As surely as night follows day, one government intervention begets another. In Massachusetts, the 2006 healthcare reform law signed by then-Gov. Mitt Romney forced every Bay Stater to buy health insurance and every insurer to cover every applicant regardless of preexisting conditions. Not surprisingly, this created an increase in demand for medical care, driving prices and insurance premiums to the highest levels in the nation.
Now, rather than admit their mistake and repeal Romneycare, elected officials are compounding their errors by imposing cost controls on healthcare. A bill doing just that passed the state House of Representatives overwhelmingly (132-20) and the Senate unanimously. Gov. Deval Patrick signed it into law Monday, saying, “This is a commonwealth that has shown the nation how to extend coverage to everyone, and we’re going to crack the code now on cost control.”
The state’s chosen means of decryption is simply to demand that costs be kept below an arbitrary target. Specifically, for each year through 2017 healthcare spending may not increase faster than Massachusetts’ Gross State Product (GSP) — about half the rate at which it is currently rising. Then from 2018 to 2022 its growth is capped at half a percentage point below the rate of GSP increase. Also, instead of paying providers for each service provided, insurers will be strongly encouraged to pay them on a per-patient basis.
And that’s just the beginning. “Joshua Archambault of the Pioneer Institute finds 941 instances in which the [House version of the] bill mandates that something ‘shall’ be done,” writes Boston Globe columnist Jeff Jacoby. “Among these are more than 25 kinds of penalties, fines, and surcharges, for price control and punishment always go hand in hand.” For instance, a healthcare provider that fails to meet the state’s cost-control targets and does not file or implement a plan to meet them could be fined $500,000.
In addition to setting cost targets, the law mandates electronic health records for all patients, increases state Medicaid payment rates (which will surely prove unhelpful in cutting costs), and imposes a tax on hospitals that charge more than 120 percent of the state median price for a given service.
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Photo: In this Feb. 25, 2003, file photo, then-Massachusetts Gov. Mitt Romney delivers his State of the State address in Boston: AP Images