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Oops, Episode 937894

On the Massachusetts Health Care reform from 2006:

So, how are things going in Massachusetts? The easy part was getting more people insured. Coverage increased from about 88% to 96%. But the number of emergency room visits, which everyone expected to drop once people had to purchase insurance, is still going up. Surveys show roughly half the visits are unnecessary. Surveys also indicate that finding a primary care physician is becoming more difficult.

But at least it solved the cost problem, right?

insurance premiums for individuals (alone or in employer-sponsored group plans) increased 6% to 7% beyond what they would have without the reform. For small employers, the increases are about 14% beyond those in the rest of the nation. Four years after reform, Massachusetts still has the highest insurance premiums in the nation, and the gap is getting wider.

And of course, recognizing the problems, the legislators and executives are working hard at all options to fix things, just like Mayor Menino:

Gov. Patrick introduced a bill that will impose de facto price controls on everyone from solo primary care doctors to prestigious academic hospital systems. An 18-member board will decide how and how much providers should be paid, and the bill gives regulators the power to force private insurers to accept these fiats. Some 30 states experimented with such rate-setting in the 1970s and ’80s. Except for Maryland, all of them—including Massachusetts—deregulated in the 1990s because costs rose even as quality and choice declined.

Some fool I know once talked about all of this happening. I’ll post a link to it soon (“Insurance or Care?” AIER Research Reports, October 15, 2007).UPDATE: Here is a draft of my piece Massachusetts Health Plan v.6.

One Response to “Oops, Episode 937894”

  1. Rod says:

    I voted for Richard Nixon twice, so I suppose it’s partly my fault, but we’re still feeling the effects of Nixon price controls to this day. Thus I have to cut Jimmy Carter half a break for having to deal with the inflation that leapt out of the genie bottle when price controls were lifted. If Governor Patrick thinks he can dictate prices, he ought to read up on what Nixon tried to do.

    I know my own personal experience is not the same thing as economic statistics, but here’s a story about my experience with price controls. We had a working dairy farm back then, and one hot July day I went on a trip to the feed store and the farm equipment dealer to get some baler twine and a hydraulic cylinder for my baler.

    “I need three bags of Calf Grower, a bag of Milksaver and five bundles of baler twine,” I told Dick Rosenberger at the feed mill.

    Dick Rosenberger looked at me like I was a space alien. “We don’t have any baler twine, Rod,” he told me.

    I needed baler twine that afternoon in order to bale up a couple thousand bales of straw, so I asked, “Do you know if Agway in Dublin has any?” He told me there was nowhere on the East Coast that had any baler twine, nowhere. Except the Green Dragon, a farm auction and market in New Holland.

    What he meant was that there was nowhere on the East Coast where one could get baler twine at the controlled price of $12 a bundle (two spools). At the Green Dragon it was available on the black market at $45 a bundle. (One could buy practically anything at the Green Dragon.)

    Lucky for me, one of my farmer friends had bought two years’ supply of baler twine on the hunch that it would be unavailable due to price controls.

    When I got to the farm equipment dealer, I found the same thing to be true about hydraulic cylinders. They had no new cylinders, but the man who owned the dealership said he would do me a favor and take one off a piece of machinery he could not afford to sell at the controlled price.

    Now, one can appreciate how there could be periodic shortages of such things as hydraulic cylinders, but the baler twine came from Haiti, a country totally lacking in industrial technology. If baler twine is in short supply under price controls, anything can be.

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