In 2010, John F. Cogan, R. Glenn Hubbard, and Daniel P. Kessler published in Forum for Health Economics & Policy a report ("The Effect of Massachusetts' Health Reform on Employer-Sponsored Insurance Premiums") on the effects of Governor Mitt Romney's 2006 health-care reform in Massachusetts. Using data for average health-insurance premiums from the federally sponsored Medical Expenditure Panel Survey (MEPS), this report suggested that, up until 2008, these reforms led to a relative increase in health-insurance premiums. This report was cited numerous times by opponents of Romney and helped fuel the belief that Romneycare caused health-insurance premiums to skyrocket in Massachusetts (even though Cogan et al. did not make this claim).
However, new data has come out from MEPS covering through 2010, and this data tells a rather different story. It instead suggests that Massachusetts' health-insurance premium growth declined relative to the nation as a whole in the years since Romneycare has been enacted. From 2006 to 2010, employer-sponsored health-care premiums for a family rose about 19% in Massachusetts, while they rose about 22% in the U.S. as a whole. Compare that to the period between 2002 and 2006, when Bay State family premiums increased 40% and US family premiums rose only 34.5%. Family premiums went from growing faster than the national average to growing slower than it.
Family premiums have seen the greatest reduction in growth since Romneycare; individual premiums have also slowed their rate of growth, though by not as much. In the four years before the passage of Romneycare, individual premiums in Massachusetts increased 32.7% in the Bay State, compared to 29.1% for the U.S. During the four years after its health-care reform, Massachusetts saw individual premiums increase 21.7% while U.S. premiums climbed 20%. The gap between the two growth rates narrowed after the passage of Romneycare.
Furthermore, for both family and individual premiums, the rate of growth fell below the national average in the period between 2008 and 2010. And the average family premium actually declined from 2009 to 2010.
Another way of looking at the cost of health-insurance premiums is to compare the average Massachusetts premium to the average U.S. premium. Here, again, the data suggests that the health-insurance premium gap has not exploded after the passage of Romneycare. In 2006, the average family premium was 8% bigger than the average U.S. premium; in 2010, it was only 5.3% bigger. The individual premium in Massachusetts rose from 108% of the national average in 2006 to 109.6% of the national average in 2010. That is an increase, but it should also be kept in mind that the individual rate's size relative to the nation as a whole fell from 2009 to 2010 and was even larger relative to the national average in 2004, long before the passage of Romneycare.
Numerous other states, from New Hampshire to Illinois to Florida, have higher average family health insurance premiums than Massachusetts does. By 2010, Massachusetts had the third-lowest average family premiums in New England (Vermont had the lowest, and Maine's family premium was $30 less than Massachusetts'). Often held up as an example of a successful "red state" model on health-care as well as other issues, Texas has been less successful at slowing the growth of premiums than Massachusetts. The gap between these two states has shrunk since Romneycare has been enacted. The average family premium in Massachusetts was about $600 more than the average family premium in Texas in 2006 ($12,290 vs. $11,690). In 2010, the difference between average family premiums had declined to less than $100 ($14,606 vs. $14,526). So if health-insurance premiums are skyrocketing in Massachusetts, solid rocket boosters must be attached to Texas's premiums.
Raw health-insurance premiums do not tell the whole story for health-care spending, of course. One also might look at other medical expenses (such as copays and deductibles), and one could compare premiums to per capita GDP. However, one of the banner claims against Romney's Massachusetts health-care reform is that this reform caused premiums to skyrocket. Premiums increased at a fairly fast rate in Massachusetts since 2006, but they have, in many respects, increased even faster in the nation as a whole and did increase faster in Massachusetts prior to 2006.
The fact that premium growth has seemingly declined after the passage of Romneycare is not necessarily proof that Romneycare caused this decline: plenty of other factors could have led to it. However, this trend does suggest that Romneycare has not caused premiums to explode in the Bay State -- not yet at least.
(This column was drawn from a new study of health-care premiums in Massachusetts. The whole study -- including data analysis, a description of methodology, and an exploration of the possible effects of Romneycare on small businesses -- is available here.)