Deflating the Massachusetts Healthcare Bill

When it was announced that a form of universal health coverage was coming to Massachusetts, quite a few people on our side of the aisle were excited by the news. After all, isn't universal coverage something progressives have been striving for for the better part of the last century? There were a few notable dissenters, however. John Sweeney of the AFL-CIO was perhaps the loudest, and while I think his criticism may have been a bit harsh, I agree with his general read of the situation.

This legislation leaves middle-income families dangling without a safety net, jeopardizes families who currently have employer-sponsored health care, and gives employers a free ride.

The bill protects workers with the lowest incomes, but punishes middle-income families. A typical family in which the husband and wife each earn a little more than $30,000 and who have two children would be forced to purchase health care, but would not be qualified for any help even if their employer does not offer any coverage or they can't afford their share of the premium. With the average employer-sponsored insurance premium costing more than $4,000 a year for single workers and close to $11,000 a year for working families, Massachusetts' new requirement will bankrupt many middle-class families.

Yesterday at The American Prospect, Robert Kuttner waded into the debate as well. He exhibits some mixed emotions, seeming to come down on the side of of those who would say this is not a great bill, but is perhaps the best we're going to get at the moment, even if it is based on "three dubious assumptions" made by Governor Mitt Romney. They are "that basic health insurance could be had for $2,400 a year,""that 'market reforms' could liberate hundreds of millions of wasted dollars to redirect to coverage," and "that health insurance is like auto insurance; government should just make everyone buy it." Economic writer that he is, Kuttner sums up the facts about the bill quite well.

Given these limitations, the bill that finally emerged is a small miracle. It cobbles together several pots of money -- Medicaid, the existing uncompensated-cost pool, projected savings from "market reform" and from sick people being treated by doctors rather than in emergency rooms. It adds $125 million a year in new state spending, and another $50-100 million from proceeds of a $295 per worker charge and other assessments to be paid by employers who fail to provide insurance and whose workers disproportionately tap the free care pool. Romney delicately calls this new tax a "fee." It is pitifully low, compared to the several thousand dollars per worker that insurance costs. It is far too feeble an incentive to induce any non-insuring employer to provide decent coverage, but it was all the business lobbyists and Romney would deign to accept.

The key criticism there is the same one made by the folks PLAN. The $295 fee per uninsured employee is an absurdly small stick with which to disincent employers from refusing to provide coverage to workers. When the pay for CEOs is averaging somewhere in the neighborhood of four hundred times that of workers, it's ridiculous that the corporate penalty for not insuring their workforce should be over three times less than the penalty imposed on the workers.

The need for universal health coverage is rapidly becoming an unavoidable fact of American life. There are a variety of ways this can be achieved and, to be sure, the Massachusetts plan is one of them. But as John Sweeney points out, it's straight out of "the Newt Gingrich playbook for health care reform." It's largely a 'market-based' approach to a problem that the market has consistently proven incapable of dealing with effectively. Worst of all, while it may not be so bad for those living in poverty or those whose employers wouldn't dream of taking away their health benefits, the hardest hit are the middle class. At the median income level, the bill for quality health insurance represents a huge chunk of the family budget.

The progressive alternative to this is some form of increased public involvement in healthcare, whether it's in the form of a single-payer system or a hybridized system of public subsidies and private add-on coverage. Point being, the Republicans are warming up their healthcare fixes, from the Massachusetts plan to Health Savings Accounts, and I'm not hearing enough from Democrats about alternative proposals. This is one debate we cannot afford to lose.

Tags: AFL-CIO, American Prospect, Democrats, Healthcare, John Sweeney, Massachusetts, Mitt Romney, Republicans (all tags)



Re: Deflating the Massachusetts Healthcare Bill

I agree with the analysis, and you can add the lack of cost controls, and the fact that most health care analysts favor dilinking health care from employment.

The problem is that this is a Democratic measure, it passed the overwhelmingly state legislature, with the support of a raft of interest groups overwhelmingly linked to the Democrats.  And they could have overriden Romney's veto if they had to.

by Michels 2006-04-11 03:35PM | 0 recs
Re: Deflating the Massachusetts Healthcare Bill

I'm no economist of any kind, let alone health economist. But it seems to me that the MA plan smacks of Medicare Part D: it enables insurers to write a whole lot of business for the otherwise uninsurable, but only at the price of copays that make the insurance not entirely worth having.

