States Should Exercise Caution Before Following Massachusetts

Published July 1, 2008

Interest in the Massachusetts health reform plan remains high, as evidenced by the sellout crowd at a recent forum on Capitol Hill sponsored by the Alliance for Health Reform and the Kaiser Family Foundation and televised live by C-SPAN.

I was the lone voice on the panel suggesting caution about the plan, which was implemented in 2006, while “three amigos from Massachusetts,” as the other speakers called themselves, expressed confidence the program is simply experiencing growing pains that can be overcome.

Jon Kingsdale, who heads the Commonwealth Health Insurance Connector Authority, and other architects and implementers of the Massachusetts reform plan, say support remains strong among political leaders and the business community.

Problems Arising

But problems are brewing. Here are a few of the yellow flags I raised during my talk at the May 19 forum:

  • It’s easy to get people to enroll in health insurance if you make it free or nearly so to them. The great majority of those newly covered by insurance in Massachusetts are in plans completely or heavily subsidized by the taxpayer. Of the 330,000 newly enrolled in insurance, at least 232,000 are getting free or heavily subsidized coverage.
  • The hard part is convincing people who don’t get subsidies–and who face growing penalties for not enrolling–to buy insurance. The state government has the audacity to tell residents what they can and cannot afford to pay. For example, if your family income is $70,001, the state says you can afford to spend $550 a month, or $6,600 a year, for health insurance. If you don’t buy it or get a waiver, you’ll be fined. The penalty now is as much as $1,824 for a couple, and it will increase again next year.
  • The plan is starting to strain the state budget as well. Gov. Deval Patrick (D) has asked for $869 million for fiscal 2009, but state authorities warn the cost will be closer to $1.1 billion–about as much as the state pays for its total public safety budget. The state also is concerned about another 30,000-40,000 people who have job-based coverage now but could be added to the subsidy rolls as well.
  • Insurance costs continue to rise. The state has approved a 12 percent rate increase for health insurance for next year.
  • Some safety net hospitals are threatening bankruptcy. Hospitals are still treating a large number of people without health insurance, but the payments they receive for uncompensated care have been cut as part of the reform deal.
  • The state is finding its goal of universal coverage to be increasingly elusive. Several hundred thousand people are still without health insurance, and they will be the most difficult to enroll because the majority won’t qualify for subsidies. They face rising health insurance costs, growing fines, or a complex waiver process.
  • The shortage of primary care doctors is making it difficult in some parts of the state for people who are newly insured to find a doctor who will take new patients. One person wrote us, “Before, I was uninsured and couldn’t see a doctor. Then I made the sacrifice to buy insurance, but I still can’t find a doctor who will see me. So now I still don’t get to see a doctor, but it’s just costing me more.”
  • The state has a detailed list of minimum coverage standards for 2009 that many small businesses will not be able to meet. They find the richer package more expensive than they can afford to buy for their workers. What will the state do? Fine them? Relax its rules again?

Goal Is Elusive

Massachusetts had a head start on reform with a relatively low uninsured rate, a sophisticated medical system, and political leaders committed to reform. It is doing us the favor of showing us the problems and complexities of states’ attempts to achieve universal coverage. California, Illinois, Wisconsin, and other states have tried to launch similar plans, but so far, all have collapsed when they saw the price tag.

I received several email messages from Massachusetts citizens after they saw the forum on TV. One told me, “I wish to thank you for the truth you spoke in D.C. regarding the fraudulent, wasteful, corrupt insurance mandate that has become the Massachusetts version of health care reform.” Another said, “Massachusetts has made being uninsured a crime. We do not have enough people willing to speak out for what this law is really doing to the middle-income residents.”

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