How is the Bay State’s Experiment with Universal Coverage Working Out?

The big story coming out of Massachusetts that has everyone (at least in my household of two) glued to the TV with popcorn and coke in hand is the Brown vs. Coakley Senate race tomorrow. If Republican Brown pulls an upset, snatching victory from the jaws of defeat, all bets are off when it comes to health care “reform.” He will deprive Democrats of their crucial 60-vote majority in the Senate, forcing them to resort to all kinds of politically risky shenanigans to push their bills through.

But here is another interesting story concerning Massachusetts. Remember Jon Gruber? He’s the highly respected MIT economist who had been shilling for the Obama administration’s health care plan without revealing that he had received hundreds of thousands of dollars from the administration in consultancy fee to help craft the very plan he was shilling for. He challenged insurance industry claims that premiums would rise sharply under ObamaCare — criticizing an industry report, performed by the prestigious research outfit PricewaterhouseCoopers, on grounds that it had failed to take into account: (a) government subsidies for moderate-income Americans that would lower their out-of-pocket premiums and (b) how lower administrative overheads that would result from the creation of a government-run insurance exchange would lower premiums.

Gruber was also a big supporter of Massachusetts’ universal coverage program. Well now Gruber’s former MIT student and collaborator, Aaron Yelowitz, has just co-authored a study with CATO Institute’s Michael Cannon drawing lessons from the Massachusetts’ universal coverage experiment for the rest of the country. They find:

  • Official estimates overstate the coverage gains under the Massachusetts law by roughly 50 percent.
  • The actual coverage gains may be lower still, because uninsured residents appear to be concealing their lack of insurance rather than admit to breaking the law.
  • Public programs crowded out private insurance among low-income children and adults.
  • Self-reported health improved for some, but fell for others.
  • Young adults appear to be avoiding Massachusetts as a result of the law

The study also finds that leading estimates understate the cost of the Massachusetts law by at least one third.

The authors conclude: “Our results hold important lessons for the legislation moving through Congress. As in Massachusetts, there has been no effort to estimate the cost of the private health insurance mandates that legislation would impose on individuals and employers. The costs may therefore be far greater than legislators and voters believe, while the benefits may be smaller than the conventional wisdom about Massachusetts suggests.”

What says you, Mr. Gruber?