Romneycare is working! Across the board! And Obamacare might be working, too! Why, it’s socialized healthcare Nirvana!
So squeals Ezra Klein, a “pundit” perhaps best noted as some kid who likes to form secret groups with other leftwing journalists to both invent and then push the news cycle.
The only problem is, this is Ezra Klein we’re talking about, which means there’s a near 100% he’s either purposely misreading data, spinning that data to create a narrative he’s hoping he can push on a technicality, or else he’s lying entirely. Or some combination of the three.
MIT health economist — and Romneycare architect — Jon Gruber showed that premiums in the non-group market, which was the market most affected by the reforms, fell sharply after the law’s introduction. But another group of economists, including Romney-campaign adviser Glenn Hubbard, published a paper showing that premiums in the employer market were rising more quickly than the national average.
But the data used by Hubbard and his coauthors only went through 2008. Fred Bauer has taken another look at the numbers, which now include 2009 and 2010. And now, those same numbers show the situation has turned around. “From 2006 to 2010, employer-sponsored health-care premiums for a family rose about 19% in Massachusetts, while they rose about 22% in the US as a whole,” he writes. “Compare that to the period between 2002 and 2006, when Bay State family premiums increased 40% and US family premiums rose only 34.5%.” Individual premiums have also been growing more slowly than the national average.
Romneycare’s cousin, the Affordable Care Act — or, as it’s more frequently known, Obamacare — isn’t fully in place, and won’t be until 2014 at the earliest. But it has passed. And since it has passed, health-care spending has been dropping. Karen Davis, director of the Commonwealth Fund, writes that the most recent spending projections show a “$275 billion (5.6 percent) reduction for 2020, compared with pre-reform estimates. Moreover, that projection represents a cumulative reduction of $1.7 trillion over the 10 years from 2011 to 2020.”
You might argue that that’s just the recession, but as Davis writes, “the recession doesn’t plausibly explain why projected health spending in 2020 is substantially below estimates made just two years ago.” And why the recession having such an effect on long-term spending under Medicare? The latest data shows we’re on track to spend $750 billion less than the pre-reform projections suggested. The Medicare cuts in the Affordable Care Act account for barely half of that. If these trends hold, the Affordable Care Act will cost far less than anticipated.
Is this all the Affordable Care Act? Certainly not. The recession is part of it. And perhaps efforts over the last decade to change the health-care system are beginning to pay off. But the passage of the ACA didn’t just send a loud signal to the health-care industry that things needed to change. It laid out, in endless detail, how providers would begin to lose money if they didn’t change. And so they’ve started changing. We’re seeing more consolidation in the hospital industry. We’re seeing doctors join larger group practices. We’re seeing efforts to crack down on medical errors and prepare for regulations that will penalize hospitals with high rates of readmission.
It’s possible those preparations are beginning to bear fruit. At the very least, as Davis writes, “the dire predictions that the Affordable Care Act would fail to control costs and, in fact, accelerate spending have not been borne out by the early experience. It now appears that both the costs of covering the uninsured and Medicare spending are substantially below pre-reform estimates.” If that seems impossible, well, look at the Bay State.
So the Massachusetts reforms worked. And though it’s too early to say anything definitively, there’s encouraging evidence that the national reforms based on the Massachusetts reforms are leading to positive changes in the health-care industry. Romney is right to defend his signature accomplishment as governor of Massachusetts. But he’s wrong to deny its lessons for the rest of the country.
Now, leaving aside the trifling bit about individual liberty and the federal government’s newly assumed role as Director of Things You Must Purchase, even on the level of pure efficacy, Klein — as is predictable — seems prematurely ejaculatory in his praises.
Notes Peter Suderman in Reason:
in fact, between 2006 and 2009 family premiums in Massachusetts rose faster than in the rest of the nation: Bay State premiums were 108 percent higher than the U.S. average in 2006, 112.1 percent higher in 2008, and 113 percent higher in 2009 (no data is available for 2007). The favorable comparison to the U.S. growth rate is accomplished by the change in the final year. So far, at least, this isn’t a trend—it’s a blip.
With individual premiums, the story is similar, though the difference is even less dramatic. Bauer notes that although “health-insurance premium growth did not slow as much for individuals as it did for family plans… it still did slow in absolute terms and relative to the nation as a whole.” He continues:
By the 2008-2010 period, the individual premium in Massachusetts grew about 5% slower than it did for the US (Bay State premiums grew 11.9% while US premiums grew 12.6%), so the gap between the two premium growth rates did narrow over the period.
As with family premiums, however, the change that makes the story is in 2010. From 2006 through 2009, Massachusetts average individual premiums rose steadily faster than the national rates, going from 108 percent of the national average in 2006 to 112.8 percent in 2009. But in 2010, the growth rate dropped: Bay State premiums came in at 109.6 percent of the national average. Once again, the work is done by a single year.
And what happened during that single year? For one thing, the economy was in the midst of a miserable recession: The crash at the end of 2008 led to layoffs and thrift throughout 2009. Given the lag in premium-setting cycles, the corresponding changes in premiums would’ve shown up most prominently in 2010.
What else happened in 2010? As Bauer notes, Massachusetts Governor Deval Patrick and his insurance commissioner underwent a very public fight over rate increases in the small group health insurance market, rejecting nearly 90 percent of proposed increases under emergency legislation. The insurers eventually settled and limited their rate hikes, despite a judgment by an appeals panel overturning the administration’s rate caps for one of the state’s insurers. Bauer argues that the rate hike fight does not “fully explain” the drop in family premiums. Surely, however, it explains some of it; in the short term, political pressure and price controls can reduce prices, even if such controls are not sustainable long-term cost-control measures. And for a time, they can also exert more subtle pressure throughout a system, acting as an implicit threat.
And price controls typically reveal themselves in other ways, which is why it’s worth asking what those premiums were actually buying. Part of the explanation for the dip in 2010 prices may simply be that insurers and employers were scaling back in terms of what they were buying. In April of 2010, amidst both the specific fight over rate hikes and a broader climate of worry about the state’s rising health care costs, The Boston Globe reported that health insurers in the state were beginning to limit access to popular but expensive hospitals; one way to cut back on premiums is to cut back on services.
Meanwhile, in a presentation on premium trends in private health insurance sponsored by the state’s Division of Health Care Finance and Policy last June, Dianna Welch noted that premiums in the state weren’t merely increasing: consumers, in response, were also buying substantially less insurance. That can disguise the growth of premium prices—what she calls “buy down.”
Think about it this way (these numbers are hypothetical): In 2010, you buy a plan for $100. In 2011, you have the option to either buy the same plan for $106 or pay $103 for a less comprehensive plan than in 2010 sold for $90. If you take the latter option, you’re actually paying a lot more, on a unit basis, despite the smaller dollar increase. It’s not clear how much buy down accounted for the 2010 figures, but we know it was already happening in the years prior: Welch notes seeing “significant” buy down in 2008 and 2009.
Finally, it’s worth noting that during the same series of presentations, which reviewed data through all of 2009 and preliminary data from 2010, Massachusetts officials and influencers did not view the state’s health spending trends as successful.
[…] nationally, premium growth declined in 2010, dropping to about three percent after several years running at five. In 2011, however, they shot way up, rising by nine percent. Which suggests that this brief slowing of the Bay State’s premium growth may well be just a temporary stopover on the too familiar road to fiscal ruin.
Which, let’s face it, is hardly surprising: math works the way math works.
People like Ezra Klein must therefore find particular data points to highlight and extrapolate out into promising trends — then use the very promising trends they themselves are creating from isolated data points as a means to win over those not sufficiently conversant either with actual long-term trends or the rules of economics and arithmetic.
Perception is reality, to the always propagandizing leftist, and Klein and his cohort are hell bent on creating the perception necessary to continue the push our country toward a progressive Utopia that constantly eludes them — though not because in the history of the world plans and schemes of this type have never worked, mind you; but rather because of the vicious hateful evil opposition of rightwing extremists who continue to hew to the ruling authority of outdated documents written over a hundred years back by slave owners who lacked the perspicacity of Ezra Klein and his fellow travelers.
At least, to hear them tell it.