WASHINGTON – The Massachusetts healthcare system, widely regarded as an example of how to provide universal coverage and keep costs low, is faltering badly and should not be held up as a national model for reform, according to a study released by Physicians for a National Health Program (PNHP) and Public Citizen.

The groups have urged Sen. Edward Kennedy (D-Mass.) to reject his home state's approach and, instead, introduce Senate legislation crafted after the House's United States National Health Care Act, H.R. 676, which would implement single-payer financing of healthcare while maintaining the private delivery system.

"Massachusetts physicians have the unique opportunity to observe the effects of this reform on patients every day," said Rachel Nardin, MD, president of the Massachusetts chapter of PNHP and lead author of the study. "The nearly 500 doctors who have signed an open letter to Senator Kennedy see that the reform is deeply flawed."

PNHP's study found that the state's 2006 reforms, instead of reducing costs, have been more expensive. The budget overruns have forced the state to siphon about $150 million from safety-net providers such as public hospitals and community clinics.

Many low-income residents who used to receive free care now face co-payments, premiums and deductibles under the new system - financial burdens that prevent many from receiving necessary medical treatment, the study said. Since the state's reforms passed, premiums under the state insurance program have increased 9.4 percent. The study found that a middle-income person on the cheapest available state plan could end up paying $9,872 in premiums, deductibles and co-insurance for the year.

"We are facing a healthcare crisis in this country because private insurers are driving up costs with unnecessary overhead, bloated executive salaries and an unquenchable quest for profits - all at the expense of American consumers," said Sidney Wolfe, MD, director of Public Citizen's health research group. "Massachusetts' failed attempt at reform is little more than a repeat of experiments that haven't worked in other states. To repeat that model on a national scale would be nothing short of Einstein's definition of insanity."

The study found that a national, nonprofit, single-payer system could save Massachusetts about $8 billion to $10 billion a year in reduced administrative costs. Currently, Americans spend 31 cents of every healthcare dollar on administrative costs, by far the highest rate in the world and much higher than the 17 cents spent in Canada, which has single-payer universal healthcare.

"Big hospitals and insurers have gotten rich off reform, but a survey shows that more people directly affected by it have been harmed than helped," said Steffie Woolhandler, MD, a PNHP co-founder and associate professor of medicine at Harvard Medical School who helped prepare the study. "We're seeing patients who now can't afford vital medications and treatments that they've been on for years because of the new co-payments and deductibles imposed by the law."