The Power of Numbers: Health Economics, Single-Payer, and Massachusetts

March 7, 2007


When I came out against the Massachusetts health reform law a year ago I felt I had put myself out on a limb. The orgy of self-congratulation in Massachusetts spread from left to right, and even left/progressive commentators and bloggers were lavishing it with praiseful phrases like “exciting” and “model for the nation.”

Mitt Romney and his Democratic opponents had a symbolic victory to use in their next campaigns, while labor leaders could boast to their membership that they “get things done.” It was Governance by Press Release.

But numbers don’t lie.

The numbers built into the Massachusetts plan – and the hard realities behind the numbers that weren’t in the statute – pointed to an inevitable conclusion: Insurers might profit in the short term from a forced march of state residents into their plans, but underwriting results would eventually be disastrous.

Or they’d anticipate danger and price their products accordingly. Care would be available but not affordable, putting lower-income state residents in a bind. The net result: Either financial hardship or a new tax penalty for lower-income residents of Massachusetts.

Why? Because only the sickest would choose the higher cost of enrollment over the lower cost of paying the tax penalty, especially in Year One. Then the hard work would have to begin – the work that should have been done before the law was enacted.

Well, it’s the morning after. I’ve written about the Tylers, the owners of a diner who may have to close their business as a result of the law. I’ve linked to other news stories that cover the slow awakening now going on among lawmakers and officials responsible for the plan.

It’s morning in Massachusetts. Time to shake off the hangover and go to work.

So, does that mean I’m a hard-left critic of any appeasement with the public/private system? The forces of numerical law that predicted to Massachusetts’ problems don’t point that way, either.

As I wrote in “The Invisible Scalpel” and “Friendly Fire,” the U.S. has a health economy that’s unique in the world. It’s larger than the entire economy of Great Britain.

It’s had more than fifty years to grow into an system (in the systems theory sense) that includes health insurers, hospital reimbursement systems based on maximizing gain, and physician treatment behaviors that have grown up around payment structures rather than health. (Not to mention a mix of physician specialties that developed in part based on expected income – and a hundred other factors.)

Could we convert to single-payer overnight? I don’t see how, unless we created a program of Marshall Plan proportions to handle the shock of radically transforming this massive economy.

To those who have written me or blogged to say that I’m an “insurance company plant”or a “hard-right shill” I would respond: this isn’t me talking. Again, it’s the numbers.

Other single-payer proponents have been far more friendly – and enlightening. I’ve had an ongoing friendly correspondence with Nicholas Scala of Physicians for a National Health Plan. PNHP is an invaluable source for health data and information on international health systems.

I can agree with Nick and other single-payer advocates on most goals: affordable and practical coverage for every American. Ready access. A system that is “user-friendly” and dedicated to improving health outcomes.

I’m not even opposed to single-payer care per se. My biggest objection as such is that “single-payer” is a means, not an end, and I think many of us – on all sides of policy debates – tend to get overly attached to the means.

If I could prove to single-payer advocates that there’s a better way to meet the same goals, why should we have to argue? Conversely, I’m open to being persuaded that theirs is the best way to meeting our common goals – but I’m not there yet.

I just don’t think we have a plan to get there from here. That’s why I’ve provisionally endorsed the concept behind the John Edwards plan (though it’s important that he provide more detail soon).

Free-choice programs aren’t boondoggles for the insurance industry if they force insurers to compete with the public system, as under the Edwards plan. Instead, that requires private payers to either a) outperform the public system, b) provide a plan that some people will pay more to join, or c) wither away as a result of market forces.

Single-payer advocates say they can’t achieve “a.” Let’s see if they’re right. As for “b,” there is concern this will create adverse selection against the public system. Let’s look at that from a legislative perspective. And if “c” occurs — well, then everybody’s happy.

And we’d have done it by the numbers.


2 Responses to “The Power of Numbers: Health Economics, Single-Payer, and Massachusetts”

  1. […] David Williams presents Upgrade or downgrade? posted at Health Business Blog, saying, “In their zeal to protect consumers, regulators are forcing people to overinsure.” He cites the Massachusetts experience to do so – but then, regular readers of The Sentinel Effect will know that I consider the Massachusetts reform effort fundamentally flawed. […]

  2. Boracay Says:

    Its like you read my mind! You appear to know a lot about this, like you wrote the book in it or something. I think that you could do with a few pics to drive the message home a bit, but instead of that, this is great blog. A fantastic read. I’ll certainly be back.

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