A Health Law with Holes

Jon Kingsdale is a good man playing a bad hand dealt him by the Massachusetts Legislature and the Bush administration.

Kingsdale heads the Commonwealth Connector, created in 2006 by then-Governor Mitt Romney and the Legislature, as part of an effort to cover most of the state's uninsured. Kingsdale takes justifiable pride in having brought health insurance to more than 300,000 Massachusetts residents.

However, as the Globe recently disclosed, the program's costs are outstripping its projections by $245 million this year, and $400 million next year. This is not Kingsdale's fault. The program's designers underestimated the uninsured by some 200,000 people (costs of service are also rising). By doing his job - reaching those without coverage - Kingsdale adds to the program's costs.

The Massachusetts program, by going beyond standard Medicaid (which is 50 percent federally funded), needed a waiver of federal rules. The waiver must be renegotiated this year. President Bush has mandated cuts in state aid - during an economic downturn no less - using a characteristically backdoor directive that limits states' ability to extend health coverage beyond the poor. Going forward, Massachusetts will bear more of the program's cost.

The deeper problem is the program's piecemeal design, and the Legislature's failure to levy more than a token annual tax of $295 per worker on businesses that take a free ride by failing to cover employees. If the law had charged delinquent employers the actual cost of decent insurance - more like $5,000 a year - the state would have adequate funds for the uninsured.

By addressing only the poor, near poor, and those without "access" to employer coverage, but not the whole system, the 2006 law produces perverse results.

For the poor, decent insurance is heavily subsidized under an expanded version of Medicaid. For lower-middle-class people without employer-provided insurance, the Connector has worked with private insurers to offer affordable plans partly subsidized by the state ("Commonwealth Care"). Most of this insurance, Kingsdale noted in an interview, is a lot better than what people had before.

Yet another layer of the cake, "Commonwealth Choice," offers unsubsidized plans for moderate income people without access to insurance. But approved plans with affordable premiums have high deductibles and copays - while plans with affordable out-of-pocket charges have high premiums. A family that can only afford lower-premium plans can incur as much as $10,000 in annual costs, plus premium costs, if a member becomes seriously ill.

But people whose employers offer insurance coverage (the vast majority) get scant benefit from the new law, and the program largely fails to address escalating deficiencies in employer-provided plans. Rather, the law legislated an "individual mandate" requiring everyone to get insured one way or another.

Bottom line: the reform helps a great many uninsured but compounds a crisis that Dr. Marcia Angell, former executive editor of the New England Journal of Medicine, calls "coverage without care." As employers and insurers contain their costs by shifting them to individuals, more people find that their insurance fails to pay many expenses when they are sick.

So as a middle-class Massachusetts resident not eligible for the 2006 program, here's what you get: If your employer offers lousy coverage, or sticks you with most of the premiums, you must still buy the plan, or some other plan, or the state penalizes you. The Connector's website helpfully trumpets in large type, "New Penalties for 2008."

This idea of an individual mandate absent comprehensive reform - how to say this politely? - is nuts. It makes a social failure the problem of the individual. As Angell points out, "It gives the idea of government-sponsored universal coverage a bad name."

When Lyndon Johnson devised Medicare in 1965, he didn't order senior citizens to go out and buy private insurance, adequate and affordable or not, or be fined. Medicare covered everyone, bypassing the notoriously inefficient private insurance industry.

Barack Obama has been criticized by some for not including an individual mandate in his health plan. But Obama is correct. The individual should not be punished for government's failure to do reform right. Universal social insurance signals government help. A mandate signals government coercion.

Kingsdale says he is betting that the holes in the current reform will logically lead to more fundamental reforms. I sure hope he's right. But I'm with Marcia Angell. The Legislature, by building half a bridge, has set up one more perceived government failure.

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