‘RomneyCare’ health reform in Massachusetts offers lessons for ‘ObamaCare’
One year after passage of the Patient Protection and Affordable Care Act, public opinion about the federal health care reform law remains sharply divided.
A Gallup poll conducted in March 2011 found that 46 percent of Americans viewed the health care reform law positively while 44 percent viewed it negatively. Meanwhile, 52 percent of Americans questioned in a poll for the Kaiser Family Foundation said they think they don’t have enough information about the health reform law to understand how it will affect them personally, while 47 percent think they do.
The ongoing debate and confusion about the “ObamaCare” health care reform measure — signed into law March 23, 2010 — must sound like a broken record to residents of Massachusetts. After all, they passed their own version of health reform back in 2006; the program is nicknamed “RomneyCare” for Mitt Romney, the governor who helped craft it.
|Apples and oranges: The federal health care reform law and the Massachusetts health care reform law provide a study in similarities and differences.|
Today, health care reform continues to elicit strong opinions among supporters and opponents.
On one side, Michael Cannon, director of health policy studies at the Cato Institute, says RomneyCare and ObamaCare “share the same design and the same failures.” The benefits of both are “vastly over-hyped” with “phony-baloney promises about controlling costs.”
On the other side, MIT economist and health care expert Jonathan Gruber notes the value of expanding health insurance coverage and says the Massachusetts reform “couldn’t have gone better.”
It’s time to de-spin this issue. How has RomneyCare worked in Massachusetts? What does it foreshadow for American consumers as ObamaCare provisions take effect? The answers hinge on how you get your health insurance.
Employer-sponsored health insurance
Under RomneyCare, businesses with more 10 employees are required to offer health insurance, although workers may have to pay a portion of premiums. Businesses that do not comply must pay fines.
Under ObamaCare, businesses with at least 50 workers that fail to offer adequate health insurance can be fined starting in 2014. One of the incentives to comply: Employers with fewer than 25 workers qualify for tax credits to help offer insurance to their employees.
Since RomneyCare took effect, Massachusetts has seen a jump in employer-provided health insurance, with enrollment rising by 150,000. ObamaCare is likely to cause a similar increase in employer-provided coverage.
But all of this comes at a cost. Massachusetts businesses have had to pay an estimated $750 million since reform began to insure more workers and dependents. The cost to U.S. businesses could turn out to be much higher, since the number of uninsured workers brought into coverage will be far larger.
Individual health insurance
Both RomneyCare and ObamaCare have similar individual mandates. Anyone without acceptable coverage must get it or face stiff tax penalties. This has helped RomneyCare achieve the goal of near-universal coverage. According to a survey by the state Division of Health Care Finance and Policy, 98 percent of Massachusetts residents had health insurance in 2010; a March 2011 report issued by Gallup put the figure close to 95 percent.
|As governor of Massachusetts, Mitt Romney backed a state health care reform law that has drawn comparisons to the federal health care reform law pushed by President Obama.|
But will ObamaCare show similar results? That could prove tough to answer. According to Michael Widmer, president of the Massachusetts Taxpayers Foundation, factors unique to Massachusetts allowed it to achieve a high level of health insurance coverage relatively quickly. For instance, the state had an unusually high percentage of employers that offered health insurance even before RomneyCare.
“Our uninsured population was already below 10 percent,” Widmer says.
After RomneyCare took effect, many workers without health insurance — particularly healthy young men — enrolled in their employers’ plans to avoid penalties. Widmer cites this as “absolutely key to the success of health reform in Massachusetts.”
Another key to that success: RomneyCare created the Massachusetts Health Connector – a regulated market where policies for small groups and individuals can be purchased. ObamaCare calls for other states to create similar “exchanges” for buying health insurance. The idea is to leverage the power of the free market to give consumers more insurance options.
In Massachusetts, providing near-universal coverage has not been free. Public subsidies have absorbed the costs of coverage for poor households. An analysis from the Massachusetts Taxpayers Foundation found that state spending on health care reform grew from $1.04 billion in 2006 to about $1.75 billion in 2010.
Eric Linzer, senior vice president of the Massachusetts Association of Health Plans, points to rising expenses as a shortcoming of RomneyCare. “For national health reform to work,” he says, “there has to be a major focus on dealing with underlying health care costs.”
Nonetheless, supporters of health care reform maintain that the federal law already is paying dividends.
Ron Pollack, executive director of Families USA, says: “Even though the largest health care improvements will be implemented in the future, huge numbers of seniors, young adults, children and small businesses have already received key pocketbook protections.”