March 18, 2008 4:56PM

RomneyCare: the Fun Continues

A central premise of RomneyCare, the smorgasbord of health care reforms that Gov. Mitt Romney (R) wrought in Massachusetts, is that the government could cover the uninsured by redirecting money from uncompensated care subsidies to subsidies for insurance. Because hey, if we give that money to the uninsured, they won't show up at the hospital unable to pay, right? We could achieve universal coverage with no new government subsidies!

Unless, of course, all the king's mandates and all the king's subsidies fail to achieve universal coverage. In that case, the uninsured will continue to show up at hospitals and receive uncompensated care. According to the Boston Globe:

Before healthcare reform took effect last year, [chief executive Dennis D.] Keefe said, Cambridge Health Alliance was reimbursed by the state for the full cost of providing services to the uninsured. Under the new system, "we only get 60 to 70 percent," he said. The reduction is particularly significant for the alliance because its hospitals serve a high percentage of uninsured patients. Despite the state's efforts to enroll all low-income residents in free or subsidized insurance programs, many still do not have coverage.

Something similar occured under Maine's Dirigo health care reforms. Supporters promised that broader coverage would reduce private insurance premiums because reduced uncompensated care would lead to less cost-shifting. Didn't quite pan out that way.

What remains to be seen is whether, as I predict, the hospitals that demanded the original uncompensated care subsidies will force Massachusetts to restore them. If so, then the Massachusetts health plan will not have reallocated those government subsidies. It will have created new ones.