May 6, 2006 | Commentary on Health Care
Call it a "rush to comment."
Pundits wasted no time weighing in when Massachusetts' comprehensive health reform was introduced. Most focused on two small but controversial provisions: a requirement that all residents carry health insurance, and a requirement that some non-insuring employers kick in an annual fee to the state's fund for uncompensated medical care.
In focusing on these two "trees," most commentators missed the "forest:" the creation of a competitive health insurance market that offers a wide selection of plans and empowers consumers to buy the coverage that best suits their circumstances. The target result: high-quality, lower-cost, near-universal insurance coverage.
Doubly frustrating is the fact that much of the discussion of the personal responsibility mandate and the employer fee mandate has occurred without context, to the extent of being shorn of basic facts.
Consider the personal responsibility provision. Certainly, it would be wrong and counterproductive to force individuals to buy coverage in today's fragmented and overly-expensive health insurance market. But the Massachusetts plan fundamentally changes the existing market, partially deregulating it to make coverage more affordable while providing subsidies to ensure low-income residents can afford coverage.
The subsidies require no new tax monies. Federal and state funds currently subsidizing hospitals for treating the uninsured will simply be redirected into buying coverage for the low-income uninsured.
As for the employer fee mandate, it's all symbolism without real substance. Gov. Mitt Romney line-item vetoed that provision, and the legislature voted to reinstate it. But the mandate's real-world impact will be negligible.
The mandate says that employers with 11 or more full-time employees must contribute a "fair and reasonable" amount to their insurance costs or pay a certain amount into the state's uncompensated care fund. The exact amount is yet to be determined, though it cannot exceed $295 per full-timer per year. In the past, the uncompensated care employer surcharge has averaged about $62 per worker, per year, according to Massachusetts Health and Human Services Secretary Timothy R. Murphy. Since the reforms are geared to dramatically reduce uncompensated care cases, the new "employer mandate" might even be lower than the old surcharge.
Rather than focus on the bill's politically galvanizing "mandates," policymakers and pundits should step back and look at the big picture of this landmark reform.
The key element is the new, statewide 'Connector,' a private, state-chartered clearinghouse where workers in businesses with 50 or fewer employees -- and any other individual seeking insurance -- can purchase coverage. A small business simply designates the Connector as its group health insurance plan, and its workers can then choose from the menu of health plans the Connector offers.
Workers can switch plans during annual open season periods, at standard rates, and keep coverage as they move from job to job, with both employer and worker premiums paid on a pre-tax basis.
The concept isn't new. But it's a radical change in direction for state government. Since the early 1990s, virtually all state reform efforts have been failed exercises in trying to design an ideal, one-size-fits-all health insurance benefit package for targeted sub-populations. The most recent examples are the "Healthy New York" plan and Maine's "Dirigo" plan.
In practice, these approaches left consumers with a health insurance market that resembled Henry Ford's auto market -- one offering only one or two models (all painted black), but obtainable from many independent dealers.
Massachusetts has inverted that model, opting instead for a CarMax approach -- offering many different makes and models to choose from, all obtainable through one giant dealership.
Massachusetts has reached a bipartisan agreement to give citizens what they really want: a health system with all the familiar comforts of existing employer group coverage, but with the added benefits of portability, choice, and consumer control. Those are huge positives.
Edmund F. Haislmaier is a visiting research fellow in the Center for Health Policy Studies at The Heritage Foundation.
First appeared in the Washington Times