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Commentary

Questionable Cure for a Questionable Crisis: The Massachusetts Health Plan Takes Shape
Sally C. Pipes, Pacific Research Institute, 11-20-06

Pipes, the president of the Pacific Research Institute, offers an in–depth analysis of the recently enacted Massachusetts health plan.

If the Massachusetts health plan lives up to its billing—universal coverage with no increased taxes and no government takeover—it will indeed be a model for other states to follow. There are strong reasons to expect, however, that the plan will, in fact, lead to higher costs and increased effective taxes, on both businesses and individuals.

Given the results of the November 2006 election and the election of Democrat Deval Patrick as Governor, these outcomes are even more likely. The plan mandates generous, highly subsidized coverage that does nothing to encourage cost control from the users of health care. It offers only limited relief from the state's onerous health insurance regulations. The problems it allegedly addresses—adverse selection in the individual health insurance market and the resultant cost shifting from the voluntarily uninsured, are themselves caused by state regulation left in place.

At best, an individual mandate will serve as a new tax on Massachusetts' citizens, albeit one collected, at least initially, by private parties. At worst, it will serve as an excuse to further regulate health insurance, control prices, and build pressure for a total government solution. The health care Connector, a central clearinghouse for individually owned and portable insurance, is a real innovation, and one that, if implemented properly, will add value to the residents of Massachusetts. The Connector's success will likely be limited by the tightly–regulated products that the state will allow to be offered. At present, state bureaucrats, health insurers, hospitals, and consumer advocates are scrambling to figure out what the bill means in practice, what it requires, and what it allows.

In the months since the Governor's April signature, Massachusetts health reform has started to take shape. Whether that shape will be sleek, responsive, and efficient, or bloated, impenetrable, and bureaucratic will depend on much behind–the–scenes wrangling over the next few months, and beyond.

We continue to watch with concern.



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