Mitt Romney has been very clear, and very confusing: His health-care reforms are working in Massachusetts, but they’re not a good model for the rest of the nation. New numbers out from Massachusetts — and from the rest of the nation — suggest he’s only half right.
It’s been clear for some time that Romneycare succeeded in expanding access to health care in Massachusetts. Over 95 percent of the state’s residents are insured. It’s also popular. A February poll found that 62 percent approved of the law, and only 33 percent disapproved. Whether it’s controlling costs has been less obvious.
MIT health economist — and Romneycare architect — Jon Gruber showed that premiums in the non-group market, which was the market most affected by the reforms, fell sharply after the law’s introduction. But another group of economists, including Romney-campaign adviser Glenn Hubbard, published a paper showing that premiums in the employer market were rising more quickly than the national average.
But the data used by Hubbard and his coauthors only went through 2008. Fred Bauer has taken another look at the numbers, which now include 2009 and 2010. And now, those same numbers show the situation has turned around. “From 2006 to 2010, employer-sponsored health-care premiums for a family rose about 19% in Massachusetts, while they rose about 22% in the US as a whole,” he writes. “Compare that to the period between 2002 and 2006, when Bay State family premiums increased 40% and US family premiums rose only 34.5%.” Individual premiums have also been growing more slowly than the national average.
So Romneycare is working. Across the board. But perhaps, as Romney implies, there’s something that makes it unsuitable for the rest of the nation.
If that’s so, however, we’re not seeing it yet. Romneycare’s cousin, the Affordable Care Act — or, as it’s more frequently known, Obamacare — isn’t fully in place, and won’t be until 2014 at the earliest. But it has passed. And since it has passed, health-care spending has been dropping. Karen Davis, director of the Commonwealth Fund, writes that the most recent spending projections show a “$275 billion (5.6 percent) reduction for 2020, compared with pre-reform estimates. Moreover, that projection represents a cumulative reduction of $1.7 trillion over the 10 years from 2011 to 2020.”
You might argue that that’s just the recession, but as Davis writes, “the recession doesn’t plausibly explain why projected health spending in 2020 is substantially below estimates made just two years ago.” And why the recession having such an effect on long-term spending under Medicare? The latest data shows we’re on track to spend $750 billion less than the pre-reform projections suggested. The Medicare cuts in the Affordable Care Act account for barely half of that. If these trends hold, the Affordable Care Act will cost far less than anticipated.
Is this all the Affordable Care Act? Certainly not. The recession is part of it. And perhaps efforts over the last decade to change the health-care system are beginning to pay off. But the passage of the ACA didn’t just send a loud signal to the health-care industry that things needed to change. It laid out, in endless detail, how providers would begin to lose money if they didn’t change. And so they’ve started changing. We’re seeing more consolidation in the hospital industry. We’re seeing doctors join larger group practices. We’re seeing efforts to crack down on medical errors and prepare for regulations that will penalize hospitals with high rates of readmission.
It’s possible those preparations are beginning to bear fruit. At the very least, as Davis writes, “the dire predictions that the Affordable Care Act would fail to control costs and, in fact, accelerate spending have not been borne out by the early experience. It now appears that both the costs of covering the uninsured and Medicare spending are substantially below pre-reform estimates.” If that seems impossible, well, look at the Bay State.
So the Massachusetts reforms worked. And though it’s too early to say anything definitively, there’s encouraging evidence that the national reforms based on the Massachusetts reforms are leading to positive changes in the health-care industry. Romney is right to defend his signature accomplishment as governor of Massachusetts. But he’s wrong to deny its lessons for the rest of the country.