May 6, 2006
By Edmund F. Haislmaier
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
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
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
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
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
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
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
Haislmaier is a visiting research fellow in the Center for
Health Policy Studies at The Heritage Foundation.
First appeared in the Washington Times
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.
Edmund F. Haislmaier
Senior Research Fellow, Health Policy Studies
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