The expansion of health insurance in Massachusetts has been largely financed by the federal government.

A recent article in the New England Journal of Medicine paints a sanguine picture of the cost (to Massachusetts anyway) of expanding health insurance through the state’s 2006 reforms (Massachusetts Health Care Reform).

The article reports that in the 2006 fiscal year prior to reform, relevant state expenditures on health care totaled $1,426 million.  Comparable expenditures are estimated at $2,017 million for fiscal year 2009, including $805 million in premium subsidies for Commonwealth Care.  The $591 million increase represents a compound annual growth rate of 12.3 percent.

The article reports that “federal financial participation” (including from a special Medicaid waiver) as a source of revenues is projected at $1,272 million for 2009, a $584 million increase from the pre-reform amount of $688 million in 2006, or an annual growth rate of 22.7 percent.

While other revenue sources changed during 2006-2009, the increase in total state expenditures of $591 million is approximately equal to the $584 million increase in federal funding.

From Kimberly Strassel’s WSJ interview of Senator Joe Lieberman , on how a public option became the centerpiece of liberal Democrats’ health care reform goals:

Mr. Lieberman . . . believes the public option is intended as a way for the government to take over health care.

“So where did this public option come from? . . . I started to ask some of my colleagues in the Democratic caucus, privately, and two of them said ‘some in our caucus, and some outside in interest groups, after the president won such a great victory and there were more Democrats in the Senate and the House, said this is the moment to go for single payer.’”

Mr. Lieberman notes that the public option serves no other purpose:

“It doesn’t help one poor person get insurance who doesn’t have it now. It doesn’t compel one insurance company to provide insurance to somebody who has an illness. And . . . it doesn’t do anything to reduce the cost of insurance.”

The Health Insurance Reform Debate provides an overview of the U.S. health care reform debate and legislation, with a focus on health insurance. Following a synopsis of the main problems that confront U.S. health care and insurance, it outlines the health care reform bills in the U.S. House and Senate, including the key provisions for expanding and regulating health insurance, and projections of the proposals’ costs, funding, and impact on the number of people with insurance. The article then discusses (1) the potential effects of the mandate that individuals have health insurance in conjunction with proposed premium subsidies and health insurance underwriting and rating restrictions, (2) the proposed creation of a public health insurance plan and/or non-profit cooperatives, and (3) provisions that would modify permissible grounds for health policy rescission and to repeal the limited antitrust exemption for health and medical liability insurance. It concludes by contrasting the reform bills with market-oriented proposals and with brief perspective on future developments.