Health care cost control in Massachusetts, continuing the bad news string for ACA

Representatives from the state’s nonprofit health plans as well as national for-profit insurers doing business in Massachusetts estimated the “medical cost trend,” a key industry measure, will climb between 6 and 12 percent this year — higher than last year’s cost bump and more than double the 3.6 percent increase set as a target in a state law passed last year.

Here is more, and for the pointer I thank Jeffrey Flier.


I haven't ever read a healthcare article regarding any state where providers and insurers don't say they want/need/desire/anticipate a rate/price increase.

If you read the article, you will see they cite a whole range of factors, including prior yeasr low medical cost increases. What they say and what they get are two different animals.

Well, didn't Obama make it a crime to blame Obamacare? So they have to come up with some explanation.

I know 2 guys, one famous and one non, who got pancreatic cancer, very expensive liver transplants, and then death. Blame insurance? Or the poor dumb SOB who perfected the liver transplant? (The free marketers have been firm that there should be no death panels, and the transplant decision should instead be based on ability to pay. Rather than even long term survival odds.)


I thought that was pretty complete. The paleo-market position is based on a fantasy or a cruelty. The fantasy that everyone can get cheep livers, if the market could just prevail, or the cruelty that some can't. Devil take the hindmost.

(I presume that some transplant recipients have good odds at long term survival, or what's the point?)

No, john. The free marketeers' position is that the unfettered market supplies more livers than the government can mandate be supplied. And this is supported by empirical research. You're in denial.

Where is there a free market in livers for comparison? Maybe you better explain that in detail. And then do not neglect my moral requirement that they should go to those with best survival odds, rather than with deepest pockets.

And you think a death panel would let Steve Jobs die just because either he is rich or someone else is poor?

Your point only seems to work if there is pecuniary crowding out, and I come down on the side of RPLong's point. It is in fact government mandates and insurance that probably (to me) price people out of the market.

Does this sort of goalpost moving thing usually work for you? Are we talking about livers or the ACA? Are we talking about your moral requirements and why the world does not conform to them, or are we talking about how to supply health care to people in need? Are we talking about comparative levels of regulations, or are we pitting competing imaginary states of health care against each other?

Well, when your best argument is that an attempt at morality might fail, you haven't really justified no attempt. In fact, I think you just signaled cognitive dissonance. (Overall, I find the paleo-market claim that health care would just be cheaper without government to be a just-so story. As we've covered, economics is not about making everything cheap. It cannot. It is about rationing scarce goods. If you ration health care by price, the rich get it. Bottom line.)

That was a pretty big concession on your part, RPLong.

You're hilarious, john. You just make stuff up. What else did I say?

RPLong, we are discussing universal health care and you desired me to drop morality from the question.

Read more closely.

Let's not sully the comments section any further.

Reviewing the thread I see your claim, my questions, your evasions. As it must be, because the alternative to government funded health care is of course price rationing and poor people going without. A "cheaper" liver is not a liver everyone can afford. Or ... can you show it working down to $5K or something (from north of a million now) in a market setting?

" If you ration health care by price, the rich get it. Bottom line."

That is not necessarily true. There is an optimum health. Once healthy, you can't buy more health (plastic surgery aside). But if the government helped to create these procedures (like liver transplants) then their role in cost growth is far more than a just-so story. But, while we are at it, since OUR government spends about 50% of the medical dollars then we can just agree that the market being responsible for high prices is a just-so story as well, absent further evidence.

Your premise is that Jobs did not buy himself healthy. For the sake of argument, what is it that Jobs' liver transplant took from a poor guy?

For what it's worth the "poor" guy I knew-of was himself a doctor, whose wife sat in the waiting room with a check for $1.2M in her purse, in case the insurance did not come through. I'd like to think both these guys took livers which would not have given someone else 10 years. As I say above I presume that there are those. If all "10 year guys" have gotten livers, then it's true, "2 year guys" can take them without harm.

And you think that a government panel wouldn't let Steve Jobs live because he's the head of Apple and pulls a lot of weight?

Hey why shouldn't Jobs get a liver? He's so productive, one year of Jobs life is worth 50 of someone elses.

You think government death panels would be immune to such arguments?

John Personna may be right but our morality may be flawed but the counter point is, we ignore many ways that we could save lives at very low cost and do not feel compelled but on the other hand we feel compelled by morality intuition to provide healthcare at very high cost per unity of life saved.


"You think death panels would be immune to such arguments?" Uh, yeah. Are you out of your mind? Using commonsense metrics like QALYs to make decisions about Medicare spending decisions is not even in the same universe as what you said, and we still aren't even doing that.

