Commentary: A Not-So-Rosy View Of Mass. Health Reform

By Josh Archambault
Guest Contributor

Hundreds of healthcare journalists will be attending the Association of Health Care Journalists’ (AHCJ) conference in Boston this week to hear from many speakers with rose-colored ideas about both our Romneycare law and a brand new state cost-control law. Yet all is not well in the Commonwealth. State officials now predict “extreme premium increases” for many small businesses under Obamacare.

In a letter to federal regulators the day after Christmas 2012, a perfect day to bury news, Massachusetts officials floated the idea of obtaining a waiver from the Affordable Care Act (ACA) out of fear of the premium spikes. Yet, recently finalized federal regulations slammed the door on that flexibility. Many small companies justifiably feel sick over the decision.

Josh Archambault of the Pioneer Institute (Courtesy of JA)

Josh Archambault of the Pioneer Institute (Courtesy of JA)

The small business community has been paying more for health insurance since the commonwealth’s 2006 reform merged sicker individuals into the same risk pool. The legislature has also added to costs by passing 12 additional mandated benefits since then, a cost borne completely by small companies and individuals.

Now the future looks even bleaker for small business. Not only will their highest-in-the-nation premiums go up because of these new regulations, but they will be paying on average $8,000 per family, per plan more in taxes over the next ten years. That translates into employers and consumers in Massachusetts paying $213 million in 2014 and $3 billion more over the next decade.

Conference speakers will be sure to mention that the Connector was created to help small companies obtain competitively priced insurance, and other states will experience this benefit in the exchanges required under the federal law. Only one problem, the rhetoric doesn’t match reality in Massachusetts.

At the end of 2012, after spending tens of millions on advertising, the Connector covers less than 1 percent of the small business market and premiums are similar to those outside the exchange.

Finally, those in attendance will hear about a promising law passed in July that will save the Commonwealth $200 billion over 15 years. Yet its approaches are rehashed old ideas. State government gets a steroid shot of market oversight and permission to write regulations freely. The law is heavy with groups of “experts,” requiring 278+ new appointees, with some instructed to “rationally distribute health care resources.” Is this the future of Obamacare?

Requesting a waiver from the ACA implies that Massachusetts deserves to be treated differently. What about the dozens of states nationally where premiums will spike anywhere from 30 to more than 100 percent, especially for young adults?

Massachusetts has embarked on a seven-year health care experiment. It has worked on some fronts and not on others. To argue that we are special because we are leading the way on cost containment is premature and begs the question of whether the ACA’s “one-size-fits-all” approach is misguided to begin with. Let’s hope visiting reporters see the clear picture.

Josh Archambault is the director of healthcare policy at Pioneer Institute, a think tank in Boston.

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  • Brian Rosman

    Under the ACA rule that Josh is talking about, the increases in health care premiums that some small businesses are complaining about will be matched by cuts in health care premiums for other small businesses and for individuals. But the cost of health insurance in general is not changing because of this ACA provision.

    The current Mass law allows insurers to impose an surcharge on individuals and some small businesses, and provide a discount to other small businesses. The ACA just prohibits both the discounts and the surcharges. Is that so unfair?

    So there will be winners and losers, but Josh just mentions the losers.

    I have a longer explanation at HCFA’s blog (, but the bottom line is that the real victory comes from keeping people healthy, and reducing the cost of medical care when people get sick. That, in the end, is what determines the affordability of health coverage.

    Brian Rosman
    Health Care For All

    • Josh Archambault


      Thanks for reading. I am not sure we know yet if the cuts will be “matching.” We have to wait for the next round of premium rates to see the difference. Plus I think the cuts will be largely seen in the individual marketplace not in the small group side of the merged market.
      I think it is slightly misleading to call the differences simply discounts or surcharges, they allow for rating by industry differences for example.

      Not sure how this change will keep people healthier or reduce medical care when people get sick (your last point), but I am willing to be proven otherwise.

