health insurance has not removed the problem of adverse selection and moral hazard; instead, thousands of residents have chosen to obtain insurance when sick and drop it when healthy. The officials responsible for administering the Massachusetts health care system are no longer talking about sophisticated ways of making health care more efficient.

Instead, they are turning to the crude tactic of imposing price controls.

Once again, we have legislators putting unrealistic demands on experts. This results in the selection of experts with the greatest hubris, shutting out experts who appreciate the difficulty of the problem. When the selected experts find that their plans go awry, they take out their frustrations by resorting to more authoritarian methods of control.

With ObamaCare, that dynamic took hold before the law even took effect.

Shifting the Blame for America’s Health Care Woes

I must be losing my touch. I’ve let nearly two months pass without responding to Ezra Klein’s defense of RomneyCare, ObamaCare, and other centrally planned health care systems.  (For those who want to get up to speed: his original post, my reply, and his response.)  So here goes.

Klein notes that he and I had each used flawed measures of RomneyCare’s impact on health insurance premiums in Massachusetts.  Fair enough.  But Klein ignores the study I cited by John Cogan, Glenn Hubbard, and Dan Kessler, which estimates that RomneyCare increased premiums in Massachusetts by 6 percent.  The CHK study has limitations, but it is the best estimate available.  I hope Klein addresses it.

Klein’s fallback position is that even if RomneyCare increases premiums, that’s not an indictment of the law because cost-control was not one of its goals.  Never mind that Mitt Romney boasted, “the costs of health care will be reduced.”  Klein knows political rhetoric when he sees it.  Yet he oddly sees no parallels between the phony-baloney promises of cost-control used to sell RomneyCare and the phony-baloney promises of cost-control used to sell ObamaCare – despite ample assistance from people like Medicare’s chief actuary and Alain Enthoven (“the American people are being deceived”).

Then Klein throws down his trump card:

[E]ven a cursory read of the evidence would show that whatever the drawbacks of central planning, it covers people at an extremely low cost. Romney Care’s cost problem is a result of pasting a coverage-oriented quick fix atop our insane health-care system. Compare its costs to the British system, the French system, the German system, or any other system, and whatever your conclusions, you won’t walk away unimpressed by the ability of centralized systems to cover whole populations for much less money than we spend.

Oy, where to begin?  First, Klein violates Cannon’s First Rule of Economic Literacy: he writes that centrally planned systems cost less, when what he means is that they spend less.

Second, the phrase “whatever the drawbacks of central planning” is some serious hand-waving.  Those “drawbacks” include (among other things): the Medicare program’s suppression of comparative-effectiveness research, error-reduction efforts, care coordination, and other delivery innovations; Canada’s human-rights violating Medicare system; and the suppression of untold innovations in health insurance and medical treatment by government price controls.  Other than a few drawbacks, Mrs. Lincoln…

Third, our “insane health-care system,” as I blogged previously, “is the product of the old raft of government price & exchange controls, mandates, and subsidies.”  Prior to ObamaCare, government already controlled half of all U.S. health care spending directly, granted control over another quarter to employers, and regulated health care more heavily than perhaps any other sector of the economy.  Klein and his fellow central planners can’t deny paternity.  Our “insane health-care system” is the product of central planning.

Finally, only a cursory read of the evidence could lead to the conclusion that central planning contains health care spending.  Klein posts the following charts and concludes that since all those (other) centrally planned systems spend less on health care than the United States, central planning must result in lower health care spending.

Photo credit: By Robert Giroux/Getty Images

But if that were true, then one would expect per-capita spending on elderly Americans – who have universal coverage through the centrally planned Medicare program – would not be far out of line when compared to how much other nations spend per elderly resident.  Yet the United States is just as far out of here as overall.  According to the OECD, the United States spends about twice as much per elderly person as Canada, and more than twice as much as Australia spends.  (Alas, I’m not cherry-picking; these are the only four nations for which the OECD provides recent data.)

Source: OECD, author’s calculations

(One could argue that the reason for this is that Medicare exists alongside the world’s largest (ostensibly) private health care sector, whose evils spill over into Medicare.  If that were the case, then moving all Americans into Medicare should reduce U.S. health care spending, bringing it back into line with other nations.  But consider that Klein and The New Republic’s Jonathan Chait both acknowledge that Congress had to throw $2 at the health care industry for every $1 that ObamaCare cut from future Medicare spending. How exactly could Congress move 250 million Americans into Medicare (which presumably would reduce overall spending), or reduce Medicare spending later, given those constraints?  How, exactly, would an independent rationing board survive the political dynamics that produce such outcomes? Prediction: it won’t.  The narrative that central planning contains health care spending just doesn’t hold water.)

