MedCity Influencers

US health care reform: Massachusetts or California style?

David E. Williams looks at state-level health care reform, and thinks the federal government is much better positioned than California to sustain significant deficit spending, which is what it will take to implement the kind of plan that’s being discussed.

David E. Williams is the co-founder of MedPharma Partners who writes
regularly on the Health Business Blog.

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At Wesleyan in the mid-1980s I was editor of the main newspaper, the Argus. It was a left of center campus and the Argus reflected that sentiment. But there was also an alternative socialist paper called Hermes. (In mythology Hermes slayed Argus, so the Hermes folks thought they were being pretty clever. Of course the way Hermes did it was by telling a long boring story so Argus closed all 100 eyes and fell asleep. That’s pretty much what the writing was like in the Hermes, too.)

In any case, we Argus editors generally found the Hermes folks pretty insufferable, but there was one reporter we respected, Jordan Rau. Unlike most of the rest of us who went into business or law, Jordan continued his journalistic path and now writes for the Los Angeles Times and Kaiser Health News.

In an excellent piece published today (Analysis: Can What Killed California Health Reform Strike Again?) he ponders the fate of federal health reform. The feds are following a similar model to what we have in Massachusetts: introducing employer and individual mandates along with subsidies and insurance regulation to achieve near universal coverage that’s somewhat affordable. As Rau points out, a year after Massachusetts enacted health reform California started down a similar path with leadership from Governor Schwarzenegger. However, California reform failed and Rau detects a number of similarities with the current debate at the federal level.

In particular, in both California and in DC:

  • The plan had reasonable public support at the outset, and industry wasn’t opposed
  • The Governor/President tried hard to win bipartisan support, but failed to make progress and waited too long to go it alone
  • Those to the left of the Governor/President criticized the plan for not going far enough toward single payer
  • Opponents on the right became highly energized while supporters became “apologetic”
  • Budget analysts attached hefty price tags to reform
  • Subsidies were too limited initially, and had to be raised to ensure affordability

However, Rau ends on an optimistic tone (not the style I remember from college):

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Despite all the similarities, the overhaul effort in Washington has achieved a momentum that eluded Schwarzenegger. Democrats in Congress still have a shot at snagging a few GOP supporters. Dissenters on the left have stopped short of saying they won’t back a plan that falls short of their dreams. Congress has more options to finance the plan than California did. And the 1994 GOP takeover of Congress — coming on the heels of the failure of the Clinton health plan — remains a terrifying lesson for Democrats on the political costs of doing nothing.

There is another important difference, however, that makes the California situation closer to the federal situation than to Massachusetts. As I wrote back in 2006:

California Health Care Foundation analyzed the potential to apply a Massachusetts-style universal coverage model to California. The bottom line: it would be doable, but significantly more expensive. Why?

  • Overall, the uninsured rate among the non-elderly is 21% in CA v. 13% in MA and 18% in the US overall
  • In CA, 56% of employers provide coverage v. 69% in MA and 63% in the US overall
  • Both states have high average incomes, but CA has a higher percentage of low income residents (43% in CA v. 29% in MA v. 39% in the US overall make less than 250% of the Federal Poverty Level)
  • Among those making less than 250% of the Federal Poverty Level, 32% of CA residents are uninsured v. 22% in MA and 29% in the US overall

The reason MA can move toward universal coverage is that the state has already done a reasonably good job of seeing that health insurance is widely available. Part of that is demographics, part is policy, part is cultural. Other states may find they need to walk first; they may fall flat on their faces if they try running to keep up with Massachusetts.

The federal government is much better positioned than California to sustain significant deficit spending, which is what it will take to implement the kind of plan that’s being discussed.

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