  • Dennis Byron

    It is not accurate for Josh to say:

    “The small business community has been paying more for health insurance since the commonwealth’s 2006 reform merged sicker individuals into the same risk pool…”

    Although the merged market in fact combined about 45,000 people who were covered by about 29,000 invidually purchased policies in 2005 with the 600,000 people that were covered by small group policies in 2005, it is a leap to assume the people covered by individually purchased policies were sicker than the people covered by small group policies. In fact, I believe many people on pre-2006 individually purchased policies — possibly people with some pre-existing condition — were allowed not to join the merged markets even though there was no pre-exisiting coverage rule preventing them from doing so (but they thought their old policy was better than Commonwealth Choice’s or Commonwealth Care’s choices).

    Look at the size of the two pools. The 45,000 was noise level amoung the 600,000. The prediction by Gorman — who was hired by the state to predict the result of the merged market — was individually bought policy premiums down 18% one time (the first year of enactment) and the price of small group premiums up 2% to make up for the merge in the same year. Subsequently the prices for everyone involved rose at the same rocket-ship ride pace (don’t be confused by publicity on merged market base rates; no one pays base rates). I think I’ve seen a report that Gorman was actually a little too high; that is the effect on small group was not as “bad” as predicted.

    But even this would have nothing to do with sickness. It has to do with rating factors and all the complexities of selling one-off rather than to a group.

    And as the numbers show, this whole analysis — which both left and right constantly obsess about (and which some believe wrongly is a predictor of Obamacare statistics) — relates to less than 10% of Massachusetts residents.

    • Josh Archambault


      Thanks for reading.

      You are right the individual market was small before reform.
      The individual market was sicker on average, largely because of dysfunctions caused by past legislative efforts to “help” the indiv market, the healthy folks dropped out as a result. You can see this trend in the old premium data. The Romney Administration merged the markets to help these folks out, and to partially deregulate the indiv market.

      As a result more individuals reentered this market after the reform. Many are now in the Connector.

      • Dennis Byron


        I am reacting to the statement in your original post that the people on individually purchased policies were SICKER than people on policies purchased through small groups. What is the source of your statement that they were “sicker?” Are you saying that they were sicker because their premiums were higher?

        There could be (and was) a lot of reasons for premiums on individually purchased polices prior to 2006 to be higher than premiums on small group policies. You hint at some of them in your reply to Brian Rosman: geography, occupation, etc. and most important — actual age as well as the age compression rules pre and post RomneyCare. (Brian argues — I think — that group-size rating adjustments cause all the issues that have recently arisen, which I don’t believe to be the case.) In addition, it just plain costs more to sell a policy one off than through a group.

        That’s probably what made premiums higher for small group participants vs. former non-group participants after the merging of the markets, not anyone’s sickness. And premiums only turned out to be 1%-2% higher than they otherwise would have been that next year had there been no RomneyCare so sickness — even if it was a factor — accounted for only a few tenths of a percent of that increase. And it also could have simply been the result of the Young Adult Plan subscribers not going into the pool.

        (Only in Massachusetts: It is also rarely mentioned that 15% of the people in the small group pool before RomneyCare were already individuals allowed to buy through the small group pool because they were self employed. I was one of them. If I hadn’t been actually self employed at the time, I would have pretended to be self employed in order to get the small group rates. This is another reason that the merging of the markets caused no great change in small group premiums.)

        Of course, it’s typical of all these discussions that you’re using the same factors and some of the same data to argue that Obamacare will fail while Professor Gruber uses it to claim that Romneycare was wildly successful and dropped insurance rates for individuals 40% (and therefore Obamacare will be wildly successful). Of course, Gruber never mentions that the 40% is not hard fact but an extrapolation from two extraneous data points in two different AHIP studies, one of which admits it is flawed and says not to believe any of the data about Massachusetts in the report because of the merged market phenomenon; that the 40% was only really 20% (or less–see Gorman); that it applied not to all individuals but only to policies bought by individuals (less than a half percent of the people in Massachusetts); and that the 20% drop lasted only one year

  • SW

    Data to support any of these assertions? Alternatives? Or were there no problems in the health system before the Mass reforms?

  • Josh Archambault

    The Associated Industries of Massachusetts just put up a blog on the premium increase mentioned above:

    AIM asks Governor to Seek Waiver, Flexibility on Federal Health Law[AIM%20asks%20Governor%20to]

  • Reasonable?

    MA has not achieved value driven health care.
    The system is intransparent.
    At this rate, every state should feel justified in asking for a waiver from ACA.