The first problem with the Beacon Hill study/attack on Romneycare it that it is limited to determining the impact of health care cost increases on the surrounding economy. It is not designed to determine what caused the increase in health care costs to begin with. The study, in other words, had no basis for concluding anything about Romneycare.
But it gets worse. The study makes this assumption because it defers to an earlier study which, in perhaps a Freudian slip, states at one point: “We employed the same mythology.” And, indeed, there is “mythology” in their methodology. Their trend numbers, which they use in comparing health costs under Romneycare with costs before Romneycare, are faulty. For instance, in Table 11 their “trend” numbers claim that costs in 2006 were expected to decline from 2005, but this is clearly a false trend since costs had increased every year since 1998.
They then subtract their false trend numbers from the actual cost increase, creating the impression that costs rose at a faster rate. The bogus numbers compound each year, as the false trend numbers get further off course. We can see this play out in each of their tables. Consider table 12, insurance premiums for an average single plan. From 2000 to 2005, costs increased by $1500; meanwhile, from 2004 to 2009, costs only increased by $1100. That’s a downward trend. Yet the study claims that the premium rate in 2009 was $215 higher than the trend.
This disqualifies both studies. The first study was based on the difference between actual numbers and false trend numbers. The second study is based on the first study.
Even with the flaws in Romneycare, the costly provisions added by the legislature and new governor, it has slowed the rate of many health care cost increases in Massachusetts – despite the aging population of baby boomers (eg. hip and knee replacements are up dramatically, as well as MRI/CT scans, and mobility scooters). In all, it is working. Think how effective it would be if Romney had been able to do it his way. As he said, “There is no question in my mind that our program could be significantly improved if it were managed by a conservative administration.”
Using the raw data contained in their own tables, let’s look at how costs have slowed. Keep in mind that Romneycare went into effect in 2007. To measure it’s effectiveness we start with the previous year, 2006, so as to contrast the status prior to the law taking effect with the most current status reflected in available numbers.
Table 9: State medicaid spending increased by $1.4 billion from 2003 through 2006, and by $1.5 billion from 2006 through 2009. Again, the slight increase is attributable to the aging population.
Table 10: Medicare Advantage monthly rate increased by $166 from 2002 through 2006, and by only $139 from 2006 through 2010.
Table 11: Medicare Personal Health Care expenditures increased by 1.4 billion from 2003 through 2006, and by only 1.3 billion from 2006 through 2009.
Table 12: Average Insurance Premium (Single) increased by $952 from 2003 through 2006, and by only $820 from 2006 through 2009.
Table 13: Average Insurance Premium (Family) increased by $2423 from 2003 through 2006, and by $2433 frp, 2006 through 2009. Only ten dollar difference between cost increases.
As far as comparing MA with other states, MA had the highest costs before Romneycare. They are higher now, they were higher then. However, Rhode Island and New Jersey are right behind MA. The obvious correllation here is that RI, NJ and MA are by far the three most densely populated states in the nation. When you receive an MRI scan, the hospital charge is primarily for their investment in purchasing the scanner in the first place, not the cost of the actual scan. Likewise, additional costs accrue in densely populated states. Land costs more, so hospitals cost more. Construction is more crowded, cumbersome and costly. The initial expenditure is higher, and so then are the costs to recoup that expenditure.
Massachusetts has both the second highest personal income per capita, and personal disposable income per capita, behind only Connecticut. Disposable income influences the health care decisions people make, such as how often to visit their doctor and to seek care at a hospital. This affects cost.