Well, in a truly free market the hospital would be able to have people killed for their livers.

Okay, that cinches it. This is the best meme ever!

"In a truly free market, babies would be farmed for meat."
"In a truly free market, every song on the radio would be a Menudo song."
"In a truly free market, Slobodan Milosevic would be the US Surgeon General."
"In a truly free market, Michaelangelo would never have been born."

Anyone else got any good ones?

The patients who are not able to pay their bills should obviously be taken for non-payment and sold to recover sunk costs.

That what mechanics do for cars they tow or work on.

In what other industry does Tyler advocate that the government impose cost controls? Why do America's elites treat health care as the one parasitic sector of the economy? And what does this imply about their view about the health and well-being of the majority of Americans?

It does seem an incendiary framing. Health care costs are rising in all US States. Let's blame Massachusetts?

Well, it was the state that the Romney was elected governor as a Republican.

No one thinks this web site has a bias, do they?

You are deluded.

You mean Romney was never governor of Massachusttets, nor that he was a Republican?

Or this is deluded? -

'The Massachusetts health care insurance reform law, St. 2006, c.58,[1][2] informally referred to as Romneycare, is a state law enacted in 2006, signed into law by then-governor Mitt Romney. The law mandates that nearly every resident of Massachusetts obtain a state-government-regulated minimum level of healthcare insurance coverage and provides free health care insurance for residents earning less than 150% of the federal poverty level (FPL)'

You imply TC is biassed towards Romney and Republicans. Thus you are obviously deluded.

'You imply TC is biassed towards Romney and Republicans. Thus you are obviously deluded.'

Ah, I see your point. You are quite right - if recent postings are to be trusted, Prof. Cowen feels that the U.S. will never be able to manage what all other industrial societies have been able to do.

Romneycare, for all its flaws, is just an example of an early American failure to actually implement health care, right?

Again, they haven't achieved anything other than create single payer systems.

'Again, they haven’t achieved anything other than create single payer systems.'

You mean like every health care system in an modern industrial societsy that pays at least a third less for comparable results (to put it mildly)?


"Again, they haven’t achieved anything other than create single payer systems."


What all the developed nations have is universal health care coverage in some manner.

In Israel you are required to join one of four HMOs premiums subsidized and means tested.

In Germany you must buy an insurance policy from one of what was once hundreds of insurers, with means tested premium subsidies.

In Britain, they had the lowest costs when everyone used the government employed doctors and government hospitals, but as they adopt the recommendations of American medical economists, costs are rising faster than in Mass.

In France and Canada, tax funded Medicare covers what Medicare Part A and B do in the US, which is about a third of the costs, with most people buying supplemental policies.

A few dozen other systems are used in other nations.

The only nation that is truly single payer is Taiwan, and they traveled the world looking for advice on health care systems, basing the advice on the quality of the health care system of each adviser - US advisers were basically ignored because it was immediately obvious the US knows nothing about designing national health care systems. Taiwan issues a debit card to everyone who then uses it to buy whatever health care they need from which ever health care provider they want.

The only commonality is they are universal.

We aren't blaming Massachusetts- we are pointing to it because it was supposed to show the way to address the problems in the other states since it has already enacted a form of Obamacare at the state level, and, surprise surprise- it isn't actually working either.

Again, Obamacare had the primary goal of universal coverage. Failure would be failure to provide that. Rising health care costs for an aging population are actually a parallel problem, and not one that universal coverage can, by itself, resolve.

No, John, that was one of the goals- the other was to bend the cost curve, and it hasn't. This suggests that ACA won't be affordable by it's supporters own metrics.

I'm having trouble with your implied causation. The most fundamental aspect of the ACA is that everyone should have health insurance. Many observers have long held that everyone should have health insurance, and should buy it voluntarily. If a state with wide enrollment, by mandate, has high costs, how would a state with voluntary enrollment have lower? It seems the only way is if you do less health care. Perhaps rationing by price? Are we back again to treating some of the people being cheaper than treating all the people?

One of the selling points for MassCare and Obamacare was that it would begin to bend what supporters of those programs claimed were unsustainable rises in the costs of care provided prior to their implementation. Sure, both plans also promised to cover more people, but both did so by promising to lower the cost per beneficiary. MassCare is already demonstrating failure in this latter regard. If the cost rises were unsustainable prior to the plans' implementation, they are only more so with their implementation. This suggests strongly that the promise of greater coverage is also going to be a mirage in the end.

