Making Excuses for the Massachusetts Failure

Most economically literate people understood from the beginning that the Massachusetts experiment with “universal coverage� was doomed to inevitable failure. As Arnold Kling put it at the time:

The elected leaders of Massachusetts have come up with a novel solution for the vexing problem of having to pay for health care: abolish the laws of arithmetic.

The Massachusetts plan has now collided with “the laws of arithmetic,� but “progressive� policy wonks have refused to absorb the obvious lesson. Here’s the risible “analysis� of Maggie Mahar:

Healthcare expenditures in Massachusetts surpass spending in every other state.  And this, I propose, is why Massachusetts is having such a hard time implementing its new healthcare reform law.

In other words, the problem is not the plan. It’s those pesky Massachusetts patients. They just want too darn much health care:

Insurance is expensive in Massachusetts because its citizens consume more healthcare than people in many other states.  They undergo more tests and procedures than most of us, and they see more specialists. 

But, if Massachusetts is failing because of excessive demand, universal coverage for the entire country will fail for the same reason. As she (rather awkwardly) puts it:

The U.S. spends more per person on healthcare than any other country in the world on healthcare.

The laws of arithmetic apply from sea to shining sea, and lame excuses won’t change that. Universal coverage is failing in Massachusetts because it’s a dumb idea based on preposterous economic assumptions.

Comments 6

  1. Scott wrote:

    “The laws of arithmetic apply from sea to shining sea, and lame excuses won’t change that. Universal coverage is failing in Massachusetts because it’s a dumb idea based on preposterous economic assumptions.”

    I agree with you, however maybe for not the same reasons.

    Universal coverage will not work because it does not address the fundamental issues. However, the free market idea of abolishing employer based coverage and transferring everything to the individual insurance market (ie: personal responsibility) will not work either. Why? Again, it fails to address the fundamental issues that underlay most of the problems healthcare faces today.

    No transparency = no competition = no incentives = no consumer market = status quo.

    Under any system I have seen proposed the provider will continue too receive less then fair market value for services rendered which will lead too providers over charging and over treating which will lead to grossly over inflated premiums and finally leads to consumers (and employers) to continue to opt out of having / offering insurance (if they can get covered in the first place). In the end, the consumer will be left holding the bag for a system that excludes them from the start.

    Just my opinion that has been simplified for the sake of sanity!

    Posted 24 Oct 2007 at 12:46 pm
  2. Catron wrote:

    I think most of the issues you raise would be resolved by deregulation of the insurance and health care markets. That would, in a relatively short time, align the incentives properly.

    Posted 24 Oct 2007 at 3:57 pm
  3. Matt wrote:

    A more cryptic statement has never been made.

    You’re a one trick pony Catron, and it’s not that sturdy a horse.

    Posted 24 Oct 2007 at 8:43 pm
  4. Maggie Mahar wrote:

    First, thanks very much for picking up the typo (in the awkward sentence).
    Secondly, if you read the whole piece, you’ll find that I’m not saying that the citizens of Massachusetts “demand too much health care,” but they are accustomed to undergoing unncessary tests, hospitalizations and procedures because Masschusetts is a medical Mecca where an abundance of specialists and hospital beds drives demand.
    It has long been known that, in the health care market, supply drives demand. (“Build the beds and they will come.) More than three decades of health care analysis done by researchers at Dartmouth University has shown that in areas of the country where there are more specialists and more hospital beds, Medicare spends twice as much per patient–after adjusting for differences in local prices, race, age and the underlying health of the population.
    This research is now widely accepted by doctors, the Congressional Budget Office, the Medicare Payment Advisory Comission, etc. See my story about this research titled “The State of the Nation’s Health” and posted on the first page of
    Scott– As to whether the consumer can create a transparent market and bring down prices, today I posted a piece on this very topic on my blog –see “A Transaction Based on Trust.”
    Finally, I’m afraid I agree with Matt: Catron is a one-trick pony.

    Posted 25 Oct 2007 at 11:03 am
  5. Catron wrote:

    When it comes to performing tricks, I prefer concentrate on quality rather than quantity. But I’m more interested in your uncanny ability to miss the implications of your own analyses.

    The core issue is demand. You prefer to think of it in terms of some conspiracy involving “unnecessary tests, hospitalizations and procedures.� I prefer to assign responsibility to the patients who receive the services. Either way, it is demand that puts upward pressure on insurance and health care prices in Massachusetts.

    Where health care demand is concerned, Massachusetts is to the rest of the U.S. as the U.S. is to the rest of the world. This means that, unless our masters in Washington dictate how much care each patient receives, a universal health care plan for the whole country will have the same problems that the Massachusetts plan is having.

    The reason that people like Arnold Kling were able to predict the Massachusetts failure with such accuracy is because they did not look at the issue through the lens of ideology. They just did the math. If you will take off your ideological blinders for a few minutes, you will also be able to see the obvious.

    Posted 25 Oct 2007 at 2:13 pm
  6. Matt wrote:

    “If you will take off your ideological blinders for a few minutes, you will also be able to see the obvious.”

    Surely you recognize the irony?

    Posted 27 Oct 2007 at 9:40 pm

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