Monday, November 26, 2007 State
Watch
New York Times Examines Massachusetts
Individual Health Insurance Mandate
The New York Times on Sunday examined the
progress of the Massachusetts law requiring individuals to obtain health
coverage, and the lessons it may provide for the presidential campaign and
efforts in other states. The reluctance of many Massachusetts residents to
enroll in health insurance plans, "along with the possible exemption of
60,000 residents who cannot afford premiums, has raised questions about
whether even a mandate can guarantee truly universal coverage," the
Times reports. Under Massachusetts' health insurance law, most
residents who do not obtain health coverage will lose their 2008 state
income tax exemption, worth $219, and residents who remain uninsured in
2008 will face fines of half the cost of the least-expensive insurance
policy available, probably at least $1,000, according to the
Times.
More than 200,000 previously uninsured
residents have enrolled in insurance plans, but state officials estimate
that possibly up to twice as many residents have not enrolled in any type
of coverage. Meanwhile, enrollment in the state-subsidized health plan has
been greater than expected, and the state program could face a $150
million budget shortfall if enrollment continues at its current rate.
Concerns also have been raised about projections that state insurers plan
to increase rates by 10% to 12% next year -- twice the national average
for 2007. According to the Times, such hikes "would undercut
the plan's secondary goal of slowing the increase in health costs."
Jon Kingsdale, executive director of the Commonwealth Health Insurance Connector Authority, said,
"We're going to be very aggressive in trying to get those numbers down to
single digits," adding, "If we continue with double-digit inflation, I
don't think health care reform is sustainable."
Implications
The experience in Massachusetts "should be
instructive to the presidential campaigns, and to officials in California,
where Gov. Arnold Schwarzenegger, a Republican, has proposed a similar
plan," the Times reports. Democratic presidential candidates
Sen. Hillary Rodham Clinton (N.Y.) and former Sen. John
Edwards (N.C.) both have proposed universal health plans that include
coverage mandates, which they say are necessary to guarantee coverage for
all U.S. residents and to spread the country's risk as broadly as
possible. Presidential candidate Sen. Barack
Obama (D-Ill.) has proposed a health plan that does not include a
comprehensive coverage mandate and instead focuses on reducing costs,
providing subsidies to low-income residents and mandating coverage for
children, the Times reports. Obama has said an insurance mandate
cannot be put in place before it is determined that coverage will be
affordable.
Diane Rowland, executive vice president of the Kaiser Family Foundation and
executive director of the Foundation's Commission on
Medicaid and the Uninsured, said it has become broadly accepted "that
an individual mandate is the only alternative to government provision of
coverage if you hope to achieve universal coverage." According to
Kingsdale, "There's good evidence, whether it's buying auto insurance or
wearing seat belts or motorcycle helmets, that mandates don't work 100%."
He added, "We're talking about how close you can get to 100%, and to me,
it's pretty evident you can't get as close without the mandate as you can
with it" (Sack, New York Times, 11/25).
Massachusetts Businesses
While most Massachusetts businesses
offer health coverage to workers, 518 employers have elected to pay a
penalty rather than offer insurance, as required under the state's health
insurance law, the Boston Globe reports. According to the law,
companies with 11 or more full-time-equivalent employees must pay a
penalty of $295 per employee this year unless 25% of their workers are
enrolled in employer-sponsored health plans or the company offers to pay
at least one-third of workers' individual insurance premiums.
The
state required about 62,000 employers with eight or more workers to report
by Nov. 15 whether they met the insurance requirement. Of those
businesses, nearly 44,000 were small enough to be exempt from the
requirement, and the rest said they already offer coverage. About 18,000
employers have not yet reported their insurance status, and the state will
impose the penalty on businesses that do not report whether they provide
insurance, according to state Commissioner of Health Care Finance and
Policy Sarah Iselin. Iselin said the state expects many of those
businesses will be exempt from the requirements because they have fewer
than 11 employees.
The state will collect about $5 million in
penalties this year -- "far less" than the $24 million previously
estimated, "which could result in another financial shortfall for health
care reform," the Globe reports. The state Legislature
originally estimated that the business penalty would generate $45 million
last year and $36 million this fiscal year. However, the state did not
collect any of the penalties last year, and Gov. Deval Patrick's (D)
administration then downgraded this year's estimate to $24 million.
Although money from the penalty "is a small part" of the estimated $1.8
billion annual cost of the law, there are other signs of budget strains,
including the pace of enrollment in the state-subsidized health insurance
plan -- which could cost $147 million more than expected this year -- and
proposed federal rules that could reduce Medicaid funding by more than
$100 million.
Some advocates have called for stricter rules on
businesses, saying that employers should be required to provide coverage
to at least half of their work forces and contribute more to premiums.
John McDonough, executive director of Health Care for All, said the rules set forth by the
administration of former Gov. Mitt Romney (R) have "permitted many
employers providing little or no coverage to their workers to escape fair
share responsibility. For example, if I offer to pay one-third of the
premium and none of my employees take up the offer, I escape liability
under the law even if I'm not covering anybody," adding, "This means that
taxpayers are carrying and will carry a larger-than-anticipated burden."
However, state Senate President Theresa Murray (D) said, "Employers are
obviously doing their part, and individuals are also taking their
responsibility seriously" (Dembner, Boston Globe, 11/22).