The Massachusetts Laboratory

Massachusetts’ venture into health care reform may well torpedo Mitt Romney’s Presidential ambitions, but it has served a useful purpose, as a laboratory experiment testing the theories underlying Obamacare. Joseph Rago of the Wall Street Journal has summed up the results so far:

President Obama said earlier this year that the health-care bill that Congress passed three months ago is “essentially identical” to the Massachusetts universal coverage plan that then-Gov. Mitt Romney signed into law in 2006. No one but Mr. Romney disagrees.

As events are now unfolding, the Massachusetts plan couldn’t be a more damning indictment of ObamaCare. The state’s universal health-care prototype is growing more dysfunctional by the day, which is the inevitable result of a health system dominated by politics.

The commonwealth’s health care costs have risen under the reformed regime, and insurance companies have increased premiums accordingly. The government’s response was predictable, especially when the current governor is one of President Obama’s closest allies:.

In April, Mr. Patrick’s insurance commissioner . . . rejected 235 of 274 premium increases state insurers had submitted for approval for individuals and small businesses. The carriers said these increases were necessary to cover their expected claims over the coming year, as underlying state health costs continue to rise at 8% annually. By inventing an arbitrary rate cap, the administration was in effect ordering the carriers to sell their products at a loss. . . .

In an April message to his staff, Robert Dynan, a career insurance commissioner responsible for ensuring the solvency of state carriers, wrote that his superiors “implemented artificial price caps on HMO rates. The rates, by design, have no actuarial support. This action was taken against my objections and without including me in the conversation.” . . .

Sure enough, the five major state insurers have so far collectively lost $116 million due to the rate cap. Three of them are now under administrative oversight because of concerns about their financial viability.

An appeals board has sided with the carriers, but Governor Patrick vows to appeal that decision further and is contemplating extending price controls –

beyond the insurers to hospitals, physician groups and specialty providers – presumably to set medical prices as well as insurance prices. Last month, his administration also announced it would use the existing state “determination of need” process to restrict the diffusion of expensive medical technologies like MRI machines and linear accelerator radiation therapy.

Even progressives can see that fixing prices risks driving doctors to opt out of the government system. Some of them have a “solution” to that, too.

Richard Moore, a state senator from Uxbridge and an architect of the 2006 plan, has introduced a new bill that will make physician participation in government health programs a condition of medical licensure. This would essentially convert all Massachusetts doctors into public employees.

All of this was drearily predictable. Romneycare, like Obamacare, aims to make consumers less price sensitive by bringing everyone under the umbrella of universal health insurance. At the same time, it does nothing – or worse than nothing – to increase the supply of physicians, nurses, hospitals, clinics, pharmaceuticals and other essentials of medical care. Prices must go up as a consequence. If the government constrains them, the mismatch of supply and demand creates shortages.

There are signs that, even without formal price controls on providers (yet), Massachusetts has done enough to make the practice of medicine unattractive that the supply side is starting to collapse. One indicator is the increasing use of hospital emergency rooms. Supposedly, ER’s are the last refuge of the uninsured. Massachusetts now has very few uninsured, yet –

Last week, the Massachusetts Division of Health Care Finance and Policy reported that, despite the imposition of universal health insurance in that state in 2006, emergency room visits increased by 9 percent between 2004 and 2008, even after taking population increases into account. . . .

If the number of doctors stays the same, but more and more people utilize health care resources, the supply of available doctors goes down.

Hence, it takes longer and longer to get an appointment to see a doctor, and people end up right back where they started: in the emergency room. As the Globe points out, “the growing use of emergency rooms has significant cost implications, because private insurers and government programs pay substantially more for a visit to the emergency room than for a doctor’s appointment.”

Massachusetts reminds us: Access to health insurance is not the same thing as access to health care.

That last sentence should be emblazoned on at least one banner at every Tea Party.