The politics are, I suspect, fascinating: I got the impression, what little I took in of the back-and-forth between Romney, Travaglini and DiMasi, that the health care thing was something of a pretext for a battle between the three of them.

What the real fight was about, I know not.

by skeptic06 2006-04-11 04:16PM | 0 recs
Re: Deflating the Massachusetts Healthcare Bill

Does the Massachusetts plan address risk pooling in a meaningful way?  Adverse selection is an enormous problem in the individual insurance market (on both sides of the market, but focusing on selection action by the insurers here).  Is Mass a community rating state for health insurance?

by arenwin 2006-04-11 04:24PM | 0 recs
Re: Deflating the Massachusetts Healthcare Bill

Oh, nevermind, I should have used google first.  It's apparently a guaranteed issue and community rating state.

by arenwin 2006-04-11 04:26PM | 0 recs
Re: Deflating the Massachusetts Healthcare Bill

...although (and sorry for 'talking to myself') if other states might copy the Massachusetts formula as several media sources have suggested, it's not a moot point at all.

The health insurance industry hates guaranteed issue (which deprives them of the right to decline customers) and community rating (which requires a uniform premium regardless of health status, kinda-sorta like what large group insurance policies are designed to accomplish).  Understandably; they're insurers, they want to minimize their exposure to risk.

What happens when a state like, say, Connecticut - which has no community rating or guaranteed issue laws - tries to mimic the Massachusetts plan?  Do they overcome the health insurance lobby?  Or do they require chronically sick people buy policies that insurers either (1) won't sell them, or (2) will charge them 10x the usual premium for?

by arenwin 2006-04-11 05:31PM | 0 recs
Re: Deflating the Massachusetts Healthcare Bill

One thing you government payer folks never address--how'd you like President Bush determing what kind of medical care you get & how much he'll pay for it? It's called the veterinary model of medicine, and with W. being the pet owner, abandon hope all ye who enter there.

by noname 2006-04-11 04:40PM | 0 recs
New to Massachusetts

and it is amazing that the state is NOTHING like it's portrayed by Republicans and flyover country.  Firstly, it's not as high in taxes as Arizona was when I lived there.  Secondly, though the Republicans really don't exist as an effective structure, the DEMOCRATS are in all reality essentially TWO parties:  conservative Dems and liberal Dems.  There are a lot of socially very liberal Democrats while at the same time, they are notoriously frugal with money.

This bill only increases state spending by $150 million?  What a joke.  Massachusetts is not nearly as liberal or progressive as people think.

by jgarcia 2006-04-11 05:00PM | 0 recs
Re: New to Massachusetts

I lived in MA for a bit, and I have to say, as a native Oklahoman, that Massachusetts is a remarkably conservative place.  No, really.  The way that the system ends up working sort of pushes the bad sorts of commercialism.  While there are great strides being made there to promote gay rights and such, one cannot drink in public spaces.  It's just weird, the mix of puritanical ethics, old money, liberal (even far, far left in Cambridge) thinking, labor, and immigrant diversity.  People around the country simply don't understand the place unless they've lived there (probably longer than I did.)

by nanoboy 2006-04-12 07:44AM | 0 recs
Re: New to Massachusetts

I would love to read more from you on the dynamics of the state.  It's fascinating how it's so paradoxical internally.  Let me know if you write a diary on it.  It would be great, because I think it takes someone from another state to properly analyze Massachusetts because they are famously provincial and knee-jerk reject any criticism or even introspection.

by jgarcia 2006-04-12 09:32PM | 0 recs
Re: Deflating the Massachusetts Healthcare Bill

We in MA have been covering this for quite a while, and you can find our commentary here.

There are some very good things about the bill, including expanded Medicaid enrollment and subsidies for working folks who make up to 300% of Federal Poverty level, or about $30k. Also, there will be increased pooling for small businesses and the self-employed.

Yes, the "doughnut hole" is the group just above that level, who will be forced to buy insurance that is not cheap, either in premiums or deductibles. That needs to be fixed, perhaps by an expanded subsidy "corridor" to help folks out of slightly higher incomes, or perhaps by other methods of cost control. That remains to be seen, and is one reason why health care will be on the front burner for the governor's race this year.

