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The Massachusetts Experiment 

The future of national health care reform is playing out in Massachusetts, and the key players who will determine whether we have found the model for success are Boston hipsters — first-jobbers, slackers and new-economy entrepreneurs. You know, the folks who seldom contemplate their role in shaping public policy, and who are usually ignored by those in charge.

Massachusetts is requiring every adult citizen to purchase health insurance by the end of 2007. This experiment is taking its bow as the idea of reforming the national health care system has climbed in status to the top of the issue ladder. States across the nation are drafting their own plans, and presidential candidates are touting their solutions. Many of the ideas — including Governor Arnold Schwarzenegger’s in California, and Senator Hillary Clinton’s on the presidential-campaign trail — closely ape the innovative solution being imposed here, which was developed by, of all people, Mitt Romney. (He’s since issued confusing platform directives on his stance, but more on that later.)

Democrats and Republicans alike are now talking about moving forward with some kind of national reform. The Bay State experiment has “been an inspiration to the national debate,” says Judy Feder, dean of the non-partisan Public Policy Institute at Georgetown University. “Massachusetts going forward gave [health care reform] a big boost.”

And the stakes are clear: If the system works well in Massachusetts, odds are that the nation will follow. If it fails, this approach dies.

Popular Mandate?

Massachusetts is the first place in the U.S. — and only the third in the world — to mandate that every individual buy health insurance. That coverage mandate is key to the plan’s goal of spreading the risk and costs among all citizens. Already, presidential candidates Clinton and John Edwards have included the individual mandate in their own health care proposals. California’s plan, and even some proposals in Washington state, include a mandate, too.

But national observers are far from convinced that the mandate is a practical solution. “Both John Edwards and Hillary Clinton are embracing a robust individual mandate, before it has been shown to actually work here,” says John McDonough, executive director of advocacy group Health Care For All, which fought for universal coverage. “It is by no means settled that this will work in Massachusetts, let alone anywhere else.”

Some suggest that, while lower-income families will take advantage of newly available lower-cost insurance options, others will be harder to rope in. Namely, healthy, single, 25- to 35-year-olds, most of whom earn too much to qualify for subsidized rates, but little enough that health-insurance premiums — on top of rent, car insurance, and student loans — seem like an unaffordable luxury.

That cohort is the toughest group to bring into the insurance system, says Laura Trueman, executive director of the advocacy group Coalition for Affordable Health Coverage, in Washington, D.C., whose members include physicians, insurance carriers and consumer groups. “Many of them look at it and say, ‘The value for me is not there.’”

If Massachusetts finds that it takes a huge, expensive, time-consuming process to enroll this demographic and to keep them in the system, the individual mandate won’t look very practical and will likely be avoided in future plans.

More important to local citizens, if the new system doesn’t function as intended, the state will be in a real jam: Among other problems, Massachusetts could potentially lose hundreds of millions of dollars in federal grants that are predicated on increased enrollment. “If we fail in this, we are in a deep, deep hole as a Commonwealth,” says McDonough. “The price of failure is significantly higher than the price of success.”

Pay to Play

Getting everyone in Massachusetts insured, experts say, is critical for three reasons. First, it’s best for the health of individuals. Second, it helps spread out the cost of the system among all residents, not just the ones who use health care most often. Third, when the uninsured do need medical care, they are often unable to pay, leaving providers and the state’s Uncompensated Care Pool to pick up the tab — a cost that the new system, by insuring everyone, should dramatically reduce.

The new Massachusetts plan tries to encourage more employers to offer health insurance to their workers, by decreasing costs and by imposing fees on those that do not. Meanwhile, the plan will make it easier and more affordable for individuals to get insurance on their own. To do that, the Commonwealth Health Insurance Connector, a special state-run body created to link people to plans, works out the packages and costs of coverage, as well as the subsidies available to lower-income residents.

To help the “young and healthy” take part, the Commonwealth Connector is offering four tiers of insurance plans, including a low-cost, low-benefit “Young Adults Plan” for those aged 19 to 26. The cheaper plans have higher deductibles and co-payments, particularly for prescription drugs and outpatient treatment. Some critics of this multi-tier approach, including Massachusetts Sen. John Kerry, deride this as dumbing down insurance, arguing that universal coverage is meaningless if the insured can’t afford their share of the cost of treatment under these minimal-coverage plans. Others, including Trueman, argue that healthy 25-year-olds shouldn’t be forced to buy expensive, high-end “BMW” insurance when they only want “a used Kia,” as Trueman puts it. “That’s okay — it gets them where they’re going.”

