Massachusetts health reforms haven’t worsened economy, report says

Nevertheless, the push for greater efficiency in the health system has led to some recent layoffs.

By — Posted June 15, 2012

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In their attempt to assess whether the national health system reform law would lead to negative economic consequences, researchers said there was no evidence that the Massachusetts health reforms on which it was based have resulted in job loss or stymied economic growth.

“There are those who feel that when employers are required to offer health insurance coverage or make payments related to a worker, employers will reduce wages and/or other worker compensation over time to cover those new costs,” said the June 7 report, which was prepared by the Urban Institute on behalf of the Robert Wood Johnson Foundation. Apparently, this hasn’t happened in Massachusetts, whose reform experience often has been considered a barometer for the Affordable Care Act, which shares many of the same features as the state statute.

The report’s researchers compared Massachusetts with four states that had similar overall employment levels and trends in employment before the reform date: Delaware, Minnesota, Nebraska and Wisconsin. From 2006-10, the researchers found that declines in private-sector employment in Massachusetts (4.4 percentage points) were consistent across the four comparison states (3.9 percentage points) and the nation as a whole (4.8 percentage points, on average).

In examining private-sector employment ratios by company size, researchers also found little difference in the trends. In Massachusetts, the employment ratio in medium-sized companies with 50-499 employees fell by 1.9 percentage points, compared with 2.2 percentage points for the nation as a whole.

However, it may be difficult to predict what the true outcomes of the reform effort will be on job loss, given the rapid changes that continue to take place in Massachusetts’ health care system, said Richard Aghababian MD. He’s an emergency physician and president of the Massachusetts Medical Society.

“When we began our health care reform efforts in 2006, the idea was to get everybody covered. And we’ve gotten up to 98%, which is laudable. Our phase two, which began about a year-and-a-half ago, maybe two years ago, was to figure out how to contain costs,” he said. But in 2006, the nation wasn’t in the dire financial straits it is in now, he said. “It remains to be seen what impact the cost-control measures enacted in phase two of our reform will have on employment. We’ll have a better idea of that later this year.”

Like other states, Massachusetts has seen layoffs in certain areas, particularly in large industries such as health care and defense, Dr. Aghababian said. Downsizing of health care jobs mostly has been due to the fact that during the voluntary cost-containment phase of the reform effort, “there has been a lot of consolidation, particularly among hospitals and groups coming together. And as a result in seeking efficiencies, there have been layoffs,” he said.

The report is available online (link).

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