Three years ago, the Commonwealth of Massachusetts enacted a far-reaching health reform law that politicians and the media hailed as a model for other states and the federal government. That law has become the blueprint for health system change on a national scale, and its advocates have aggressively marketed some variation of the Massachusetts plan as the reform of choice. Until recently, there has been remarkably little analysis of how the law has worked. This is the seventh in an occasional series of posts that will explore the Massachusetts law with an eye toward helping the press and the public understand the flashpoints as legislation based on the Bay State’s experiment winds its way through Congress. The entire series is archived here.

A few weeks ago, the NewsHour with Jim Lehrer featured a segment on the individual mandate—the centerpiece of any health reform bill likely to pass this year, and something that, until recently, had received scant media attention. So we were pleased to see the NewsHour’s discussion of the mandate with Jonathan Gruber—an MIT policy wonk and member of the Massachusetts Connector board, which oversees the state’s program—and Michael Cannon, a policy wonk from the libertarian Cato Institute.

Host Gwen Ifill pretty much let the two of them talk. My ears perked up when I heard Gruber say:

What we’ve seen is for individuals the cost of buying health insurance has fallen dramatically. It’s not gone up. It’s fallen, because by mandating insurance we fix the problem with our insurance market.

I was waiting for Ifill to ask the obvious next question—why were insurance premiums for small businesses climbing higher than Mt. Everest? But she didn’t, and switched subjects. Cannon, however, noted that premiums as a whole in Massachusetts were growing 20 to 40 percent faster than premiums in the rest of the country. “Health insurance premiums are not falling in Massachusetts,” he said. “The opposite is happening.” But Cannon didn’t mention the small business issue either, and that night a major deficiency created by reform went unexplored.

One of the Massachusetts law’s objectives was insurance market reform, which would merge two formerly separate types of policy markets—the individual market, where people bought policies on their own, and the small group market, where small businesses bought policies for their workers. The idea was to expand the so-called risk pool, bringing insurers a better mix of sick and healthy people who would in turn make premiums more affordable and coverage more attractive—at least for individuals. More attractive individual coverage, a.k.a. lower-priced policies, would help insurers enlarge their market share. “Blue Cross wanted the merged market so they could increase their market,” one business executive told me. “They were the major driver behind combining the small group and individual markets, which was a huge cost shift onto small employers.”

It was yet another example of the balloon problem in American health care—fix one problem and another pops up somewhere else. Jon Hurst, president of the Retailers Association of Massachusetts, told me: “Despite all this new business insurers and hospitals get, they keep billing us double digit increases.” Rates had been high even before reform, but Hurst added: “You would have thought rates would come down, but they haven’t. We have poured billions into the health care industry in this state and they haven’t given us any return.” Businesses with more than ten full-time workers must offer coverage, or they may be assessed $295 per year per employee.

At the beginning of the year, Hurst said, his trade association—which employs five workers and represents about 3000 small businesses across the state—got hit with a sixteen percent rate increase from Blue Cross Blue Shield. That meant that Hurst’s group now pays $18,000 per year for family coverage. That was a relative bargain. Other small business owners, Hurst said, were paying $23,000 and $24,000 for similar policies.

Trudy Lieberman is a fellow at the Center for Advancing Health and a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR’s healthcare desk, which is part of our United States Project on the coverage of politics and policy. Follow her on Twitter @Trudy_Lieberman.