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Official: Mass-type care could 'wipe out' economy

By Steve LeBlanc
Associated Press Writer / March 16, 2010

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BOSTON—The Massachusetts treasurer said Tuesday that Congress will "threaten to wipe out the American economy within four years" if it adopts a health care overhaul modeled after the Bay State's.

Treasurer Timothy Cahill -- a former Democrat running as an independent for governor -- said the 2006 law has succeeded only because of huge subsidies and favorable regulatory changes from the federal government.

"Who, exactly, is going to bail out the federal government if this plan goes national?" He asked.

Cahill made his remarks after Gov. Deval Patrick, a Democrat, accused him and Republican gubernatorial candidate Charles Baker of being silent amid the ongoing health care debates.

Cahill said he's called for the state to abandon its plan, and for the federal government not to match it.

He also gave reporters a copy of a state ledger sheet showing the state's Medicaid program ballooning from $7.5 billion to a projected $9.2 billion since the health care law was adopted. Of the 407,000 newly insured, only 32 percent paid for insurance wholly on their own.

The remaining received partial or total taxpayer subsidies.

Michael Widmer, president of the business-backed Massachusetts Taxpayers Foundation, rejected Cahill's analysis, saying health care costs in Massachusetts have been "well within the projections at the time the law was passed."

"Increases in Medicaid spending have been a problem for the state for years, but health reform has added very little to the problem," Widmer said.

He agreed, however, that the state has relied on additional federal money and that the costs of a national health care program would be more challenging than the state law.

Patrick administration spokesman Juan Martinez said the state should be focused instead on reining in the rising cost of health care instead of proposing "cuts that would make it harder for many to get health care coverage."

Cahill didn't back down, pointing out the Obama administration is asking the House and Senate to approve a national plan that includes an "individual mandate," similar to Massachusetts', and an entity designed to match buyers with private health insurance plans.

Cahill said the Massachusetts equivalent, the Health Care Connector, had helped only 5 percent of those who bought private insurance without any type of government assistance.

While the Massachusetts program has increased access to health insurance, he said it hasn't cut underlying cost increases, steering more people to a broken system.

"If President (Barack) Obama and the Democrats repeat the mistake of the health insurance reform adopted here in Massachusetts on a national level, they will threaten to wipe out the American economy within four years," the treasurer said.

Cahill's comments came as the Patrick administration launched three days of hearings on rising health care costs. Insurance premiums in Massachusetts rose more than 12 percent over a two-year period.

Patrick said the state has to come up with ways to ease the burden of soaring premiums on struggling businesses, individuals and families.

"We have to stop the sharp annual rise in health care costs and find lasting solutions," the governor said.

At the hearing, Attorney General Martha Coakley released a study that found prices paid by health insurers to hospitals vary widely within the same geographic area and cannot be explained by the quality of care.

She said most of the increase in health spending in the state is due to the higher costs those hospitals charge for services, not an increase in the number of services.

In 2008, the price paid for a normal delivery ranged from just over $3,000 to nearly $9,000, according to the state Division of Health Care Finance and Policy. The highest price for a gastric-bypass procedure was more than seven times the lowest.

Coakley said higher priced hospitals are gaining market share at the expense of lower-priced hospitals, raising the specter of a health care marketplace "dominated by very expensive 'haves' as the lower and more moderately priced 'have-nots' are forced to close or consolidate."

"Health care costs are increasing much faster than the growth of the economy, creating serious hardships for many individuals, families and businesses that are unable to keep pace with these rising costs," Coakley said.

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Associated Press writer Glen Johnson contributed to this report.