Klein, The New Republic’s Jonathan Cohn, and others have taken a big step by acknowledging that RomneyCare is struggling.  When they shift the blame to “the American health care system,” however, they obscure what’s really happening.  As I closed my previous post: “RomneyCare and its progeny ObamaCare are attempts by the Left’s central planners to clean up their own mess.  If Klein and Cohn want to defend those laws, pointing to the damage already caused by their economic policies won’t do the trick.  They need to explain why government price & exchange controls, mandates, and subsidies will produce something other than what they have always produced.”

A Response to Gruber on RomneyCare & Health Care Costs

I just came across this letter to the editor of the Wall Street Journal from MIT economist Jonathan Gruber.  I don’t know how to confine myself to just one of the letter’s many problems. So brace yourselves, here comes the fisk.

Joseph Rago’s article on Massachusetts health-care reform (“The Massachusetts Health-Care ‘Train Wreck’,” op-ed, July 7) is exactly the type of selectively misleading use of facts upon which opponents of health-care reform have been relying over the past year.

No comment, other than remember the phrase “selectively misleading use of facts.”

Health-care reform in Massachusetts has covered 60% of the state’s uninsured, has done so at roughly the cost projected before reform was enacted in 2006, and remains overwhelmingly popular with the residents of the state.

Regarding coverage gains, Massachusetts officials used to claim that RomneyCare reduced the share of uninsured residents from around 10 percent to 2.6 percent.  In a study released this year, Aaron Yelowitz (a former student and coauthor of Gruber’s) and I show why that figure is too low and why the actual figure is likely 5.1 percent or higher.  The study on which Gruber relies – like all other such studies – neither mentions nor attempts to measure the problem that Yelowitz and I identified: uninsured Massachusetts residents appear to be responding to the individual mandate by concealing their lack of insurance, which would inflate the coverage gains.  Since that study obtained results similar to our results for Massachusetts adults, that study’s estimate of a 60-percent reduction in the uninsured appears to be an upper-bound estimate, rather than a point estimate.

Regarding costs, I haven’t seen any updated numbers since the Massachusetts Taxpayers Foundation’s whitewash from May 2009.  I’d like to see an updated, non-whitewashed report on actual spending and how it compares to the original projections, especially considering that in 2006, the Kaiser Family Foundation reported that Massachusetts “anticipates that no additional funding will be needed beyond three years.“  Updated figures would also allow us to judge how much RomneyCare spent per newly insured resident.

The state has seen a decline in its nongroup premiums of more than 50% relative to national trends…It reduced the costs to individuals of purchasing insurance…[an] enormous reduction relative to pre-reform…

Here’s where Gruber engages in his own “selectively misleading use of facts.”  Yes, non-group premiums appear to have fallen for the 4 percent of residents in the non-group market – because RomneyCare shifted those costs to workers with job-based coverage.

It is true that reform has not slowed the growth of group health-insurance premiums, which have continued to rise at exactly the same rate as in the nation as a whole.

The first part of this sentence is an understatement; the second part is false.  This report from the left-wing Commonwealth Fund shows that premiums in Massachusetts are growing faster than anywhere else in the nation.  And the only study that has tried to isolate the effect of RomneyCare finds that it increased premiums for employment-based coverage by 6 percent (see cost-shifting, above).

Despite Gov. Mitt Romney’s claims, the Massachusetts reform was not designed to slow the growth of health-care cost growth.

It should be obvious by now that RomneyCare wasn’t designed that way.  But it sure was sold that way.  And so was ObamaCare.  Any bets on how long before we hear apologists for both claiming that ObamaCare wasn’t designed to slow cost growth?

The PPACA also includes a series of changes that represent the best thinking about how to control costs, such as an independent rate-setting board for Medicare, pilots of innovative medical reimbursement approaches, and an end to the open-ended tax subsidy to the highest cost health insurance plans in the U.S. None of these is guaranteed to slow the rate of cost growth. But each is better than doing nothing, which was the alternative.

So the, ahem, best thinking on how to contain health care costs is (1) price and exchange controls set by (2) an unelected and unaccountable rationing board, plus (3) taxing health insurance.  Bra-vo. Sure, Obama’s National Economic Council chairman Larry Summers says, “Price and exchange controls inevitably create harmful economic distortions. Both the distortions and the economic damage get worse with time.” But when the alternative is nothing – nothing! – that means the bar for “best thinking” isn’t very high.

In the end, it is impossible to control health-care costs without first bringing as many citizens as possible into our health-insurance system.

As I blogged earlier today, it does not speak well of the Left’s approach to health care that in order to reduce wasteful government spending – or at least pretend to – they must first create more wasteful government spending.

