In 2006, Massachusetts passed a bill which required its residents to purchase health insurance. The new law set up a plan for subsidizing those with lower incomes so they could have insurance which they would not have been able to afford on their own.
Fast forward to today from the L.A. Times:
Three years later, the law has resulted in a 96% coverage rate, but the cost of health insurance for most of Massachusetts residents are going up, not down. And those in the middle class, who previously had coverage, are not seeing much change, except rising costs. Overall, the total cost of the Massachusetts program has “soared.”
“Whereas the subsidized plans cover only about 3% of the 5.4 million in the state who have health insurance, for instance, the subsidies are estimated to carry a price tag of $1.3 billion by 2011 — double the 2007 cost.
One reason is that more residents applied for assistance than the state had projected. Also, Massachusetts has always had exceptionally high healthcare costs, and it still does — in part because it has some of the most advanced and costly medical centers in the world.
At the same time, in 2008, yearly family premiums here averaged $13,788, the highest in the nation.”
This Massachusetts law closely resembles what is currently being considered in Congress now for our national health care reform. Those pushing for passage say Washington still has time to address cost-controls in this bill so costs won’t go up as rapidly. But, how does Congress actually keep to the promise that this new program will be “deficit neutral,” as President Obama claims it will be, without raising income taxes? If the cause of higher costs is due to advanced technology, as quoted above, does this mean there will be limits on access to that technology to keep costs down?
I’d like to point out that the federal government doesn’t have a good record when it comes to estimating the costs of its programs. Senator Sam Brownbeck, Ranking Republican Member of the Joint Economic Committee issued a study on July 31, 2009 comparing orginal estimated costs of programs including Medicare with their actual costs after they had been implemented.
In 1965, the House Ways and Means Committee estimated that Medicare hospital insurance would cost about $9 billion annually by 1990. But, the actual cost for this portion of Medicare in 1990 was $67 billion. The entire cost of Medicare was estimated in 1967 to be $12 billion by 1990. The actual cost for Medicare in 1990 turned out to be $110 billion. The estimate was off by A FACTOR OF 10.
Given the seeming inability of goverment to project the long term costs of its programs, I don’t expect projections for the cost of the new health care reform bill to be any more accurate.