Jonathan Gruber, an economics professor at Massachusetts Institute of Technology, recently wrote a comic book that explains the health reform law so it is easy to understand. He shared some of his insights and lessons from his home state about what makes health reform work at the World Health Care Congress in Washington. Hint: It includes the Boston Red Sox.
Gruber is also a member of the Commonwealth Health Insurance Connector Authority Board, the Massachusetts health insurance exchange. The nation’s health reform law, the Patient Protection and Affordable Care Act, is based on the Massachusetts pioneering health reform law.
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Below are are excerpts from his April 17 presentation:
What the Affordable Care Act is trying to do is bridge the historical divide between the right and the left on healthcare reform. Its approach is incremental universalism. Incremental borrows from the right, meaning let’s build on the existing private health insurance system; universal borrows from the left, meaning let’s get to universal coverage. Massachusetts healthcare reform law just had its sixth anniversary.
The three-legged stool
The core of that act is a three-legged stool. The first leg is insurance market reform. If you have employer-sponsored insurance or government-sponsored insurance, you’re in pretty good shape. If you go outside those systems, you’re not. In most states, the non-group health insurance market is fundamentally broken.
Individuals don’t have access to insurance they can count on if they get sick. The first leg of that stool is to end that discrimination in insurance markets, to make sure that people have access to insurance no matter whether they are sick or healthy at fair prices.
That’s why you need the second leg of the stool, the individual mandate, which ensures broad participation in the insurance pool to make sure that insurers can price fairly and still stay in business. However, you can’t mandate people to buy something they can’t afford. That’s why you have the third leg of the stool, the subsidies to make health insurance affordable.
Those three legs of the stool are what we put in place in Massachusetts and it’s worked incredibly well. We’ve covered about two thirds of our uninsured citizens, and we fixed the broken non-group health insurance market. We have taken a market, which was fundamentally broken, and cut the premiums in half over the first three years of the law’s implementation. We’ve done so on budget, according the Massachusetts Taxpayers Foundation, and we’ve done so with broad public support.
Boston Red Sox and health reform
What made it work was an enormous social buy-in to the concept of universal coverage. The Massachusetts Health Connector, which implements the law, ran ads between the first and second inning of every Boston Red Sox game in the summer of 2007, a good year for the Red Sox.
The ad would say that you have to have health insurance. The ad would show a man with a broken arm and who said he was glad he had health insurance. And people went out and got it. No one came out afterwards and said stick it to the man, don’t get health insurance.
In the first year, the penalty for not having health insurance was just $200. But people went out and got it in record numbers. In the first year, there was a new tax form that had to be filed, and 98 percent of tax filers got it right that first year. So health reform was popular, and it was implemented and socially accepted. That may not be true elsewhere.
What Massachusetts didn’t do
People in the media say health reform failed because Massachusetts has the most expensive health care in the country. We had the most expensive health care before health reform and after reform. It has nothing to do with health reform. That’s because health reform in Massachusetts wasn’t about cost control. It was only about coverage and fixing the broken non-group market.
But national health reform has to tackle the much more difficult subject of cost control. The Affordable Care Act tries to do so through a number of channels—through limiting open-ended tax breaks for employer-sponsored insurance; through changing the way providers are paid, moving from fee-for-service and how much they do to how healthy they make you; through comparative effectiveness research to understand what works and doesn’t in health care.
All these aspects are modest steps forward, but they are at least steps. We have been paralyzed at the federal level in trying to move forward on cost control.
How to separate the wheat from the chaff
It’s an incredible challenge to control costs because, first, we don’t actually know how to control costs in health care in America. A lot of what we do in health care is good for you and some of it is a waste, and we don’t know how to get rid of the waste without potentially putting at risk the things that are good for you. We have ideas, and we’re getting there, but we don’t know yet. So in that situation, you move forward slowly.
The second barrier is politics, which even if we knew how to control healthcare costs, the politicians wouldn’t let us. Witness the ‘death panels’ debate. So you move forward slowly and cautiously. If we let frustration that we’re not going fast enough on cost controls halt our progress, we would effectively be moving backwards.
On coverage, it’s critical that states show leadership, and some states have begun to do so to fix the broken non-group insurance markets. By setting up these competitive exchanges, you will get insurers to have to compete and show what they are offering, what their products mean, and let individuals shop for the product that best fits them.
So, this is not socialized takeover of health care. This is inducing and making more effective private health insurance competition where there wasn’t effective competition before.
Gruber said that the next step is for states, working with consumer groups, to educate, publicize and build acceptance among their residents so they can benefit from health reform and to demonstrate that universal coverage is a priority.