Skyrocketing Massachusetts health costs could foreshadow high price of ObamaCare

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When Mitt Romney criticized the Obama health-care program earlier this week, leading Democrats responded by pointing out that, as governor of Massachusetts several years ago, Romney himself presided over the enactment of strikingly similar reforms. RomneyCare and ObamaCare aren’t so different, Democrats argued. If you liked one, you can’t attack the other.

Fair enough. So how is the Massachusetts health-care system these days?

Like the bill that President Obama signed on Sunday, the 2006 Massachusetts plan was sold to voters on the now-familiar promise that it would reduce costs and lower unnecessary emergency room visits. That’s not what happened.

Since the bill became law, the state’s total direct health-care spending has increased by a remarkable 52 percent. Medicaid spending has gone from less than $6 billion a year to more the $9 billion. Many consumers have seen double-digit percentage increases in their premiums.

Even more striking, the 2006 law has done little to ease the burden on emergency rooms, a central goal of all heath care reform plans. A report by the Boston Globe found that in the first two years of the program, the state’s ER costs actually rose by 17 percent. “They said that ER visits would drop by 75 percent, and it hasn’t been even close to that,” said State Treasurer Tim Cahill, who is currently running for governor as an Independent. “It hasn’t changed people’s habits. It hasn’t been successful at getting people to use less expensive alternatives.”

According to Cahill, Massachusetts is still afloat thanks only to generous federal subsidies, Medicaid waivers and gobs of recent stimulus money. “I’m worried that now that this national plan has passed, some of that federal money will start drying up — that the feds might tell us, ‘No, sorry you can’t have this money because we have to go cover Texas now,’” Cahill told The Daily Caller.

Hospitals, particularly those that serve the poor, have lost so much money under the plan that a number of them are now suing the state in an effort to stay in business. “While health-care reform has brought the state closer to universal coverage,” a group of six Massachusetts hospitals filing suit explained in a recent statement, “the unintended consequence of that success is many … hospitals are experiencing significant shortfalls in payments as they treat additional patients whose public insurance doesn’t cover the full cost of care.”

The problem is not unique to Massachusetts; hospitals around the country have battled state governments over reimbursement rates for years. But there’s no question the 2006 law has made things worse. One prominent teaching hospital in the state, Boston Medical Center, filed suit earlier in the year, claiming vastly increased caseloads and a state reimbursement rate of only 64 cents on the dollar, leading to an annual shortfall of $181 million.

The problem, the hospitals allege, is that the state has diverted funds from reimbursements to prop up health plans for the uninsured. Under state law, those plans must in effect be “Cadillac” models, loaded with mandates for costly nonessentials like in-vitro fertility treatment. The plans are expensive, and therefore heavily subsidized. Hospitals are bearing much of the cost.

“Massachusetts changed everything about the health-care debate because the one thing about Massachusetts that actually worked well was getting people coverage,” said Kevin Wrege, a former Massachusetts state insurance regulator and president of Pulse Issues and Advocacy who consults with the Council for Affordable Health Insurance. “If you provide it and it’s free or near free, people will come. The problem is that the costs in Massachusetts are stunningly high.”

So what does this mean for the rest of the country, now that the Obama administration has imposed a similar plan on the rest of us? “Massachusetts,” said Wrege, “is the canary in the coal mine.”