Mass. ‘Universal’ Insurance Plan Proving Expensive and Ineffective

Published June 1, 2008

Massachusetts Gov. Deval Patrick (D) has been boasting his state’s health reform initiative has reduced the number of uninsured by half, with nearly 300,000 more people added to the state’s health insurance rolls. What he doesn’t mention is that four out of five of them are relying heavily on taxpayer subsidies for their coverage.

Of the 293,000 people newly insured in Massachusetts:

  • 160,000 earn less than $63,600 (for a family of four) and are enrolled in taxpayer-subsidized plans. More than half of them pay no premiums, and most others pay only a modest amount.
  • 70,000 people were added to the rolls through expansion of the state’s Medicaid program.
  • Only 63,000–or about one in five–have purchased private insurance.

In addition, about 60,000 are being declared exempt from the mandate all citizens must buy coverage, showing how elusive the goal of universal coverage will be, even for a state that had a relatively low uninsured population to begin with.

Costs Still an Issue

Costs are still a problem for the Massachusetts plan. The state government now estimates its annual spending on the new program for the uninsured may exceed its budget by nearly $150 million.

The penalty for not complying with the mandate is steep. Individuals who don’t get insurance this year–or don’t get an exemption–will face a fine of $912, four times last year’s penalty and scheduled to increase each year.

The state “negotiated” with the health insurers participating in the Commonwealth Connector to keep premium increases to about 5 percent this year, but the insurers said in order to keep their prices down, they will have to increase co-payments and/or deductibles and/or cut benefits. Many of the newly insured say they have trouble finding primary care physicians who will see them.

To show how hard it will be to get to a point that everyone will be able to get “coverage as good as members of Congress have” in Massachusetts, a gold-plated BlueCross BlueShield plan in the Connector would cost a family of four about $23,000 a year.

In addition, the state is trying to figure out what to do with those businesses that already are offering coverage but whose policies don’t comply with the higher standards set by the government. Should they be exempted, forced to pay for more expensive coverage, or fined?

Relying on Federal Handouts

Patrick and other governors were in Washington, DC in March pleading with Congress to reverse the Bush administration’s Medicaid and State Children’s Health Insurance Program (SCHIP) reform policies, saying they would threaten their ability to expand or even sustain coverage. That’s because Massachusetts and other states rely heavily on federal payments for their expansion plans. The president wants them to focus on covering poor children and needy citizens first.

Since the Bay State’s initiative is seen by many as a model for the nation, it’s important to pay attention to it. There is clearly no Massachusetts miracle here. Other states should certainly be cautious before proceeding.

Public Leery of Mandate

The public is leery of new mandates like those in Massachusetts, despite the claims regarding a new poll on health care from National Public Radio, the Kaiser Family Foundation, and the Harvard School of Public Health. The poll found “a majority of Americans are backing key elements in the health reform proposals of Democratic presidential candidates Hillary Clinton and Barack Obama.”

When asked whether they would support an individual mandate for health insurance, 59 percent said yes, as long as employers were required to provide coverage or pay a fee, and as long as there were subsidies for those with low incomes and insurance companies were required to take anyone who applies.

“But when the question was asked a different way–without emphasizing government subsidies, employer mandates, and requirements on insurance companies–support dropped to 47 percent in favor and 44 percent against,” said the release issued by the poll’s sponsors. “That’s an even split, given the poll’s margin of error of plus or minus 3 percentage points.

“The finding suggests that support for requiring everyone to buy insurance may be iffy,” the release concluded.

Grace-Marie Turner ([email protected]) is president of the Galen Institute.

For more information …

NPR/Kaiser/Harvard Survey, “The Public on Requiring Individuals to Have Health Insurance,” February 2008: