So it looks like Rick Perry, the Governor of Texas, is running for President. There’s good reason to believe that his entry will lead to a two-man race for the GOP presidential nomination between Perry and former Gov. Mitt Romney of Massachusetts. But while Mitt Romney’s record on health care has been the subject of countless academic papers and blog posts, Rick Perry’s has not.
So, yesterday, I went through a wealth of statistical data compiled by the U.S. Census, the Kaiser Family Foundation, and the Commonwealth Fund in order to ask: how does health care in Texas compare to that of Massachusetts? Does the data help illuminate the health care records of Perry and Romney as governors of their states, and what they could achieve on the national level?
Come back and visit this page from time to time, as I will try to update it as I come across useful stats.
If you’re the type who likes to read the end of a book first, you might ask, “Okay, Avik, what’s the bottom line?” The answer will, in part, depend on what you think is important in health care policy. If you’re most concerned about runaway government spending, Perry is the clear winner. If the rising cost of health insurance is your primary worry, Perry wins there too. On the other hand, if universal coverage is your bailiwick, Romney comes out far ahead.
If that sounds like the basic ideological divide in health policy, you’re not far from the truth. As you read through this article, you’ll see what I mean.
Willard Mitt Romney served as governor of Massachusetts for one term, from January 2003 to 2007, after defeating Democrat Shannon O’Brien in the 2002 election. He decided not to seek re-election in 2006. James Richard Perry was the Lieutenant Governor of Texas when George W. Bush became President, and was sworn in as Governor in December 2000. He has been re-elected three times: in 2002, 2006, and 2010, making Perry the longest continuously-serving governor in the United States.
Despite Perry’s far longer tenure, it is of course Romney who is known for his impact on health care in his state. On April 12, 2006, signed An Act Providing Access to Affordable, Quality, Accountable Health Care, which sought to achieve near-universal health care for the residents of Massachusetts by (1) requiring all Massachusetts residents to purchase insurance; (2) requiring all Massachusetts employers to sponsor insurance; (3) creating a state-based exchange, the Commonwealth Health Insurance Connector Authority, to provide subsidized private insurance to those who were neither eligible to gain insurance from their employer or from existing government programs. This program has been quite controversial, especially given that it served as the template for President Obama’s Patient Protection and Affordable Care Act.
Perry’s most significant achievement on health care was a successful 2003 attempt to convince voters, over the determined opposition of trial lawyers, to amend the Texas Constitution to cap non-economic medical malpractice damages at $250,000 from a physician and $500,000 from hospitals and other providers: an issue that most physicians believe is at the heart of what drives wasteful health spending.
An important factor to consider in evaluating the records of Perry and Romney is that Perry was working with a conservative Republican state legislature, whereas Romney was working with a liberal Democratic one. However, Romney’s full-throated defense of Romneycare suggests that he doesn’t need nor warrant that excuse.
Another issue to consider is variations in cost of living. Relative cost of living affects the relative cost of health services; however, the reverse is also true. In addition, residents of states with more onerous regulatory regimes will endure a higher cost of living as a result. Texas and Massachusetts are on opposite ends of the cost-of-living spectrum; this CNBC survey, for example, ranks Texas eighth-best, and Massachusetts ninth-worst, for cost of living. Texas’ lower cost of living means that while it may spend less money on health care than Massachusetts does, one cannot necessarily draw from this that Texan care is of lesser quality.
Finally, as we all know, correlation is not causation. However, if you can come up with a better way to compare the performance of both candidates on health care issues, I’m all ears.
Affordability of health insurance
No matter your philosophy, you probably agree with the principle that it’s a good idea to keep health insurance costs down. With that in mind, one of the best ways, if not the best, to measure health care performance across states is to ask: how affordable is health insurance in those states? According to data from the Commonwealth Fund, in 2003, premium costs for the average health insurance plan in Massachusetts, Texas, and the U.S. overall were quite similar.
However, as you can see from the chart, the growth of premium costs from 2003 to 2009 was dramatically slower in Texas (4.0% per annum for an individual plan and 4.6% for a family plan) than in Massachusetts (7.1% for individual and 6.9% for family). The national average growth rate was 5.0% for individual plans and 5.9% for family ones.
There’s a lot that goes into the value of insurance besides premium costs. But it’s quite clear that the Romney approach of mandates and subsidies was associated with faster premium growth, whereas the Perry approach of medical malpractice reform correlated with slower premium growth. Indeed, Texas’ premium growth rate from 2003 to 2009 was between 33 and 44 percent slower than that of Massachusetts.
Medical malpractice claims
Why did Texas’ insurance premiums grow so slowly? Definitively answering that question is beyond the scope of this blog post. What we can say is that the Perry-led reform of Texas’ medical malpractice system yielded dramatic results. On the other side, Massachusetts’ malpractice costs far exceed the national average.
In 2010, there were 282 paid medical malpractice claims in Massachusetts, versus 510 for Texas. However, adjusted for the number of state residents, Texas had 209 paid claims per 10 million residents, compared to 433 for Massachusetts. (The national average was 326.) And the average medical malpractice payment in Texas that year was $170,632, compared to $336,437 nationally and $484,290 in Massachusetts.
