Unbiased Analysis of Today's Healthcare Issues

Massachusetts Makes Cuts to Universal Health Plan

Written By: Jason Shafrin - Jun• 24•09

The Boston Globe reports that “Overseers of Massachusetts’ trailblazing healthcare program made their first cuts yesterday, trimming $115 million, or 12 percent, from Commonwealth Care, which subsidizes premiums for needy residents and is the centerpiece of the 2006 law.”  The reduction in the Commonwealth Care was caused by the bad economy.  Not only does a bad economy mean fewer tax revenues as earnings are cut, but demand for government health insurance grows as laid off employees lose employer provided care.

Opponents of government health plan may use this as evidence that government-run health care can’t work.  This is not the case however.  In a bad economy with private insurance, workers lose coverage when they lose their jobs.  If they do decide to purchase a nongroup health insurance plan, they will likely choose a less expensive plan.  Thus a bad economy effects individuals similarly with and without government provided health insurance; with fewer resources to go around everyone must cut medical expenditures irrespective of whether there is a government-provided health plan.  

The difference between the less generous insurance benefits is who decides on the cuts.  In a free market plan, individuals decide for themselves how much insurance to buy.  However, for some individuals who lose their jobs, health insurance will be unaffordable.  On the other hand, bureaucrats determine what will be cut in a government health plan.  

Democrats will argue that mediocre insurance for all is better than great insurance for some and none for others.  Republicans will claim that a government-run healthcare system will necessarily lead to mediocre insurance coverage in any bad economy. Further, legal immigrants may not be eligible for Commonwealth Care in order to save money.  Thus, there will still be individuals without insurance.

Who perspective do you think is right?

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Comment

  1. [...] Go here to read the rest: Healthcare Economist · Massachusetts Makes Cuts to Universal … [...]

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>