Also, I will point out- the mandates were supposed to spread the costs out onto those who really did not use, nor needed to use, much healthcare in the first place- young, healthy people, but, unfortunately, once people are forced to pay for a product or service they previously didn't consume, they start consuming it since they are paying for it.

But again, the mandate was not that different than economic normative advice ... get yourself health insurance. (In these days of very high costs how much to you really need to self-insure, $3M? $5M?)

Obamacare was sold to (1) increase coverage (2) reduce costs (3) improve quality and (4) improve an economy hamstrung by medical costs.

(I have no problem with the idea that insurance, or national health, should optimize consumption vs prevention for the healthy. Tests, but not too many, etc.)

True, the Affordable Care Act was never actually about affordability.

I suppose now that it is passed and we've found out what is in it, you can drop the pretense.

By and by you can drop the other pretenses too. Everything, except for the insurance mandate, the people will just have to learn to be "realistic" about.

"Again, Obamacare had the primary goal of universal coverage. Failure would be failure to provide that."

And this:

"A new Congressional Budget Office (CBO) report says that under the Affordable Care Act, a.k.a. Obamacare, 30 million non-elderly Americans will remain without health insurance in 2022."

So by your own standards Obamacare is a Failure. Welcome aboard.

You'd be amazed how infrequently people give me economic normative advice to get myself health insurance that includes first-dollar contraceptive coverage.

You see no connection whatsoever between the rising costs of healthcare and the open ended promise to opay for healthcare for the elderly?

No connection whatsoever?

The CBO study you cite also says that, in 2022, there will be 30 million fewer uninsured than if ACA had not been enacted. Doesn't cutting the absolute number of uninsured in half count for something? Doesn't cutting the percentage of uninsured non-elderly (excluding unauthorized immigrants) from 18% to 8% count for something? You are always going to have some uninsured--Netherlands and Switzerland have an overall uninsurance rate 1-1.5%--so the US would be higher, but by a dramatically smaller amount. Given that the US started with a much higher rate of uninsurance and the percentages in the CBO study exclude the elderly, it seems reasonable that the US would have a higher uninsurance rate than those countries. So ACA, as measured by universality of coverage, is not a failure.

Well, the people who are doing the negotiations have no incentive to be good at them. Price controls can make up for that.

What is the comparison increase in health care costs for other status quo states, and the projected alternative for nothing, which was the only alternative apparently offered to ACA? Are the conditions assumed by the ACA still constant, or are conditions different now than assumed or projected by the ACA? If there was an alternative, can't some NON-IDEOLOGICAL

person crunch some numbers based on known facts and see where that would have wound up also?

It's funny how people objected to the name 'ObamaCare' and insisted on the use of the official name, 'ACA'. If anything, ACA is the ultimate Orwellian euphemism.

Yes, people love to dicker with titles. DKR, ACA is not the ultimate Orwellian euphemism. There are worse examples in the world. Your point suffers from hyperbole. This blog's comment section suffers from this.

Into the maelstrom we go.

We just continue to talk about costs costs costs costs and ignore supply forever. Because cost controls are easy to mandate but trees don't bare fruit on command. Fancy that.

ACA is making health insurance more affordable for many people who did not have it before. Because of the peculiar political dynamics surrounding passage, the folks who normally try to contain costs in government programs did not participate in the final drafting of the bill and in fact objected to some measures that might have reduced costs, so ACA is not as “affordable” as it could be. It will require decades of tweaking and probable evolution away from making employment the principal way of accessing the taxpayer subsidy for health insurance to make/keep health care costs affordable. Therefore linking the name of the bill to the President who happened to be holding office when we begin this process seems less appropriate than the appellation “affordable.”

More delusion. If a marginal vote goes along with the President, he just gets more of what he wants. This was an unpopular boondoggle even if it wasn't in the depths of a depression.

I thought ACA WAS just a Republican plan...

It is simple, Republican supporters have become older and much more "Medicared" since they proposed the core of ACA. By 2008, having lost to a Dem, it just didn't make sense for them support ACA-style health reform. All they need are those baby boomers and the oldsters, so it become more about Medicare and less about anything else. By and by, they are realizing that those supporters end up dying and without new blood, particularly the young, non-white and uninsured kind, they party will slip into irrelevance. They will try first to get them with immigration reform, but sooner or later they will need to support health care coverage for more than the elderly. Just like what happened with Medicare.

