OK, congratulations to Massachusetts’ legislators and governor for creating the nation’s first potentially viable universal coverage program. While everyone is busy congratulating each other, (free registration required) I hate to be the one to harsh their mellow. But so I shall.
I’ve read numerous reports of the new program, but nowhere have I seen any reference to any aspect of the program that convinces me it will work over the long haul. Why not?
There don’t appear to be any cost-control mechanisms, price or fee or utilization or frequency controls, nor any constraints on supply.
Yes, the program should eliminate excessive costs in the system due to cost-shifting, as long as the fees paid by all payers are high enough to cover associated costs. And, with cost-shifting accounting for about $1000 of the average family’s annual health insurance premium, the savings should be significant.
But that’s it. I’m afraid Massachusetts’ noble efforts have built a giant new demand mechanism, one that will produce healthier people, a one-time drop in premiums due to elimination of cost shifting (fingers crossed on that one), and ever-higher costs for the state’s citizens.
If we are relying on private industry’s innovators to come up with a solution, one that will effectively hold down costs over the long term for the entire population, we may have a long wait. For there are few incentives and lots of risks for any insurer to develop bold new programs when all they have to do is out-market their competition to capture their slice of the Mass pie. And there certainly has been ample opportunity for private companies to develop and deliver new programs over the past two decades, programs that could successfully constrain costs. That just hasn’t happened.
I hope I’m wrong, I hope I’m wrong, I hope I’m wrong.
But if I’m not, naysayers will have another example of an “experiment” that did not work out, an example they can, and will, point to as an image of another failed attempt by government to solve a huge problem.
The reality is government did not do too much, but rather did not go far enough.

White House Domestic Policy Advisor Allan Hubbard has been making waves of late, speaking out on behalf of consumerism in health care, advocating bigger tax breaks for health savings accounts, and demanding hospitals disclose their pricing information so consumers can make better decisions.
I’ve been blogging on consumerism in health care, the lack of useful data on prices and outcomes, and the complexities of health care buying decisions for well over a year, so no need to review those issues.
Except, one of his statements manages to simultaneously be both blatantly jingoistic and completely misleading. Here’s the quote from Sunday’s NYTimes “”no consumer is better than the American consumer at driving prices down and quality up.”
I’m not sure if Hubbard’s statement is a tortured call for patriotism as the solution to health care’s ills, or if he actually believes this drivel. Doesn’t really matter.
Every other country has some variation of nationalized health care, with some entirely nationalized (Canada), others mostly public (Britian), and others with a strict national requirement for care delivered by private providers (Switzerland). Yes, there are lots of variations and permutations, but every other country uses government to set prices for health care, not consumers.
And by the way, Allan, if you knew anything about health care you would know that the single most significant factor causing US health care to be more than 50% more expensive than other developed countries is price. And somehow you think that each individual citizen will be better equipped to demand and obtain lower prices for drugs than, say, the VA?
If that’s your position, Alan, than why are small businesses pushing so hard for Enzi’s AHP bill to allow them to capture the purchasing power of big companies?
My guess is Hubbard is another of the “every complex problem has a simple solution” guys.
What does this mean for you?
More wasted time as the Administration refuses to engage in meaningful efforts to address the health care crisis.

Contrary to popular belief, most of the patients in emergency rooms have insurance, but are there because they can’t get in to see their regular physician or are waiting for an inpatient bed. A new study released today by the American College of Emergency Physicians (and reported in the LA Times) indicates that about 15% of patients in ERs were people without health insurance.
The statistics hold true across the board, even for high utilizers of ERs (those who visited 4 or more times per year).
The report refutes a common misconception that the uninsured make up a substantial percentage of ER admissions.
What does this mean for you?
The lesson I take from this is to always question your assumptions (to quote one of Ayn Rand’s heroes), and question your most basic assumptions about health care most aggressively.