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Massachusetts health care – wonky with a dose of reality

April 4, 2005

From the business section of yesterday's New York Times, required reading for anyone who thinks tax cuts spur economic growth:

"Despite the widespread notion the taxes harm the economy, no one has actually been able to back that up. ... over all, there is surprisingly little evidence that tax rates are an important factor in determining the nation's economic prosperity. ... Over the last 30 years, economists have undertaken hundreds of studies to determine whether taxes hurt the economy. So far, they've turned up little to convict taxes of the charge. After reviewing the literature on the topic in 1993, two economists, William Easterly of New York University and Sergio Rebelo of Northwestern, concluded in a joint paper that "the evidence that tax rates matter for growth is disturbingly fragile." A leading tax specialist today, Joel B. Slemrod of the University of Michigan, would agree. He notes that in the 20th century, a rising tax burden in the United States and other developed countries went hand in hand with rising prosperity. ... Looking at the data from 1950 to 2002, the authors found that periods of strong productivity growth actually occurred when the top tax rates were the highest. And they showed that, on average, high-tax countries are the most affuent countries. ... After study of the tax cuts of the Reagan years, most economists agree that taxes don't play a big part in how hard Americans work. While the study of savings is less precise, large effects from tax incentives haven't been measured. ... reform based on the notion that taxes are bad for the economy is just that: a notion not backed by strong evidence. And the costs of ignoring experience in favor of hope can be high: mounting deficits, decaying infrastructure, inadequate investment in public education and research."
-- Anna Bernasek, Economic View, New York Times, 4/3/05

Not to mention, a government that watches the numbers of uninsured rise year after year and takes no action to address it. In Washington, President Bush pushes huge tax cuts for the wealthy while seeking to cut Medicaid by $16 billion. In Massachusetts, Governor Romney pushes income tax cuts and refuses to restore dental services for more than 550,000 poor adults. All in the name of "economic growth." In health care, there's a big, legitimate cry for "evidence based medicine." Seems we could use some "evidence based policy" as well.

April 3, 2005

I just spent a few days in Chiould increase to pay for the plan (about 13% combo new income and payroll) got leaked ancago at a conference for state legislators new to health policy. Many fascinating developments in states, none more so than in Vermont where enactment of a single payer (tax financed) health care system is a front burner issue supported by many members of the Democratic House and Senate majorities.

A little history: back in 1992 when Howard Dean was governor, Vermont decided to create a universal health care system, setting up a commission to figure out financing. In 1994, the Commission’s estimate of how much taxes wd plastered on the front page of the Burlington Free Press. That day, the reform process died.

They’re trying again, this time learning from episode one’s collapse. The bill would set up a governing structure and leave the treacherous chore of defining a benefit package and tax rates (to replace insurance premiums) to two commissions with the Legislature ratifying next year in an up or down vote. The new system would start in 2007. Benefits would be structured similar to those in Oregon’s now-defunct Health Plan, ranking services in order of priority, and linking the budget to the number of services that could be provided. A key obstacle is Republican Governor Jim Douglas who criticizes the plan and estimates the combo of new income and payroll taxes now needed at 20 percent. The Legislature wraps its session in late April, so this will play out quickly.

Back in the early ‘90s, many folks said Vermont was a good place to try such a huge experiment because of its size and compactness. They’re traveling down a difficult and controversial road and deserve our attention and respect for tackling this issue.

April 1, 2005

Welcome to HCFA's blog. We'll do this 3-5 times weekly, touching on anything related to MA health policy. For starters, let's see where health reform in Massachusetts is at right now.

Last November, health care access hit the front pages big time with announcements by Sen. Pres. Bob Travaglini and Gov. Mitt Romney that they want to eliminate or reduce substantially the number of MA uninsured, estimated between 460,000 and 650,000 residents. In December, the MA Health Reform Coalition -- with HCFA in the lead -- filed reform (the Health Access and Affordability Act-- lead sponsors: Sen. Dick Moore and Rep. Debbie Blumer) legislation. Since then, the issue dropped off the media radar screen.

The issue is ready to re-emerge. Next week, we expect Pres. Travaglini to release a plan, and we hear Gov. Romney's staff is working furiously on their own. So, most likely by late April, there will be three major proposals -- all of which will be referred to the new Joint Committee on Health Care Financing, chaired by Sen. Moore and Rep. Patricia Walrath. Among the three, there will be similarities and striking differences. Gov. Romney's will be a "market based" approach offering a scaled down insurance plan he hopes the uninsured will voluntarily purchase. The MHRC approach includes expansion of MassHealth for lower income and a "health care minimum wage" to help all working uninsured persons get coverage. Sen. Travaglini's plan, we believe, will be in the middle.

Also at play:

In January, the state and federal governments agreed on a plan to continue a "waiver" under which Massachusetts operates our Medicaid program, preserving $600 million in vital extra payments. Key details are unresolved, and the state may yet lose a big chunk of the money, with drastic consequences for health access reform . The new waiver takes effect, for better or worse, on July 1, 2005.

Also, the Blue Cross Access Foundationcontinues work with the Urban Institute on its "roadmap" plan for universal coverage due for a final release in the fall.

And the MHRC this summer will file a ballot petition for placement on the November 2006 state ballot with the requirement to collect more than 65,000 signatures between early September and mid-November 2005 to give voters a chance to weigh in.

What's it all add to? A thick policy and political stew with much left to do. Will reform happen in 2005? Maybe, and there's a chance to achieve real progress in the FY06 budget process this spring, making downpayments on access, provider rates, and more. Experience teaches us that it will take the House and Senate a lot of time to get their arms and minds around this complex area, and we expect major legislative action to occur between January and July 2006. That's how it looks to us right now.

Please use the form at the bottom to add your own thoughts and ideas. We'll use some of the best comments in a future column. And let us know how to make this blog better.

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