But even at Kia prices, are the state’s young adults signing up for the low-budget insurance? It’s hard to say, because so far, with the data spread among many points, nobody yet knows for certain who is and who isn’t participating, and why. Officials estimate that 200,000 previously uninsured people have bought health insurance in Massachusetts in the past 16 months. That leaves somewhere between 150,000 and 300,000 still to sign up, depending on whose estimates you believe.

Some theorize that the ones who have signed up are lower-income families taking advantage of new subsidies and low-cost options — meaning that the remaining uninsured might be higher-income and may prove far more difficult to convince.

To prompt remaining laggards into action, the state will begin imposing penalties, through the state tax system, beginning Jan. 1. That fine will start at a couple hundred dollars for 2007, but for 2008 will likely be equal to half of the cost of the cheapest available insurance plan — as much as $1,500.

Some, including McDonough of Health Care For All, argue that the penalty should be lower during this start-up phase. McDonough says that a lower fine is under consideration. “We’ve been urging the Patrick administration to view 2008 as a phase-in year,” he says.

But those eager to extend the Massachusetts plan elsewhere want to hurry the process of pushing people to enroll, not delay it. With health care reform such a hot topic on the campaign trail, there’s a good chance the president elected in November will enter office with a mandate to enact reform. McDonough knows that national observers want concrete results by then. “All the work we’re doing in Massachusetts,” he says, “is really preparatory for the national effort that will begin in June 2009.”

Federal Help

That mandate won’t be there, however, if voters elect the man who led the charge to enact the Massachusetts system. As much of the fate of the country’s health care weighs on the Massachusetts experiment, it weighs particularly heavily on its chief architect: former governor Mitt Romney.

Romney, now seeking the Republican Party’s presidential nomination, can’t seem to decide how he feels about the plan he spawned.

When he signed the health care reform package into law, in late 2006, many expected it to be the signature bragging point of Romney’s four years running the state. But when conservative think tanks found fault with his approach, Romney seemed to drop it like his old pro-choice position.

Romney’s current proposal disavows the individual mandate, which many conservative Republicans view as intrusive governmental interference. He has even derided the Edwards and Clinton plans as something out of the communist Soviet Union playbook.

Later in the campaign, however, Romney again started taking credit for the Massachusetts plan — or parts of it, anyway — in an attempt to distinguish between what he calls Massachusetts’ “market-driven” approach and Clinton’s nearly identical plan, which Romney calls “government-driven.”

So, if the Massachusetts plan works smoothly, is that good news for Romney, who spawned it, or bad news since it clashes with what he now claims to support?

Regardless of the presidential politics involved, some Washington observers believe that any federal health care reform bill would leave the issue of individual mandates to the states. But the federal government could give states, including Massachusetts, a better shot at making their mandates work.

One way the federal government could help is now under consideration in congressional committees, and involves the federal tax code. It would extend to individual insurance purchasers the tax break currently enjoyed by those insured through their employers. Members of employee plans are not taxed on the income used to pay for health insurance. The same is not true for those buying insurance on their own.

Providing that federal tax break would make health insurance more affordable for those now being hit by the individual mandate in Massachusetts. In the meantime, Massachusetts has done what it can to bring down the cost of insurance, subsidizing the cost through two main sources: fines on businesses that don’t provide insurance to employees, and savings from the Uncompensated Care Pool, which should be used less as more state residents become insured.

Other federal legislation could do even more to help individuals comply with state-mandated health coverage, by providing revenue to subsidize the insurance plans in the form of vouchers or tax credits. “States cannot cough up all the money to help people afford insurance,” says Trueman, who favors federal help to bring those costs down.

In a way, the young uninsured might end up better off down the line if they don’t respond well to the mandate now facing them. If the sign-up goes smoothly, there will be less reason for the government to enact these kinds of changes. If the sign-up proves extremely difficult, there could be many more calls for incentives that make individual insurance cheaper.

Or the government could decide to just give up on uninsured young adults, and let them opt out of “universal” health care. One way or the other, young hipsters and go-getters are having their moment in the public-policy spotlight, whether they know it or not.

This story first ran in the Boston Phoenix.

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