More Good News from Massachusetts

Today’s Managing Health Care Costs Indicator is $453 Million

The blogosphere has focused a lot of attention on Massachusetts, where almost everyone (97+%) has health insurance as a result of health care reform that looks almost exactly like the Affordable Care Act.  Our costs in this state are exceptionally high – although they are rising more slowly than costs in other states.

A study released last week by the Massachusetts Taxpayer Foundation  – a nonpartisan group that advocates for good government (including promoting prudence in spending) – shows that it cost the state an additional $453 million, or  an incremental $91 million on the average for each of the last five years to extend coverage to another 7.6% of the population.   The total cost was a bit over $900 million –the additional amount was spent by the federal government for Medicaid and waivers,  employers who increased the portion of the population insured during this time period despite the recession, and individuals who purchased insurance and who would have otherwise gone “naked.”

It’s not perfect for states to go this alone.  Massachusetts hospitals on the New Hampshire border are already seeing higher rates of bad debt due to the difficulty of obtaining affordable insurance to the north.

And the total dollars being spent are not inconsequential.    However, incremental spending to support expanded coverage is equivalent to 1.4% of the total state budget. Seems like a good deal.

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When Health Care Employment Rises, Health Care Costs Will Go Up

Today’s Managing Health Care Cost Indicator is 2.8 million

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Research from the Center for Health Workforce Studies (Albany)   shows that between 2000-2010 the health care workforce represented more than 100% of the increase in employment for the entire country.  Overall number of jobs decreased by 2%, while health care jobs increased by 25%.  The non-HC sector lost 6 million jobs from 2000-2010, while the health care sector gained 2.8 million jobs.  

Health care jobs are well-paying, good jobs. That’s why health care can represent 18% of the GDP but less than 10% of total employment.  Low skilled jobs (janitorial and food service) were the only place where there were fewer jobs in health care in 2010 compared to 2000.

The calculations, derived from Department of Labor/ Bureau of Labor Statistics, suggest that we will create net new jobs over this decade –but again health care will represent a disproportionate share of these jobs.   Health care represented 9.8% of jobs in 2010, and is projected to represent 11.2% of jobs in 2020.

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These are only projections, and there are some good reasons for increased employment in health care.  Our population is aging, which leads to higher health care costs.  Projections are also usually wrong;  few projected in 2002 that the last decade would have concluded with fewer jobs.    The Bureau of Labor clearly doesn’t see technology leading to displacement of labor in health care.    I’d guess that there will be more savings due to increased use of technology than these estimates suggest.

There is a straightforward relationship between health care job creation and health care inflation.  As long as we are predicting more jobs in health care, we have to conclude that health care costs will continue to rise.  

Previous posts on this subject here and here 

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Misleading Reporting

Today’s Managing Health Care Costs Indicator is $6,058

Here’s the first paragraph of an article from the Boston Herald   abstracted by Commonhealth   yesterday:

The nation’s anemic economic recovery could suffer a brutal blow at the hands of Obamacare, critics say, as a new study shows mandated health care in Massachusetts cut $6,000 from some Bay State residents’ annual pay.


Here’s the conclusion from the actual paper.


Our results suggest that mandate-based reform has the potential to be a very efficient approach
for expanding health insurance coverage nationally.

The same researchers previously reported that health care reform in Massachusetts decreased the number of uninsured, and


Using new measures of preventive care, we find some evidence that hospitalizations for preventable conditions were reduced. The reform affected nearly all age, gender, income, and race categories. We also examine costs on the hospital level and find that hospital cost growth did not increase after the reform in Massachusetts

So – the researchers conclude that there is less “dead weight loss” from a mandate than from a broad-based tax to cover health care costs.  Further, Massachusetts is covering more people and not spending appreciably more.  The Connector Authority (our health insurance exchange) is set to announce a second year of premium decreases.  

Health Care Reform in Massachusetts is working – the Herald headline notwithstanding.

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