Massachusetts: Land of Affordable Health Insurance

The Commonwealth Fund just released a sobering analysis (State Trends in Premiums and Deductibles, 2003–2010: The Need for Action to Address Rising Costs) revealing that total premiums for family coverage increased 50 percent over the past seven years, with big increases in every state. It probably won’t surprise you that insurance costs in Massachusetts are among the highest in the nation.

The Commonwealth Fund just released a sobering analysis (State Trends in Premiums and Deductibles, 2003–2010: The Need for Action to Address Rising Costs) revealing that total premiums for family coverage increased 50 percent over the past seven years, with big increases in every state. It probably won’t surprise you that insurance costs in Massachusetts are among the highest in the nation. If you are an opponent of the Patient Protection and Affordable Care Act (PPACA) you’ll probably also be eager to point to Massachusetts as the evil place where it all started and the harbinger of doom for the rest of the country as PPACA is implemented.

Health insurance costs have always been high in Massachusetts, and while so-called RomneyCare hasn’t fixed the problem, it also hasn’t made Massachusetts worse relative to other states. Meanwhile the cost of health insurance shouldn’t be looked at in a vacuum. Massachusetts is also expensive on other dimensions such as housing and education.

Luckily, thanks largely to the state’s investment in education and infrastructure, and its open minded populace, Massachusetts is also a place with a modern, knowledge based economy that offers high wages. The Commonwealth Fund’s analysis reveals that health insurance in Massachusetts is significantly more affordable relative to income than it is in other states. Not only that, but the situation is improving over time relative to the rest of the country.

In 2003, the average health insurance premium as a percent of median household income for the under-65 population nationwide was 14.9%. In Massachusetts it was 12.6% –or 2.3 percentage points better.

By 2010 the national average had jumped to 20.3% of income. In Massachusetts it moved up, too, but only to 15.9% –now 4.4 percentage points better than average. Only Connecticut (15.5% ) and New Jersey (15.4%) are more affordable. By way of comparison, health insurance in Texas consumes 24.5% of median income, which goes a long way toward explaining why so many people are unemployed there.

Don’t get me wrong, Massachusetts has a big health insurance cost problem and it needs to be tackled. But thanks to health care reform and a high-wage economy we have a better chance than most to deal with it.