Perhaps Massachusetts Gov. Duval Patrick should spend some time studying one of Nixon's failures.
NOT LONG AFTER President Nixon took the unprecedented step of imposing peacetime wage and price controls, the American people learned a basic economic lesson: Artificial controls don’t work unless underlying costs are controlled.
Four decades later, the Patrick administration is imposing controls on small business health insurance rates. The move will prove to be little more than an election-year reprise of Nixon’s failed effort.
Romneycare was passed in 2006 which was supposed to make health insurance more affordable by covering everyone.
Sounds good on paper but in reality, it doesn't work.
For sure, there are people who cannot truly afford health insurance and others who do not qualify based on their medical history. But the latter is not an excuse in Pilgrim country since the state has told health insurance carriers they are required to take anyone who can fog a mirror.
Those who feel they don't need health insurance (because they are healthy) don't buy it while those who are sick will only buy it when it less expensive to pay premiums than to pay for medical care out of pocket.
This type of business model doesn't work.
The Commonwealth Connector, an independent authority meant to act as an insurance plan clearinghouse, was established to provide real choices and information needed to evaluate options. In theory, an informed and robust marketplace would bend the cost curve and get more of the working poor and lower middle class insured.
Gosh this sounds familiar. Kind of like a recent campaign pledge.
But the plan is not working as sold.
First, the Connector focused all its energy on providing nearly free products to the indigent. In contrast, the Connector’s board seemed almost uninterested in market-rate products for small business employees.
The Connector revenues come from selling plans, and selling nearly free products was the path of least resistance. Unsurprisingly, 90 percent of the Connector’s operating revenue has come from the fee it earns for state-subsidized plans.
The words "selling" and "free" do not belong in the same sentence.
the Connector chose to build a top-down bureaucracy rather than leverage the broker and private market community. The quasi-governmental Connector has a $40 million annual budget and 45 employees earning annual salaries that average $100,000. Its board is heavily weighted toward government officials and unions.
Yeah, but $100,000 doesn't really go very far these days, does it?
Utah, the only other state with a health care exchange, demonstrates that there was another path forward.
Utah’s Health Insurance Exchange was started with a $600,000 appropriation and has no board and just two employees. The Exchange provides a technology backbone that enables private entities — brokers and businesses — to take advantage of consumer-based options.
Well yeah, but Utah doesn't have a lot of people so they only need two employees. And don't overlook the fact that Mormon's lead healthy lifestyles. I don't think they eat a lot of beans and lobster in Utah.
Fewer than 1,500 small business employees receive coverage through the Connector. In Utah, with a far smaller population, about 55,000 small business employees have purchased health insurance through the Exchange.
How could they do that without a public option? Everyone knows a public option is needed to instill competition and make premiums affordable.
But I am sure if the folks in Massachusetts hang in their long enough the federal government will bail them out.