Five painful lessons from RomneyCare and Massachusetts

Lesson 1: The Massachusetts plan does not control costs.

When Massachusetts launched its reform program in 2006, it already had the highest medical costs in the nation. Today, the burden is still rising far faster than wages or inflation, from those already lofty levels. A report from that state attorney general in March — remember, this is a Democratic administration — asked rhetorically “Can we expect the existing health-care market in Massachusetts to successfully contain health-care costs?” The report concluded, “To date, the answer is an unequivocal ‘no.'”

Costs are rising relentlessly for both families and for the state government. The median monthly premium for family plans jumped 10% from 2007 to 2009 to $14,300 — again, that’s a substantial rise on top of an already enormous number. For small businesses, the increase was 12%. In 2006, the state spent around $1 billion on Medicaid, subsidies for medium-to-lower earners, and other health-care programs. Today, the figure is $1.75 billion. The federal government absorbed half of the increase.

Hence reform’s proponents boast that expenses have risen only $354 million or around 6% a year. But the real increase is double that, including the federal share. And it’s highly possible that given the current budget pressures, the U.S. will reduce the contribution that has encouraged the state to spend so lavishly.