Wayne O'Leary

Massachusetts Gets it Wrong

Massachusetts, home of the Kennedys and erstwhile bastion of liberalism, has managed to provide Republicans with a gift from the political gods: In one fell swoop, it's enacted a conservative health "reform" package and kick-started GOP Governor Mitt Romney's 2008 presidential campaign.

From a purely political standpoint, the decision of a Democratic Bay State legislature to, in essence, rubber stamp the pet healthcare project of a Republican governor with White House aspirations boggles the mind; it's one more reason to wonder why the Democrats exist as a party. Equally startling is that Sen. Ted Kennedy, patriarch of the Massachusetts Democracy, blessed the event as in keeping with his long-standing crusade for universal health insurance, raising serious doubts about whether the senator's celebrated political instincts remain intact.

For his part, Gov. Romney, who finished a surprising second to favorite son Sen. Bill Frist in the Tennessee GOP straw poll last March, could well steal his party's presidential nomination -- especially with a high-profile healthcare accomplishment on his resumé. Romney will no doubt campaign as the man who solved the nation's medical-insurance dilemma with his "tough-love" state experiment, avoiding new taxes and putting the onus on the malingering uninsured. In point of fact, he hasn't solved anything, as will presently become clear, but in politics, perception rules.

As for the heralded healthcare initiative itself, slated to go into effect in 2007, it essentially amounts to a compulsory health insurance program in which every Massachusetts resident not on Medicare or Medicaid (or rich enough to pay their own expenses out of pocket) is required to have a private medical policy. This so-called individual mandate will compel those not insured through their workplace to purchase coverage on the open market, with sliding-scale state subsidies based on income offsetting some or all of the premium cost for the poorest Bay Staters. Private insurers will be encouraged (but not required) to offer cheap, bare-bones plans to those unable to afford anything else.

The compulsory aspect of the new Massachusetts law will be enforced by a schedule of taxes and fines. Uninsured individuals failing to buy policies will face financial penalties that could total up to $1,000 or more a year. Also included, in lieu of an employer mandate, is a largely symbolic annual fee of $295 per employee imposed on businesses not providing coverage for their workers, as a purported inducement for them to institute or retain workplace health plans. The governor used a line-item veto to initially void this one progressive feature of the legislation, but was overridden.

Beyond the generally coercive nature of the Bay State experiment is the uneven application of its system of penalties and incentives. Individual citizens are hit with a substantial monetary stick if they fail to obtain insurance; businesses, on the other hand, are only modestly penalized for not offering employee health plans, and (in contrast to Maryland's recent legislation aimed at Wal-Mart) they avoid any legal obligations, a major dispensation. Moreover, the penalty, really a nuisance fee, amounts to a mere fraction of what providing employee insurance would cost.

Apologists for the draconian Massachusetts solution to health care point to the state premium subsidies as its saving grace, yet it's there that the scheme may be weakest. As formulated, Commonwealth Care (the program's designation) provides a full subsidy for the near-indigent -- individuals earning under $9,800 a year. So far, so good. But the working poor, those earning between $9,800 and $29,400 (or 100 to 300% of the federal poverty level), will be required to pay monthly premiums they probably can't afford, notwithstanding access to group rates and the as-yet-unspecified subsidies. The results could be socially catastrophic.

Even those in the lower reaches of the middle class, with annual incomes slightly above the subsidy cutoff of $29,400 ($49,800 for a family of three), will struggle to meet unsubsidized monthly payments estimated to range anywhere from $300 (for scaled-back individual coverage) to $500 -- substantially more if dependents are covered. Nevertheless, "everyone" will be insured, and that's the minimalist political objective of a plan the Bush administration ideologues could be proud of and Newt Gingrich, who huddled with Romney, finds intriguing.

Two major concerns haven't been addressed at all, however. First, as Robert Haynes, head of the Massachusetts AFL-CIO, has pointed out, the individual mandate will likely accelerate the decline of employer-provided health care. Well over 10,000 workers statewide have lost job-based coverage since 2001, and the new law offers an excuse for business to drop still more, swelling the ranks of the uninsured. Second, the Romney blueprint does nothing to control overall medical expenses, which will continue their inexorable rise.

Basically, Massachusetts has preserved and reinforced marketplace medicine. The healthcare industry will still pass on its costs and pad its profit margins, and a vast array of private insurers will still milk consumers through annual premium increases. To the extent state subsidies are applied to rising insurance costs, state taxes will rise as well -- or subsidies will be reduced. And then there's the waste and confusion inherent in a complicated, multi-tiered plan that resembles the Medicare drug benefit in its devilish detail and administrative red tape.

This is the approach Mitt Romney hails as a "market-based reform program" that avoids the perennial Republican bugaboo of a government-run system funded by taxes. Forget that the newly insured (and the already insured) will pay far more in insurance premiums than they would in taxes under a universal single-payer framework, an option the governor was delighted to reject. The objective, which Massachusetts Democrats bought into wholesale, was to remove the visible embarrassment (and state expense) of an uninsured population without departing from business as usual. Let's see how long it will be before the inevitable unraveling and reassessment.

In truth, the Massachusetts solution to health coverage is a flawed model that won't translate nationally. What's needed is an alternative state experiment geared to a simple, uncomplicated single-payer insurance system operated with tax monies and incorporating negotiated fee schedules and public cost controls -- a plan, in other words, divorced as far as possible from the marketplace. A large blue state with a Democratic governor and legislature would seem the place to try it -- perhaps a post-Schwarzenegger California.

Wayne O'Leary is a writer in Orono, Maine.

From The Progressive Populist, June 1, 2006

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