RAY SUAREZ: Now: the beginning of an ongoing series about health care reform.
Tonight: how the biggest experiment at the state level is working and what lessons it offers for the national debate. Health correspondent Betty Ann Bowser reports from Massachusetts.
BETTY ANN BOWSER: It's Cider Days in Western Massachusetts, a time each year when people eat, bake, press, and drink the elixir from one of the state's healthiest exports, the apple.
But there's another homegrown product getting national scrutiny these days because, four years ago, Massachusetts became the first state in the nation to pass a health care reform bill. And now, with the Republicans poised to take over the House and governorships in 10 states next year, the new federal health care reform law is under the microscope, with supporters and critics alike looking over their shoulders to see how reform is working here.
LYNN NICHOLS, self-employed: This is the 16th year of this festival.
BETTY ANN BOWSER: Cider Days volunteers Lynn Nichols is one of those who no longer has to worry about insurance. But before the law passed, she and her husband, both self-employed Web designers, could not afford the $500-a-month premiums.
LYNN NICHOLS: Basically played Russian roulette with it, hoping that we weren't going to get sick. You know? That was -- that's the best we could do. And fortunately neither of us had a really -- you know, a really -- you know, we didn't -- neither of us needed to use it. But we basically went without seeing doctors for eight years.
BETTY ANN BOWSER: Now Nichols and her husband buy insurance for $160 a month through the state's so-called Connector, an exchange where residents can sign up for one of seven state-approved plans run by private insurance companies.
The new federal law calls for each state to set up similar programs. Since 2006, premiums in the individual insurance market have gone down 40 percent on average. But Massachusetts continues to have among the highest premiums in the nation, although state officials say employer-provided insurance seems to be stabilizing.
Massachusetts Institute of Technology economist Jon Gruber was a key adviser to the Obama White House when the new federal health care reform law was being crafted. He was also one of the chief architects of the Massachusetts reforms.
JON GRUBER, economist, Massachusetts Institute of Technology: It's worked very well. I think the facts are very clear. We have lowered the number of uninsured by 60 percent, from about 10 percent of the population to about 4 percent of the population. We have done so on budget. We essentially are exactly where we thought we would be when we started the program in 2006.
And we have done so in a way which is very popular with the public. It's got about a 74 percent public approval rating.
BETTY ANN BOWSER: Like the new federal law, the Massachusetts legislation requires most people to buy insurance or pay a penalty, provide subsidies to low-income families to purchase coverage, requires most employers with more than 10 workers to offer insurance, and dramatically expands Medicaid.
So, Molly, what do you make here?
MOLLY WOOD, owner, SmallCorp: We make museum cases, high-end picture frames. We work for museums.
BETTY ANN BOWSER: Small business owner Molly Wood has offered her workers health insurance for 35 years. She believes it helps keep the highly skilled employees she needs to do custom jobs for museums.
Last year, they made display cases to house mummies for a museum in Chile. But when her insurance company raised premiums 30 percent because of rapidly escalating health care costs, she had to change to a plan with a higher deductible.
MOLLY WOOD: We're a small business. It wasn't a great time to be taking on another $85,000 a year in costs. So, we sat down with our staff, had a meeting. The option was to stay with the office co-pay level, but put in a $500 per person deductible. It was cost shifting on to my employees. And I know it. And I -- you know, I don't feel good about it. But we still have insurance. And that was the important thing.
BETTY ANN BOWSER: To save money, Wood also had to shift to a plan that had fewer benefits. But, in spite of the increased costs and reduced coverage, employee Tom Hale is relieved.
TOM HALE, employee, SmallCorp: I think it's -- it gives people a lot of reassurance that they're not going to be hung out to dry, you know, that they won't have -- have -- they won't get into trouble that -- where they have nowhere to go.
BETTY ANN BOWSER: For co-worker 36-year-old Ben Humphrey, the personal cost of change has just hit home.
BEN HUMPHREY, employee, SmallCorp: Spent 11-and-a-half hours in the emergency room last week, and found out I have gallstones. So, my gallbladder has to be taken out. And the emergency room doctor ordered a CAT scan and an ultrasound. And insurance won't pay for those two tests.
BETTY ANN BOWSER: He will have to figure out a way to pay the costs of those tests on his own.
Unlike some other parts of the country, health care reform here in Massachusetts is popular. And one of the reasons is because just about everybody who lives here has health insurance. So, while the law that passed a few years ago has been successful in getting more people into the tent, it also has created some new issues.
Perhaps the biggest one is, the law has done nothing to rein in the price tag for taking care of people. Economist Gruber says cost containment was never a goal of the Massachusetts legislation. Its focus was to get more people insured.
When it comes to cost controls, the new federal law is more ambitious. It includes some money for pilot programs. But, until they produce some results, Gruber says nobody knows how to get the cost of health care under control.
JON GRUBER: It's projected to be 40 percent of our GNP by 2075 and about 100 percent of our GNP about 100 years later. We have to deal with it. We will deal with it. Ultimately, it's going to get dealt with. The problem is, there are two fundamental difficulties in dealing with cost control.
The first is scientific. We don't really know how to do it. We're still learning. We're making great progress in trying new models, and -- but we're still not there yet.
BETTY ANN BOWSER: The Massachusetts law has also not solved another major problem, the shortage of primary care physicians, which got worse when more people had insurance and could afford to go to a doctor.
Every year since passage in 2006, the Massachusetts Medical Society has found the shortage to be either critical or severe. And that's affected traffic to the emergency room.
CHUCK GIJANTO, chief administrator, Baystate Franklin Medical Center: We get an influx of patients, and you folks just call to arms.
BETTY ANN BOWSER: Chuck Gijanto is chief administrator for Baystate Franklin Medical Center in Greenfield, a rural community hospital.
CHUCK GIJANTO: Emergency room visits have skyrocketed. In the last four years alone, our emergency room visits have increased by over 20 percent. The same thing is playing out across the state. People aren't able to get in to see a doctor. And, so, when they have their health issues, they're going to come in to the emergency room.
BETTY ANN BOWSER: Gijanto says the shortage is something to be concerned about across the country, as Washington tries to implement the new health care reform law.
CHUCK GIJANTO: I think it would be a harbinger, because the same phenomenon is going to play out. What I don't see in the legislation is a way to address that from a primary care side. And I think that the market will help correct that over time, but it's going to be a long build. And in the interim, emergency room visits will continue to grow.
BETTY ANN BOWSER: Tufts University School of Medicine's Amy Lischko thinks the problem is people are just used to going to the E.R. A moderate who helped then Republican Governor Mitt Romney draft the Massachusetts law in 2006, Lischko says the current political climate is going to make fixing problems in the federal law difficult.
AMY LISCHKO, Tufts University School of Medicine: The biggest lesson I think is to evaluate, continue to evaluate, and then make changes that you need to make as you move forward. I don't know if the politics are going to allow that adaptation as we move forward.
I don't know if people will have the appetite to revisit some of the pieces of the law that aren't working well. Here in Massachusetts, everybody was in it together. And people were really supportive of the law. We know that's not the case nationwide. And so, if you don't have that support, I think it's going to be difficult to really move forward with implementing the law in the same way that we were able to here in Massachusetts.
BETTY ANN BOWSER: Massachusetts' Democratic Governor Deval Patrick has set up a special commission to rein in the costs of health care. One of the reforms gaining consensus is that the state would cap the amount of money hospitals and doctors could charge for their services.
GWEN IFILL: Betty Ann's series on the impact of the new federal health reform law will continue with a look at the shortage of primary care physicians.