False Accounts of Massachusetts’ Health Reforms

Recent editorials in both the Boston Globe and The New York Times contained some staggering falsehoods about the cost of Massachusetts’ health reforms. Here is a poor, unsuccessful letter I sent to the editor of the Globe:

The editorial “Mass. bashers take note: Health reform is working” [Aug. 5] states that “the cost to the state taxpayer” of the Massachusetts health reforms is “about $88 million a year.” That claim is unquestionably false. The cost to state taxpayers is 19 times that amount, while the total cost is 24 times that amount.

The Massachusetts Taxpayers Foundation explains that the $88-million figure represents not the total cost to the state government, but the average annual increase in the state government’s costs. Worse, the editorial completely ignores new spending by the federal government and the private sector, which account for 80 percent of the law’s cost.

According to Massachusetts Taxpayers Foundation estimates, health reform will cost at least $2.1 billion in 2009. The total cost to state taxpayers is at least $1.7 billion and growing. (The fact that other states’ taxpayers bear the balance should not be a source of pride.)

One wonders how such a falsehood comes to appear on a leading editorial page.

And one I sent to the Times:

“The Massachusetts Model” [Aug. 9] understates the cost of the Massachusetts health plan.

The editorial claims, “the federal and state governments each pa[y] half of the added costs, or about $350 million” in 2010. The Massachusetts Taxpayers Foundation, which generated that estimate, assumes that Massachusetts will eliminate $200 million in subsidies to safety-net hospitals next year. Given that those hospitals are currently suing the Commonwealth and exerting political pressure to increase such payments, those assumed cuts are hypothetical. More certain is the foundation’s estimate that the on-budget cost will reach $817 billion in 2009.

Yet the foundation’s estimates also show that the law (1) pushes 60 percent of its cost off-budget and onto the private sector; (2) costs about three times the $700 million that the editorial suggests, and (3) is covering 432,000 previously uninsured residents at a cost of about $6,700 each, or $27,000 for a family of four. That’s more than twice the average cost of family coverage nationwide.

The editorial admonishes that “the public should demand an honest assessment, from critics and supporters” of the Massachusetts health plan. Indeed.

A fuller response to these spurious claims may be found here.

I wish I could run a newspaper, so I could print false stuff and then not correct it. Oh wait, I do blog…

Michael F. Cannon • August 18, 2009 @ 8:37 am
Filed under: Cato Publications; Health Care

Government Employment Up or Down?

Posted by Chris Edwards

The New York Times editorialized today about the supposed “brutalizing” effects of state and local government spending cuts. They claim that “most states also have cut their public workforces.”

Yet USA Today reporter Dennis Cauchon takes a look at the actual data, and he finds that state and local governments added 12,000 workers in the latest quarter, while the private sector cut 1.3 million jobs.

Thus, it appears that “brutal” restructuring is going on in the private sector, but not in the government sector. Indeed, Cauchon finds that “a huge influx of federal stimulus money to state and local governments more than offset a sharp drop in tax collections” this quarter. The article shows that state and local government spending rose quickly in the first three quarters of 2008, then dropped for two quarters, but is now rising again quite quickly. That doesn’t sound very brutal to me.

Too often editorial boards and columnists seem to write economics articles based on their preconceived notions about what they think is going on, without looking at any solid data. Cauchon’s columns at USA Today are a refreshing alternative to the sort of impressionist writing on economics we see in the NYT editorial today.