Mass Confusion Regarding Health Insurance

Massachusetts’ new universal health care plan reminds me of a quote from P.J. O’Rourk that goes, “If you think health care is expensive now, wait until you see what it costs when it’s free.!” Let’s hope New Mexico has the sense to postpone being a Massachusetts copycat until we see how the new law pans out. We know that Tennessee’s big-government attempt to universalize health insurance was a disaster.
Thanks to Grace Marie Turner for sending us this excellent assessment of the law:
April 13, 2006 The new Massachusetts health plan has dominated the policy conversation over the past week, causing more division among conservatives than liberals.

The law, designed to make the state the first in the nation to achieve universal health coverage, was signed on Wednesday by Gov. Mitt Romney. He was flanked at the invitation-only ceremony by the Democratic leaders of the Massachusetts legislature and by Sen. Ted Kennedy, a long-time advocate of universal health coverage.
The biggest concern among conservatives is the requirement that every individual in the state must purchase health insurance or face financial penalties.
Mandates are almost impossible to enforce, even with the fines and other enforcement provisions in the law. Further, the state must specify what kind of insurance people are required to buy and how much they should pay, taking away the ability of markets to freely compete and for people to purchase the coverage of their choice.
We were also concerned about the back-door employer mandate. The legislature wanted to force employers with 11 or more employees to pay a $295 annual fine for any employee without health insurance. The Governor vetoed the provision, but leaders of the heavily Democratic House and Senate have said they will override.
House Speaker Salvatore DiMasi called the veto disingenuous, saying the law was crafted with concessions and compromise. “To change anything will disturb the delicate balance that made this law possible,” DiMasi said. Note to employers: $295 is only the beginning.
While many conservative groups, like the Pacific Research Institute, the Cato Institute, and the Council for Affordable Health Insurance, have been highly critical of the plan, The Heritage Foundation has been very involved in helping the Governor craft the legislation. The Governor credits Heritage with creating the new FEHBP-like insurance connector to offer insurance options and collect and distribute premiums. Bob Moffit of Heritage stood behind the Governor at the signing ceremony. [Harry’s note: yes, you read that correctly; Heritage is partially behind this abomination.]
An integral provision is the requirement that every employer with more than 10 employees – think your local automotive garage – must offer a Section 125 cafeteria plan so employees can use pre-tax money for their insurance premium contributions.
And that’s only the beginning of the reporting requirement, mandates, penalties, and other enforcement provisions in the new law, for example:
The law requires every employer and employee in the state to sign “under oath” a Health Insurance Responsibility Disclosure form, testifying to whether the employer has offered insurance and whether the employee has accepted or declined.
It creates at least 10 new boards and commissions to create and run the new health system, such as the Health Care Quality and Cost Council, the Payment Policy Advisory Board, and the Health Access Bureau.
New and existing state agencies will be checking on individuals’ insurance status, monitoring their income to see if they qualify for subsidies, and tracking individual health habits (like smoking and wellness activities) to determine their insurance rating category.
There also is a major expansion of Medicaid and S-CHIP to cover children up to 300% of poverty, and the state makes it clear that it is doing all it can to maximize collection of federal matching funds to help finance the new plan.
My biggest concern is over the financing. The state says it is just moving money around – redirecting about $1 billion in uncompensated care money to subsidize health insurance for those under 300% of poverty (about $50,000 a year for a family of four).
But there is nothing in the law to keep health insurance costs from soaring. Policies offered through the new health insurance Connector must have first dollar coverage and include all of the 40 coverage mandates on the books, with none of the provisions that are working in the private sector to engage consumers as partners in managing health costs. Estimated premiums are unrealistically low and will quickly lead to higher taxes and “assessments” on individuals and employers.
Nonetheless, newspapers around the country are falling over each other in their effusive praise of a Blue state, led by a Republican governor, building a bridge across the political chasm to go where no other state has gone before.
Gov. Romney’s term ends this year, and he is likely to be spending a lot more time in Iowa and New Hampshire than in Massachusetts as this plan gets up and running. But I worry that he has laid the foundation for what can become a very intrusive, onerous, and expensive health plan for Massachusetts. Other states, which are firing up their Xerox machines now, should wait to see how this works out before rushing to follow the Bay State’s lead.