I love the strategy of making cautious, detailed, nuanced, reasoned arguments when trying to poke holes in a widely-accepted progressive viewpoint, but when jumping on the hate-bandwagon for an unpopular policy like ACA, throwing up your hands and saying "yes sir it sure is bad!" while making attempt at logical argument, and avoiding at all costs comparative discussions of universal coverage and cost-control in the rest of the industrialized world.

Exactly, as if the one alternative to ACA was an embrace of price based rationing in the marketplace.

1. Our GOVERNMENT spends more than every OECD country's except 1 and our GOVERNMENT spends more than the total medical spending of all but the top 8 or so. If government can fix the problem, why can't they fix THEIR problem first?

2. Is Obamacare doing to the US what the OECD did 20 years ago to control costs? 6 out of 14 countries in Exhibit 5 show higher rates of growth for the period 2000-2008 than the US.

3. You can say that the OECD has kept cost growth lower up until now, but projecting that we "can do what other OECD has done" is a non sequitur. They are not controlling costs from now on and they aren't us in any event.

I find this a very curious argument. In your link, look at Exhibit 3 - growth in expenditures per capita - and then look at Exhibit 5 - annual growth rates in expenditures per capita.

The idea that the UK has a higher growth rate than the U.S. is I'm sure of great interest to the British, but it seems much less pertinent to the U.S. than the fact it's a higher growth rate off a per capita cost that is LESS THAN HALF of what we spend in the U.S.

Why would your takeaway from those charts be that because their growth rate is higher that that means there is nothing we can learn from their systems that could reduce costs in the U.S.?

If I have to choose between "price based rationing" (by which I assume you mean supply and demand equalization mediated by money), or government mandated rationing via coercion by low-accountability technocrats and politicians, I'm definitely going with the former.

If your highest priority is personal choice, you're certainly correct.

If your highest priority is maximizing the well being of your nation, well, all of those single payer systems deliver universal coverage and outcomes as good or better than ours, plus lower costs.

Certainly if you're wealthy and other people's health is not a concern to you, the American health care system is the best in the world - at least as long as you don't consider the opportunity cost of the extra trillions we spend on health care compared to our peer nations.

Controlling cost per procedure vs controlling the number of procedures is really pretty different. Medicare controls the first, but doctors control the second. I think as procedures become less profitable, doctors will demand more of them to keep their incomes constant. You can easily imagine a world like this where costs per procedure go down a little or fail to keep up with CPI and total medical expenditure rise a lot. It's a kind of reverse operating leverage. I think that simple model may approximate what is going on.

This is the heart of it. Single payer 'works' (lower costs) primarily because doctors make significantly less money in those systems. There's also not nearly the medical tort issue. As I've posted on another thread, it's easy for non-doctors to say 'doctors need to do less, make less'. But the AMA is a very powerful lobby.

I honestly have no idea how this whole issue will play out.

And that's why Canada has a doctor's shortage and long waiting lists.

Doctors get paid less = fewer doctors.

Not if you open up the licensing and immigration restrictions on docs. Let nurses do more, let Cuban and Indian and other docs in, etc. This will result in lower pay for each doc, and help control costs. But the AMA will naturally be very opposed to this.

I'm not saying Canada's system is better or worse, I'm just saying that's the problem in a nutshell. We have a huge bulge of people getting to their prime years of consuming healthcare. It is obvious why costs are rising. It is not so obvious how to keep those costs under control and still cover everyone. Probably Medicare for all but covering far less (QALY measures, etc), lots more doctors (and nurses doing more), allowing those with extra money to buy more care abouve what the govt will pay, etc.

How do we get from here to there? No idea. The good news is after the Boomers there's a baby bust generation so the pressures will ease. But that's 20-30 years away.

It's not just that we have a bulge of people. It's that we've promosed to supply them with an effectively unlimited amount of money to prevent an inevitable outcome - death.

There is no product or service on Earth that will not increase in price if you start buying it in unlimited quantities.
Worse, if you give someone else a blank check to buy as much of it as they can use.

Letting in more doctors will slow the increase in price. but it will not change the fundamental dynamic. We will pour more and more money into healthcare until we either ikmpose some form of raitoning, or we go broke with everyone hooked up to a heart-and-lung machine.

Doctors do get paid too much here. There is a doctor shortage pretty much everywhere. The reason is the medical licensing establishment and the power doctor lobby, not the salary.

Re: Physician Comp: Physician compensation accounted for 8.6 percent of total healthcare costs in the United States in 2011 — or $216 billion of the $2.5 trillion spent on healthcare, according to data from the Overseas Employment Development Board and a survey from healthcare staffing firm Jackson Healthcare. However, the physician compensation distribution is the second-lowest among western countries with "modern healthcare systems,"

Re: MedMal: In Michigan, procedural legal reforms (concerning expert witness testimony, etc.) and caps on non-economic damages (generally limited to $350,000 or $650,000 for extreme injuries (like paralysis) were enacted in 1986. (see ).

"As a result of the legislative changes, and judicial interpretation thereof, many medical malpractice lawsuits were dismissed or never filed. Consequently, in Michigan there has been a 75 percent decrease in the number of medical
malpractice cases filed from 1986 to 2006." Different Directions, Todd C. Berg, Esq., July 16, 2007,
Michigan Lawyers Weekly.

Moreover, Michigan residents, unlike the residents of other states, may not join class actions brought against drug companies. See eg,

Despite this dramatic decrease in the number of medmal medmal actions, caps on damages and the elimination of class actions against drug companies, medmal insurance premiums did not go down; in fact they increased by over 100% at the big carriers. Moreover, based on anecdotal info, drug companies do not charge less for drugs destined for Michigan, notwithstanding that they cannot be the subject of a class action in the State.

If we are at the point where ACA supporters are flat out saying "this was never intended to be a serious attempt to bend the curve and it's supposed to be more expensive", we have made progress towards agreement and that can only be good for the country I suppose. I would have been nice to hear that when passing the thing is all I'm saying.

I certainly embrace cost reduction, whoever it can be managed, within the context of universal coverage. My whole thing (above) is to challenge the idea that universal coverage is just too expensive to attempt. See also mw's comment about the curious absence of cross-country comparisons in this context. This isn't about cheap universal health care for many, it's again an attempt to avoid universal care.

This report is timely.

Fewer to get health insurance under reform law, CBO says

Our family may end up dropping our health insurance coverage if our catastrophic policy gets spiked. Remains to be seen.

It will be grimly hilarious if Obamacare results in much higher costs and an increase in the number of uninsured at once.

Even these new, lower estimates predict an additional 27 million people covered. That's not chicken feed.

Please remember, coverage is not the same thing as treatment. What matters is whether a person gets the treatment she needs when she needs it, not whether the law says she is entitled to coverage.

Your plan will most likely be grandfathered.

Tyler, How dare you point to the comparator that was used during the debates to sell the thing and diminish Romney's credibility to argue against the ACA as a sign of the times to come.

ACA was legislation whose purpose was always to raise premiums on the young and healthy to benefit the old and sick. Overall that means that a few sick people that couldn't afford coverage can now afford it and its more expensive for most people.

Exactely what was surprising about the outcome?

You could phrase it that way, or you could say that it will extend health care coverage to tens of millions of the most vulnerable Americans and provide a safety net to everyone else. To-mato, to-mahto.

Under your objective, there would be no need to use insurance companies (and the aforementioned premiums) to affect all of those wonderful "benefits" you detail. Indeed, it is rather strange to use not only private companies, but rather the same private companies whose misconduct was in large part the impetus for the regulation, to achieve those goals. But yet, that's precisely what happened.

Does your tomato, or your tomahto, have any idea why that happened?

I don't understand your point. Welcome to politics?

I do find it amusing to think that if a true single-payer system were magically implemented in the United States, it would put millions of people out of work. It's the free-market version of stimulus.

Hundreds of millions more would die earlier. Extra stimulus - more job openings!

Trillions would die instantly! Socialism is jobs for everyone. Or, wait, would millions more have health insurance? Oh yeah...

Huh? Did anyone actually read the article:

"Health insurers asked for ­average premium base rate increases of 2.7 percent for Massachusetts small businesses and individuals whose policies renew in the April-to-June period, the largest renewal period for the so-called small group market."

I'm one of those small business policy holders (w/Tufts HMO). My rates were flat in 2012. A 2.7% (ish) rise in 2013 seems reasonable.
How exactly is this bad news?

Clearly you missed the part where Tyler strongly implies it is more news from the Department of Uh-Oh and any predicted increase in health care spending is because of Obamacare. If the increases are in Massachusetts, then it portends Obamacare's future failure. This has to be bad, bad, bad!

Don't worry if health care spending is going up just as quickly or even faster in the rest of the developed world, this is socialist medicine we're talking about here, developed to drive private insurance into bankruptcy.

Well, if costs aren't supposed to be lowered, then sure, a 50% higher than inflation growth rate is no problemo.

You have made some really good points there.
I looked on the internet to find out more about the
issue and found most individuals will go along with your
views on this website.

Comments for this post are closed