Jon Cohn and friends have been having a good debate on the Massachusetts health reform experience over at The Treatment. Cohn gives the plan a qualified pass. "The big success," he says, "is the expansion of insurance coverage," and he's right about that. Diane Archer is less impressed. But the post worth reading closely is Jon Gruber's. Gruber, an economist at MIT, helped design the legislation. He argues, rightly, that attacking its absence of cost control is like attacking this post for containing insufficient insight on early period Silver Surfer comics. The original Massachusetts legislation didn't seek to control costs and this post isn't about Silver Surfer. But that doesn't close Gruber's story. The Massachusetts coverage reforms, he argues, reshuffled the political incentives to render cost control a more pressing issue than it had previously been:
Nevertheless, the Massachusetts law explicitly did not take on the fundamental determinants of medical cost growth--and this is, in my mind, the genius of the approach. For decades, efforts to move towards universal coverage have always floundered on the shoals of cost control. For thirty years we have seen growing numbers of uninsured for one reason: because well-meaning reformers have tried to fit the square PEG (pun intended) of cost control into the round hole that is political viability. And when they lose, they take the uninsured with them. What is particularly frustrating is that Archer and others miss the fact that doing coverage first is the single most important thing we can do to get to cost control. To see this once again we need look no further than our experience in Massachusetts. We have one of the strongest and most effective advocacy groups for health care for the poor in the country, Health Care for All (whose former director and key architect of the Massachusetts law, John McDonough, is now directing the efforts for national reform at the Senate Health, Education, Labor, and Pensions Committee). After playing such an important role in passing our law, this group suddenly realized that their hard won gains may be lost if we didn't eventually figure out a way to control health care costs. The result was an intense and broad-reaching campaign that resulted in the most significant cost-control legislation we have seen in Massachusetts in at least fifteen years. This includes the appointment of a commission that will revisit exactly the type of provider payment disparities that Archer highlights in her response. This legislation, and commission, would simply not have happened without our reform law motivating concerted action to preserve the gains we have made for the uninsured. Whether this commission can make headway in a state so dominated by the health care sector is uncertain, but at least more progress is being made than had been made in recent years.
The lesson in Massachusetts, in other words, is not that it didn't control costs after not trying to control costs, but that there's an embedded political logic to doing coverage first. If you let health reform fail because you can't gore enough oxen to control costs up front, then you end up with neither cost control nor coverage expansion. Costs are then controlled in the ad hoc way they've been controlled for decades now: individuals are thrown onto the uninsured rolls.But if you expand the system and create an entitlement of sorts, the political system's incentives shift and they need to protect the popular entitlement and figure out how to make it sustainable. Cost control becomes an administrative necessity -- rather like passing a budget or keeping Social Security solvent. Related: A limited health care success in Massachusetts.
