Is the new Massachusetts new health plan really a model for reform nationally? Advocates of universal health coverage feel they finally have their nose under the tent. The question remains, however: is this the right tent?
The design of the plan was drastically constrained from the beginning by Governor Romney Mitt who started with three dubious assumptions. First, he insisted that basic health insurance could be had for $2,400 a year. As any employer or individual who actually buys insurance knows, minimally decent coverage costs around $4,000 for an individual and double that for a family. The rhetoric about basic “Chevrolet policies” versus “Lexus policies” is blarney. Any policy that costs only $2,400 has astronomical out-of-pocket payments. It simply shifts medical costs to individuals.
Romney's second premise, shared by Senate President Robert Travaglini, was that “market reforms” could liberate hundreds of millions of wasted dollars to redirect to coverage. The health bill, which creates a “Connector” to re-structure insurance markets, will test that assumption. But as long as private insurers remain dominant to take their cut -- for profit, marketing, the costs of cherry-picking healthy customers, second-guessing doctors, and spewing paperwork -- the savings of market reform will remain modest. True market-reform would be single-payer coverage like Medicare, which is far more efficient than anything private insurers offer.
The final dubious assumption is that health insurance is like auto insurance; government should just make everyone buy it. But you can get basic auto insurance for well under a thousand dollars. While there are an estimated 50,000 affluent people in the Commonwealth who could afford medical coverage but choose instead to play Russian roulette with their health, the vast majority of the uninsured and under-insured don't have decent insurance because their employer doesn't offer it and they can't afford to buy it. (How do you pay $8,000 for insurance on a $30,000 income?)
The real free-riders are not improvident low-income individuals who fail to buy insurance (that they can't afford) but negligent employers who let responsible employers and taxpayers pick up the costs.
In addition to Romney's fantastical premises, advocates of universal coverage were constrained by the odd conversion of Travaglini, from a back-bench advocate of single-payer insurance as recently as five years ago into a staunch defender, as Senate President, of the business elite's determination not to be taxed. With Romney and Travaglini dug in, nothing could be enacted without the consent of the business and health-insurance lobbies.
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.
Nonetheless, this combined pool will yield about $1.2 billion, presumably enough to provide comprehensive coverage for everyone with incomes below the poverty line (basically a better version of Medicaid) plus decent insurance with sliding-scale premiums for everyone who earns up to three times the poverty line -- about $50,000 for a family of three. Advocates expect that this will reduce the number of uninsured in Massachusetts from over 500,000 to under 100,000 and will also help a lot of under-insured people get better coverage.
It remains to be seen how all this will work in practice. None of the players quite believe that the total pool of money is sufficient to meet the commitments. The business community fears that pressure will build to increase the token $295 tax on non-compliant employers (“You bet we'll be back,” confirms John McDonough, executive director of Health Care for All.)
McDonough, on the other hand, worries that if resources prove inadequate to promises, the political equation will produce pressures to degrade the coverage rather than tax the free-riders. Meanwhile, the trend will continue of more employers dropping coverage or shifting costs to employees.
So is it the right tent? It was the only one available. Whether the camels nose leads to true high-quality universal coverage, or to more out-of-pocket payments and more families going without care, depends on how the people hold the politicians accountable.
Robert Kuttner is co-editor of The American Prospect.
