Americans tend to look overseas to see how government-run health systems lead to long wait times, poor quality, and rationing of care. But sadly, there's a clear example at home in the commonwealth of Massachusetts of where socialized medicine inevitably leads.
Because Massachusetts chose to expand Medicaid, the joint federal-state program created to pay for health services for the sick and vulnerable poor, the program now faces significant budget challenges. To cut those costs, the state is proposing, among other changes, to significantly limit benefits for all Medicaid beneficiaries, including vulnerable groups such as pregnant women and the disabled.
Although enrollment in Massachusetts Medicaid, also known as MassHealth, was high before the expansion, approximately 400,000 more beneficiarieshave been added since 2014, bringing total enrollment to 1.85 million people. MassHealth now covers more than one in four commonwealth residents and has expanded well beyond being a safety net to being a major insurer in the state.
Spending on the program has ballooned as a result, increasing by more than $1 billion in the initial year of the expansion. Massachusetts now spends 40 cents of every state tax dollar on the Medicaid program and budget pressures are driving a proposal to amend the agreement, technically a waiver, between the federal and state government about how the program operates.
Massachusetts' proposal includes many changes, but among them is a "closed formulary" for Medicaid beneficiaries. This means the program may offer only one drug per class (a class is something like antidepressants or anticonvulsants used to prevent seizures). For patients, this means the government will essentially dictate to physicians how to treat patients, interfering between patients and doctors.
Of course, we can all respect the impulse to be frugal with taxpayer dollars. Yet, some research suggests that restricting drug access can sometimes increase overall health costs due to increased hospitalizations.
There are better ways for Massachusetts to reform Medicaid to protect both taxpayers' interests and ensure that vulnerable populations have access to the healthcare and insurance they need.
The most compassionate policy would put the needs of the most vulnerable first. Rather than ration care, Massachusetts and other states should focus on moving as many able-bodied adults as possible off of the Medicaid rolls into private insurance plans, in order to preserve and strengthen the program for those who truly have no other option.
Notably, Massachusetts' latest proposal does take steps in this direction, by moving current nondisabled Medicaid beneficiaries with incomes over the poverty level to CommonwealthCare, where they can find subsidized private insurance plans. This would benefit both those who leave and those who stay in MassHealth: Private plans typically offer greater provider networks and better access to care and the Medicaid program would be relieved of a significant budget burden because of this shift. This idea — moving beneficiaries out of MassHealth into competitive private plans — should be the focus, rather than restricting benefits.
Of course, competition will only work if our insurance markets are free to compete. The Affordable Care Act significantly limits competition by dictating what all insurance plans must cover and regulating how plans are priced and sold. This has caused premiums to increase dramatically, making it harder for consumers at all income levels to find coverage they can afford.
The real lesson from Massachusetts is that a safety net stretched too wide will also wear thin, putting at risk those for whom the safety net is truly intended.
This should serve as a cautionary tale about the Medicaid expansion in particular and about government-run healthcare in general. We all want to help low- and middle-income Americans who now face skyrocketing private insurance premiums. But the best way to do that is to reform the private market and foster greater competition so that more affordable plans are available.
The answer is not to throw millions into a program that should be only for the most vulnerable people, and then serving everyone poorly. To strengthen the safety net, make it smaller.