It is a very good and very troubling bill. Kuttner's commentary is quite on the mark, I think.

by Charley on the MTA 2006-04-11 05:27PM | 0 recs
The Answer Is -- Medicare for Everyone

Or more precisely, Medicare for Everyone as a basic crummy health care benefit, with a Medicare Plus option to keep the Insurance Industry from killing the deal.

The best health care system in the world is right here in the USA -- the VA. It is far superior to anything else, because they have computerized the medical files on everyone, which allows them to practice prevenative medicine -- which is something no private insurance company is ever going to do.

Medicare for Everyone -- with a Medicare Plus carrot to keep the health insurance industry off the warpath.

by ck 2006-04-11 06:45PM | 0 recs
Re: The Answer Is -- Medicare for Everyone

VA is every health insurer's worst nightmare.

On their side, of course, they have Harry and Louise - every health care reforming pol's worst nightmare.


by skeptic06 2006-04-11 07:01PM | 0 recs
Re: The Answer Is -- Medicare for Everyone

Systems like the VA and Kaiser Permanente on the non-profit side are able to do things others can't because they are "coordinated systems."  This means that virtually all care is provided inside their systems and information is shared and coordinated.  They have things like electronic medical records which improve care by letting the treating physician see the patients entire medical history rather than a snapshot.  Only very difficult to treat cases are sent outside.

Quality surveys consistently show that "coordinated systems" have much better outcomes than systems built around individual doctors and hospitals.  Unfortunately, perception does not meet reality in this case.  The majority of the public sees "coordinated systems" as clinic medicine which is inferior.  Too bad because this type of system provides better care and at a lower cost.

by John Mills 2006-04-12 07:25AM | 0 recs
Re: The Answer Is -- Medicare for Everyone

"Which is something no private insurance company is ever going to do."

Not really true.  I am doing some work on electronic medical records and it is the doctors and hospitals who are resistent to them because most don't want to spend the money to implement them.  The systems are expensive.  

Frankly, it is ridiculous that in an era when you can do almost anything on the Internet that medical records at most doctors offices and hospitals are still paper based.  The federal government should mandate them as part of participation in the Medicare program.

by John Mills 2006-04-12 07:35AM | 0 recs
Re: Deflating the Massachusetts Healthcare Bill
The way I see it, as a resident of Mass, this bill at least makes an effort to accomplish a goal. Progress happens in baby steps, not over night. First get Universal access, then work to make health insurance affordable. Currently, health insurance is massively expensive for the "doughnut whole" group... this does very little to change that. In fact, the amount of people without health insurance in the state is relatively small... affordability is the most difficult problem, as health insurance costs have skyrocketed. There are a number of ways to combat those costs, but none of them will be easy. The health care industry will bitterly resist along the whole way.. but if we get a progressive and charasmatic governor (like Deval Patrick), we can help combat that lobby.
by Ryepower12 2006-04-11 09:49PM | 0 recs
Re: Deflating the Massachusetts Healthcare Bill

A couple of thoughts.  Scott is right that the Dems need to get their act together on healthcare issues in general.  They are still so scarred from the 1993-94 debate they are afraid to propose anything which is clearly a mistake.

I also agree with Kutner that the solution is no doubt flawed but it is a step in the right direction. The $295 per employee fine is pitifully low.  However, the lessons of the early 1970s and 1993-94 are that achieving universal coverage is probably going to occur on an incremental basis.  

It is interesting that Ted Kennedy was a major player in the Mass plan.  I am sure he rues the days in the early 1970s when he helped defeat the Nixon employer mandate plan because it wasn't single payer.  Those who don't learn from history are doomed to repeat it.

by John Mills 2006-04-12 06:24AM | 0 recs
uh.. "market based" reform

how anyone can refer to mandatory insurance as "market based" is beyond me. it is, however, a highly "pro-big business" conservative solution.

a big weakness with this program is that healthcare inflation (~10% a year) is a national problem, that won't be constrained by state level reforms.

by colorless green ideas 2006-04-12 11:54AM | 0 recs


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