Did Romney’s Health Care Law Control Health Care Costs?

On Saturday, during the GOP presidential forum on Fox News’ Huckabee, Mitt Romney conceded that his 2006 health care reform law in Massachusetts did not lower health care spending, saying the effort was focused on expanding coverage to the uninsured. “We had hoped that what we did would bring down the cost of health care, even in a modest way. That didn’t happen,” he said. “There’s some who say its come down a little bit, or the rate of growth has come down a little bit. But in terms of getting down the cost of health care, that’s the real objective we ought to be looking at the federal level.” Watch it:

Indeed, Massachusetts opted for the “coverage first” approach and state lawmakers are now tackling the question of how to reduce health care spending while improving care quality. But it’s also worth reiterating that reform has been far more cost efficient than conservative critics and Romney — who always has one foot out the door when it comes to his signature law — would suggest. Consider the following data, via Jon Gruber:

– Premiums have fallen dramatically in the non-group market: According to AHIP (2007, 2009), from 2006 to 2009 non-group premiums rose by 14 percent nationally; over that same period, they fell by 40 percent in Massachusetts. Some of that decline was due to a buy-down of non-group benefits; analysis by the Connector staff suggests that the decline for a given benefit structure was 20 percent.

– Cost increases are on trend with the national spikes: From 2005 to 2009, the typical cost of a single employer policy in Massachusetts rose from $4,380/year to $5,304/year, a 21 percent increase; the typical cost of a single employer policy nationally over this period rose from $4,024/year to $4,824/year, a 20 percent increase.

— Implementation costs were not higher than projected: Legislative staff in 2006 projected that the Commonwealth Care program would cost $750 million when fully implemented. In FY 2009, the first full year of implementation, costs were $800 million; for FY 2010, costs are only $735 million, below the original projections. A study of net cost of reform in the state has been $707 million, roughly half of which is borne by the federal government. Given that the state has newly insured about 300,000 individuals according to survey evidence, that is a cost of only $2,350 per newly insured.

Spending for the first full year of implementation was indeed higher than projected — “because more members enrolled than had been anticipated” — but as enrollment leveled off in the subsequent years, spending came in on budget, state figures reveal: