The United States has the highest health care costs in the world, with Massachusetts leading the country in health care costs per person. Premiums have steadily risen at rates above 10 percent per year, more than three times the rate of inflation. These trends are expected to continue in the coming years.

The Massachusetts plan lacks cost controls as well as any new revenue sources that could sustain a significant expansion in access to health care. Initial estimates of the costs and available revenue for the reform were wildly unrealistic. Planning for the law significantly underestimated the number of uninsured in the state. Revenues from the employer fine were estimated at $48 million per year, but fell vastly short, raising no funds the first year, and only $5 million the second year. Almost all funding is coming from the state general budget and federal matching grants: however, subsidies for low-income individuals are coming in hundreds of millions of dollars over budget each year, and the Bush administration is poised to cut federal matching funds.

Failure to control costs not only threatens the sustainability of the reform law, but guarantees continued erosion of employer-sponsored health care for the insured population, and growing strain on state, municipal, business, and household budgets. Even those involved in the creation of the law are beginning to admit the problems with their reform. Massachusetts Senate President Therese Murray admitted that “if we do not constrain healthcare costs, the system we worked so hard to create and implement will collapse.” And John Kingsdale, the executive director of the Commonwealth Connector, announced that “if we have double-digit increases (annually in costs), health reform is not sustainable.”

Massachusetts spends enough to cover all residents with comprehensive health care benefits if we cut out waste in the system and use it for patient care. This will require more fundamental reform.

Further Resources:

• “State Health Plan Underfunded,” Alice Dembner, Boston Globe, March 2008.
• “Healthcare Cost Increases Dominate Mass Budget Debate,” Alice Dembner, Boston Globe, March 2008.”
• Healthcare Myths, Realities,” Alan Sager, Ph.D. and Deborah Socolar, M.P.H., Boston Globe Op-Ed, November 2005.
• “Mass Health Spending Soars to $62.1 billion in 2006,” Alan Sager, Ph.D. and Deborah Socolar, M.P.H., A project of the Health Reform Program of the Boston University School of Public Health, June 2006.
• “Without Cost Control, Universal Coverage Will Fail,” Himmelstein, David, M.D., May 2007