RomneyCare Advocates: We Swear, This Time Centralized Planning Will Work

You know things aren’t going well in Massachusetts when supporters of RomneyCare write “there’s some evidence that the reforms signed into law by Mitt Romney in 2006 are struggling.”  That’s how The Washington Post’s Ezra Klein puts it in a post defending RomneyCare.  The New Republic’s Jonathan Cohn offers a similar defense.

Klein mentions only a few of the difficulties confronting Massachusetts.  Here are a few more:

  • The Commonwealth Fund reports that even though Massachusetts already had the highest health insurance premiums in the nation, premiums rose faster post-RomneyCare than anywhere else; 21-46 percent faster than the national average.
  • A recent study estimates that RomneyCare has so far increased employer-sponsored health-insurance premiums by an average of 6 percent.
  • The success that Klein sees in Massachusetts’ individual market – which accounts for just 4 percent of the private market – is merely the product of shifting costs to workers with job-based coverage.
  • Contrary to Klein’s post hoc spin that RomneyCare “was never an attempt to control costs,” Romney himself promised that “the costs of health care will be reduced.”
  • Aaron Yelowitz and I find evidence suggesting that uninsured Massachusetts residents are responding to the individual mandate not by obtaining coverage but by concealing their insurance status.  Coverage gains may therefore be less than official estimates suggest.
  • Evidence is mounting that, despite stiffer penalties than ObamaCare will impose, increasing numbers of people are gaming the individual mandate by only purchasing health insurance when they need medical care. Such behavior could ultimately cause the “private” insurance market to collapse.

Nevertheless, the Klein/Cohn thesis is basically that costs have been climbing and employers have been dropping/curtailing health benefits for decades.  So you can’t blame that stuff on RomneyCare.  We should instead be thankful that Massachusetts enacted a new raft of government price controls, mandates, and subsidies to protect residents from those features of “the American health-care system.”

The only problem is that “the American health-care system” is the product of the old raft of government price & exchange controls, mandates, and subsidies.  The largest purchaser of medical care in the country (and the world) is MedicareMedicaid is second.  The Left complains so much about fee-for-service medicine fueling rising health care costs and reducing quality, you’d never know that their beloved Medicare program is the primary reason for its dominance.  Likewise, the reason why employers are dropping and curtailing coverage is that the government turned the private health insurance market into an unsustainable employment-based system that is doomed to unravel.  Cohn’s book documents the inhumanity of that system so well, you’d think it would sour him on the sort of centralized planning that created it.  I could go on…

RomneyCare and its progeny ObamaCare are attempts by the Left’s central planners to clean up their own mess.  If Klein and Cohn want to defend those laws, pointing to the damage already caused by their economic policies won’t do the trick.  They need to explain why government price & exchange controls, mandates, and subsidies will produce something other than what they have always produced.

Under Romney/ObamaCare, Even the Scapegoats Scapegoat

In a recent post on how RomneyCare is increasing health insurance costs in Massachusetts (by encouraging healthy residents to purchase coverage only when they need medical care) and how ObamaCare will do the same, I linked to a Boston Globe article where an insurance-company spokeswoman made this odd claim:

We believe…the gaming in the system…is adding as much as $300 million dollars to the health care system in Massachusetts.

It’s hard to know what she meant. Taken literally, this claim is obviously untrue.  The gamers aren’t adding revenue to “the system” – they’re withholding revenue.  Nor are they adding costs, in the sense of additional medical spending.  If anything, overall spending falls because the gamers are less often insured, and therefore consume less medical care.

She might have meant that the premiums the gamers aren’t paying (or the difference between what they pay and the medical care they receive) amounts to $300 million, and that the gamers are imposing that cost on non-gamers in the form of higher premiums. But that doesn’t hold water, either.  The gamers have zero power to impose costs on non-gamers; only the government has that power. All the gamers are doing is responding rationally to the incentives RomneyCare creates and avoiding — lawfully, I might add — a $300 million tax.

So if that was her meaning, this spokeswoman should have said:

RomneyCare is imposing a $300 million tax on insured Massachusetts residents by encouraging other residents to game the system.

Instead, she blamed consumers and argued for laws that make it harder for consumers to avoid RomneyCare’s private-insurer bailout individual mandate.

So now we’ve got President Obama, who signed a law requiring health insurers to pay for more stuff, blaming insurers for rising premiums.  We’ve got pro-RomneyCare politicians doing the same in Massachusetts.  And we’ve got health insurers, who support laws forcing consumers to buy their products, blaming consumers for the cost of those laws.

Remember how RomneyCare and ObamaCare were supposed to promote responsibility?