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By Gary Saunders

The Bush-sponsored bailouts of major financial institutions extends beyond the lending sector.  While it is not as dramatic a crisis, the Massachusetts state-sponsored health plan has had its own financial woes, requiring more and more funds from Medicaid and other sources to keep it afloat.

The original article outlining the Federal increase in funding was reported in the Boston Globe on October 1, 2008, and can be referenced here:

To sum it up, Massachusetts will be expanding its healthcare law thanks to a federal promise of $10.6 billion dollars over the next three years.  The deal will give Massachusetts $2.1 billion dollars more than it received from the federal government for the past three years for its Medicaid waiver package.  The purpose of the waiver is to allow Massachusetts to provide subsidized health insurance to people who would normally not qualify under the Medicaid income standards.

This approval of additional funding is atypical.  Many other states have been unsuccessful to secure more funding for programs which provide health insurance to peoples whose incomes traditionally have not qualified them for Medicaid.

Since Massachusetts has begun its health insurance program two years ago, it has added about 440,000 people to the insurance roles, approximately half of those through employer-sponsored programs.  As of several months ago, the state reported a $130 million gap in paying for these newly insured, requiring hospitals and insurance companies to contribute more.  The state also boosted premiums for people receiving subsidized coverage.

All these figures beg the question:  Is the Massachusetts plan working, or is the extra federal money merely a bandage for a failing system?

A recent blog post from the Galen Institute sees the extra federal money as nothing more than another federal bailout of a shaky “business.”  The blog post can be found at:,8/action,show_content/id,68/category_id,0/blog_id,1092/type,33/

The blog post also comments that the Massachusetts health plan has already plugged a $200 million hole for this fiscal year with a $1.00 per pack increase in the tobacco tax.  They also cite growing concern about wait times for primary care visits increasing for those under the subsidized insurance, at times stretching to 100 days.

All these figures tend to paint a bleak picture of the Massachusetts healthcare plan, but should the analysis of a program’s success be measure only by whether its “bottom line” financial statement runs in the black or the red?  It is my view that the Massachusetts plan is a much-needed experiment into alternative delivery methods for healthcare in the United States.  Further, I contend that it is proper for the federal government to increase funds for the Massachusetts program to see if it can succeed, and eventually stabilize financially.

While increased federal spending to keep the program alive is concerning, it is also appropriate to look at the expanded opportunities the Massachusetts plan has given to people who would otherwise not be covered by insurance.  What the blog articles and the Boston Globe piece do not illucidate is, while wait times may have increased for primary care visits and subsidized premiums have gone up, people who might not have gone to see a doctor in the past because of worries over the expense will now be able to better afford treatment they may need.

Not many people would argue that federal spending on some of its programs is unnecessary and wasteful.  In my view, however, funding for the innovative Massachusetts plan is money well spent.  Futhermore, the Massachusetts plan, if proven successful over the next several years, could serve as a model for country-wide implementation of health care reform.


One Comment

  1. The Massachusetts Plan’s main goal was achieving full coverage, and not containing costs. The cost question is something the MA scheme did not focus on (recall the U. of Kansas L. Rev. article). Cost is the next issue to be dealt with in MA (and the rest of the country no doubt) – the so called fifth wave of MA reform. Please also see the article by two MA law makers in the Patriot Ledger, available at

    I am not surprised at all. Moreover, it would be unfair to judge the MA scheme on the cost issue when cost control was not what the plan sought to achieve.

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