Massachusetts Health Coverage Mandate Should Inform Presidential Candidates

The New York Times on Sunday examined the progress ofthe Massachusettslaw requiring individuals to obtain health coverage, and the lessons it mayprovide for the presidential campaign and efforts in other states. Thereluctance of many Massachusetts residents to enroll in health insurance plans,"along with the possible exemption of 60,000 residents who cannot affordpremiums, has raised questions about whether even a mandate can guarantee trulyuniversal coverage," the Times reports. Under Massachusetts' healthinsurance law, most residents who do not obtain health coverage will lose their2008 state income tax exemption, worth $219, and residents who remain uninsuredin 2008 will face fines of half the cost of the least-expensive insurancepolicy available, probably at least $1,000, according to the Times.

More than 200,000 previously uninsured residents have enrolled in insuranceplans, but state officials estimate that possibly up to twice as many residentshave not enrolled in any type of coverage. Meanwhile, enrollment in thestate-subsidized health plan has been greater than expected, and the state programcould face a $150 million budget shortfall if enrollment continues at itscurrent rate. Concerns also have been raised about projections that stateinsurers plan to increase rates by 10% to 12% next year -- twice the nationalaverage for 2007. According to the Times, such hikes "wouldundercut the plan's secondary goal of slowing the increase in healthcosts."

Jon Kingsdale, executive director of the CommonwealthHealth Insurance Connector Authority, said, "We're going to be very aggressivein trying to get those numbers down to single digits," adding, "If wecontinue with double-digit inflation, I don't think health care reform issustainable."

Implications

The experience in Massachusetts "should be instructive to thepresidential campaigns, and to officials in California, where Gov. ArnoldSchwarzenegger, a Republican, has proposed a similar plan," the Timesreports. Democratic presidential candidates Sen. Hillary Rodham Clinton (N.Y.)and former Sen. John Edwards (N.C.) both have proposed universal health plansthat include coverage mandates, which they say are necessary to guaranteecoverage for all U.S. residents and to spread the country's risk as broadly aspossible. Presidential candidate Sen. Barack Obama (D-Ill.) has proposed ahealth plan that does not include a comprehensive coverage mandate and insteadfocuses on reducing costs, providing subsidies to low-income residents andmandating coverage for children, the Times reports. Obama has said aninsurance mandate cannot be put in place before it is determined that coveragewill 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 governmentprovision of coverage if you hope to achieve universal coverage." Accordingto Kingsdale, "There's good evidence, whether it's buying auto insuranceor wearing seat belts or motorcycle helmets, that mandates don't work100%." 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 asyou can with it" (Sack, New York Times, 11/25).

Massachusetts Businesses

While most Massachusetts businessesoffer health coverage to workers, 518 employers have elected to pay a penaltyrather than offer insurance, as required under the state's health insurancelaw, 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 inemployer-sponsored health plans or the company offers to pay at least one-thirdof workers' individual insurance premiums.

The state required about 62,000 employers with eight or more workers to reportby 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 restsaid they already offer coverage. About 18,000 employers have not yet reportedtheir insurance status, and the state will impose the penalty on businessesthat do not report whether they provide insurance, according to stateCommissioner of Health Care Finance and Policy Sarah Iselin. Iselinsaid the state expects many of those businesses will be exempt from therequirements because they have fewer than 11 employees.

The state will collect about $5 million in penalties this year -- "farless" than the $24 million previously estimated, "which could resultin another financial shortfall for health care reform," the Globereports. The state Legislature originally estimated that the business penaltywould 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. DevalPatrick's (D) administration then downgraded this year's estimate to $24million. Although money from the penalty "is a small part" of theestimated $1.8 billion annual cost of the law, there are other signs of budgetstrains, including the pace of enrollment in the state-subsidized healthinsurance plan -- which could cost $147 million more than expected this year --and proposed federal rules that could reduce Medicaid funding by more than $100million.

Some advocates have called for stricter rules on businesses, saying thatemployers should be required to provide coverage to at least half of their workforces 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. MittRomney (R) have "permitted many employers providing little or no coverageto their workers to escape fair share responsibility. For example, if I offerto pay one-third of the premium and none of my employees take up the offer, Iescape liability under the law even if I'm not covering anybody," adding,"This means that taxpayers are carrying and will carry a larger-than-anticipatedburden." However, state Senate President Theresa Murray (D) said,"Employers are obviously doing their part, and individuals are also takingtheir responsibility seriously" (Dembner, Boston Globe,11/22).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.