Five years after Gov. Mitt Romney signed Massachusetts’ groundbreaking health care legislation, it has met its chief goal of extending insurance coverage to most residents — but with costs rising faster than inflation, lawmakers face the challenge of how to pay for it all.
Although the law has extended coverage, it has done little to fundamentally change the way consumers shop for health care, which analysts say is the only lasting solution to ballooning costs.
Massachusetts’ uninsured rate plunged to the lowest in the nation, from 6.4 percent to 1.9 percent, after the law was enacted in 2006. The rest of the nation averages close to 17 percent. Nearly every child has coverage, and more businesses are offering insurance plans.
At the same time, health care premiums continued to outpace inflation by rising an average of 5 percent to 10 percent each year.
“It’s been very successful in getting people covered,” said Jon Kingsdale, whom Mr. Romney appointed to set up the law’s insurance exchanges, though he also said the trickier issue of bending the health care cost curve remains. “I think, politically, it would have been difficult to enact the law with cost containment - that really means taking money away from the people who save lives.”
Reforming health care in Massachusetts — and the challenges that came with it — foreshadowed President Obama’s health care initiative, which he signed into law last year. The Affordable Care Act closely mirrors Mr. Romney’s overhaul, leaving in place the employer-coverage model butexpanding subsidized coverage.
Both laws include mandates on individuals to purchase health insurance or pay a fine, and on businesses to offer insurance, though they exemptsmall firms. Both establish insurance exchanges that offer subsidized coverage to low-income individuals and families and ban insurance companies from rejecting individuals with pre-existing conditions.
Now, both plans face questions over how to pay for their reforms over the coming decades.
In Massachusetts, that problem is already acute.
MassHealth, which includes Medicaid and the State Children’s Health Insurance Program, has seen more residents come under its wings from the dual impacts of an economic recession and the new mandates under the law. An extra $5.6 billion in Medicaid funding through the federal stimulus bill helped to pay for the program over the past two-plus years.
As of this year, though, that assistance is gone. In response, the state trimmed $770 million from MassHealth in a 2012 spending plan that authorizes higher co-pays and reduces reimbursements to providers.
The cuts add to concerns about sustaining the program that costs $10.4 billion annually and insures one-fifth of state residents, represents 29 percent of all state spending and forms the backbone of the new health care law. Spending on the program has increased by an average of 6.2 percent each year since 2005, when MassHealth made up 27 percent of the state budget.
“Just having that many more people in public programs, it does create problems for sustainability,” said Amy Lischko, a professor at Tufts University who served as Mr. Romney’s health care policy director. “It’s done nothing to constrain health care costs.”
Spending lots of money on health care is nothing new for Massachusetts. In 2004, two years before the health care reform was enacted, spending per capita was $6,683 in the state, compared with $5,283 nationally, according to the Kaiser Family Foundation.