Critical Condition

Massachusetts: An Apples to Oranges Comparison

AEI’s Tom Miller challenges health economist Austin Frakt who wrote in a recent JAMA Forum article that the penalties in Obamacare are high enough to get people to comply with the individual mandate. 

Many others have argued that the initial penalty of $95 a year in the Affordable Care Act is insufficient to get people to purchase a $5,000 health-insurance policy, especially when people know other provisions of the law mean they can purchase a policy at the same low price if they wait until they get sick.

Frakt argues that the federal penalty will be sufficient based upon experience with the Massachusetts mandate. But this is an apples-to-oranges comparison.

“Despite cautioning that Massachusetts differs from the rest of the country in many ways, the usually careful Frakt still concludes that ‘all the best evidence and logic we have point in the same direction’ and indicate that the ACA’s mandate penalties will be adequate,” Miller writes in his AEIdeas blog post, “Hyping the individual mandate’s penalties.”

Then Miller proceeds to take apart Frakt’s argument: The size of the subsidies and penalties and the other regulatory differences between Obamacare and Romneycare are significant and do not provide a basis for legitimate comparison.

The authors’ suggestion that mandating coverage might play an even larger role in encouraging the healthy to participate in health insurance markets nationally than it has in Massachusetts represents more of a “hope” than a “finding,” and it fails to speak to the particular effectiveness of the size of the ACA penalties or the law’s enforcement policies.


Frakt cites another study which found “that Massachusetts’ mandate and penalties reduced average premiums from what they would have been without them, thereby curbing adverse selection. However, a closer look at the study suggests some quick jumps across categories and wider holes through which more ACA mandate hopes than robust evidence are driven around in circles,” Miller says.

Miller also cites community rating regulations that already were in place in Massachusetts before the state’s health-reform law was passed in 2006 that contained premium variation. But there is no such existing law in the nation, and the premium distortions, and spikes for some populations, are expected to be much greater as a result. This makes comparing the two markets highly problematic.

What’s the larger point here? Austin Frakt usually does careful work in a fair-minded manner. Even within the JAMA Forum article, he notes that Massachusetts differs from the rest of the country in many ways, so one should be careful about making generalizations. . . .

The temptation is to push those points just a little too far, when it seems to be for a good cause (and all your friends agree with you already). 

Miller’s bottom line: “Whatever happened in Massachusetts stays in Massachusetts, for now.” 

In other words, the generalization just doesn’t work.