These are very large differences, and it’s hard to believe that they don’t play a role in Texas’ slower premium growth. If doctors in Texas believe they can practice less defensive medicine, out of a lesser fear of litigation, this will have at least some effect on insurance costs.
One way in which Massachusetts and Texas are very different is in the composition and proportion of their insured populations. If universal health insurance is your primary policy priority, you’re going to be a fan of Massachusetts, where the proportion of uninsured residents was 4.4% in 2009, compared to 26.1% for Texas. (The national average that year was 16.7%.)
There can be no doubt that Romneycare has succeeded in reducing the number of uninsured residents. There was a sharp drop in the proportion of uninsured, from 10.4% to 5.4%, between 2006 and 2007, during the first year of Romneycare. From 1999 to 2009, the proportion of uninsured in Massachusetts declined by 51%, from 8.9% to 4.4%. Over the same time period, Texas’ uninsured population grew, by a similar proportion (18%) to that of the nation as a whole (19%).
What’s interesting about Massachusetts is that the proportion of residents with employer-sponsored health insurance has stayed remarkably steady between 1999 (67%) and 2009 (67%). However, in Texas, that proportion declined from 58% to 48%; across the country, it declined from 64% to 56%. Again, broadly speaking, Texas appears to be reflecting national trends, though at a slightly faster rate of decline (17% vs. 13%).
Emergency room and hospital usage
The primary justification for Romneycare—one that Romney repeated last night at the Iowa debate—was that the law would eliminate the “free rider problem” by which uninsured individuals used the emergency room to get free care.
However, the data tells a different story: despite the fact that Massachusetts has far fewer uninsured residents relative to Texas and the country, it’s Massachusetts that has the highest rate of ER visits. In 2009, Massachusetts reported 473 emergency room visits per 1,000 residents, compared to 415 nationally and just 381 for Texas. This is all the more interesting because Texas, a large border state, has a sizeable population of illegal immigrants, for whom ER usage is a significant resource. (Federal law requires hospital emergency rooms to care for illegal immigrants.)
Overall, the biggest driver of health care costs is hospitalization. And on at least one measure of hospital utilization—the number of inpatient days patients spent in hospitals—the Lone Star wins again, with 548 inpatient days per 1,000 residents, compared to 628 nationally and 635 for Massachusetts. This is despite the fact that the two states are roughly comparable in the number of hospital beds per 1,000 residents: 2.5 for Texas and 2.4 for Massachusetts. (2.6 is the national average.)
One of the most important things to consider when comparing governors is their record in managing Medicaid. Medicaid is by far the most significant way in which state executives can demonstrate their health policy chops, despite the Byzantine federal regulations that constrain their freedom.
Texas under Rick Perry has acquired a reputation for being stingy about government-sponsored health care assistance. Surprisingly, however, the proportion of Texas residents on Medicaid (16.0%) was slightly higher in 2009 than that of the country as a whole (15.7%). Romneycare triggered a rapid increase in Medicaid enrollment in Massachusetts, something that should concern anyone who places quality health outcomes ahead of insurance coverage statistics.
If you’re concerned first and foremost about the growth of government and excessive spending, you’ll be troubled to learn that Massachusetts spent approximately $1,916 per resident on Medicaid in 2009, compared to $973 in Texas and $1,208 nationally. Massachusetts’ additional subsidies for low-income residents, through Romneycare’s Connector Authority, account for another $120 or so per resident. Texas spends just 5.1% of its budget on Medicaid, compared to 28.9% for Massachusetts. (The national average is 15.7%.)
On the other hand, Texas receives more federal assistance than Massachusetts does: Washington spends $2.44 for every dollar Texas spends on Medicaid, compared to $1.60 for Massachusetts. The national average is $1.28.
Why is Massachusetts spending so much on Medicaid relative to Texas? One big reason is that the composition of Texas’ Medicaid population is heavily oriented towards children, whereas Massachussets’ has a much larger proportion of adults and the disabled:
The Massachusetts Medicaid program is available to working parents with incomes up to 133% of the federal poverty level, whereas working parents (other than pregnant women) have to make less than 26% of FPL in Texas to get onto Medicaid. It’s not clear why Massachusetts has such a large disabled population compared to the rest of the country: either the rest of the country is too strict in its definition of disability, or Massachusetts is too loose.
When it comes to per-enrollee Medicaid spending, the biggest differences between the states is in their handling of the elderly: the “dual-eligible” population, so named because they quality for both Medicaid and Medicare. Texas appears to do a far better job in controlling the costs of dual-eligibles compared to Massachusetts. In fiscal year 2009, Texas spent $8,437 per dual-eligible enrollee, compared to $18,069 in Massachusetts and $12,499 nationally.
As I said at the top, who you favor between Romney and Perry will depend in large part upon what your priorities are in health care policy. My personal view is that universal coverage is meaningless, if the ultimate consequence of universal coverage is that people can’t afford, or gain access to, basic health care. It is Rick Perry’s Texas that has done more to keep the growth of health costs down, and we should spend more time drawing lessons from his Lone Star State.