Health Insurance Expansion Efforts Draw Attention

What has Massachusetts wrought with its new law saying anybody who wants to live in the state must have health insurance? It depends on who you talk to. In California, where a similar proposal cleared its first hurdle last month, some people say Massachusetts — and maybe California — is starting down the wrong path. Others say the Massachusetts plan is the beginning of a solution.

Last month, Massachusetts became the first state in the U.S. to pass a mandatory health insurance law. Uninsured state residents must purchase health insurance through the private market by July 1, 2007, or face penalties on their state income tax forms.

Low-income residents might get some state help with premiums, but they’ll have to pay something for some kind of coverage, even stripped-down, high-deductible policies. Employers with 11 or more employees must provide coverage for workers or pay into a state fund.

Debate Over Terminology

Whatever the Massachusetts plan is, it probably shouldn’t be referred to as universal health care. Several media outlets across the country — ranging from the Miami Herald to NPR — did just that in reporting the Massachusetts Legislature’s approval of the law in the middle of April, followed one week later by the California Assembly Health Committee’s passage of Assembly member Joe Nation’s (D-San Rafael) proposal (AB 1952).

“To say what they’re doing is universal health care because they’re requiring people to buy insurance is really cynical,” Sen. Sheila Kuehl (D-Los Angeles) said. “They’re creating individual mandates forcing people to buy something they already want but can’t afford. They’re doing nothing about costs.”
In the generally accepted vernacular, universal health care is a government-administrated plan that covers everyone equally. So far, it does not exist in this country, but it’s the ultimate goal of many, including California Insurance Commissioner John Garamendi (D). Last year, in a major policy statement, “Priced Out: Health Care in California,” he said, “Universal health care coverage is the only real answer.”

Acknowledging, however, that it would be a long time coming either at the state or national level, Garamendi suggested that California “use interim reforms to further the long term goal of universal health care. Health care reform proposals must align short term reforms to long term objectives. Recognizing that plans to expand public financing are challenging, all interim steps should be consistent with a long term comprehensive solution.”

Nation agrees, sort of. Calling single-payer plans “politically impossible in Sacramento” and not likely at the national level, he said bills like his are the right way to go.

“If incremental change is the best we can do right now, let’s do a good job of it,” Nation said.

Nation’s bill is a splintered-off portion of a larger package of health care legislation that he proposed last year with Assembly member Keith Richman, (R-Granada Hills). Their joint effort dissolved and the two went their separate ways.

Last month, the Assembly Health Committee voted 9-3 in favor of Nation’s insurance mandate, while the same group voted 10-1 against a similar proposal (AB 2450) by Richman. One of the major differences between the two is that Nation’s bill includes “shared responsibility” provisions requiring employers to pay part of the ticket price.

Is the Massachusetts Plan Feasible?

Nobody, including Nation, knows how much implementing the Massachusetts law will cost. An analysis commissioned by the California HealthCare Foundation estimates the plan would cost about $9.4 billion a year in California above what it would cost in Massachusetts.

Nation, who thinks Massachusetts’ guess of $1.5 billion a year is “grossly underestimating” the cost of its program, said $9.4 billion more “could be pretty close” in California. He said the biggest cost will be covering the uninsured. “If we have close to 7 million uninsured, like our estimates show, and it takes $1,000 a year to cover each one, there’s $7 billion right there.”

California’s population of uninsured residents is estimated at between 6.5 million and 7 million people — more than Massachusetts’ overall population of 6.3 million, according to the 2000 census. About 500,000 Massachusetts residents are uninsured.

Differences in the uninsured populations and several other factors — California’s larger population of undocumented immigrants, as well as a higher percentage of employers not offering health coverage — lead some to predict that what works on one side of the country might not work on the other.

And some predict Massachusetts’ plan might not work at all without a whole new state bureaucracy.

“Remember what happened in California with auto insurance,” Kuehl said. “The state mandated everybody had to have auto insurance and the insurance companies raised premiums and made it difficult for some high risk people to get insurance at all, at any price. Then came Proposition 103 (in 1988), which created the insurance commissioner’s office and a whole new set of rules and regulations.”

Kuehl also predicts the Massachusetts “shared responsibility” plan of requiring employers who don’t provide health care to contribute $295 annually per employee might backfire.

Massachusetts employers, faced with a choice of providing health coverage for as much as $300 monthly per employee, might decide that $295 per year instead is a good business decision.

“I think you’re going to see a lot of shuck and jive,” Kuehl said.

And maybe some red ink fairly soon.

A legislative staff analysis of the Massachusetts law estimates the landmark plan will start losing money in two to three years, a situation that could put pressure on lawmakers to increase the state’s contribution, raise the fee on businesses or scale back the coverage of the sweeping bill. The analysis projects the plan will be about $160 million short of its estimated cost of $1.56 billion in the fiscal year that starts July 1, 2008.

A Push Toward Single-Payer Health Care?

Kuehl said shortcomings in insurance mandates eventually will “point out positive factors” in her bill (SB 840).

“Forcing everybody to buy insurance provides no assurance of quality health care, no transparency — you don’t necessarily know what you’re paying for, it’s not truly affordable and it really does nothing to address the rising costs of health care,” Kuehl said.

Nation said his bill does include language to address rising costs.

“My bill says electronic medical records should be mandatory, which will reduce costs,” Nation said. “And we have several specific provisions to improve efficiencies of health care delivery that will reduce costs.”

If Democrats Nation and Kuehl are so far apart in finding solutions, imagine the divide between Republicans and Democrats. Some hope part of what California learns from Massachusetts in this episode is the power of compromise. Massachusetts Republican Gov. Mitt Romney, considered a likely GOP candidate for president in 2008, worked with a Democrat-dominated Legislature to get the groundbreaking law on the books.

Bruce Bodaken, president and CEO of Blue Shield of California and past president of the California Association of Health Plans, said California “can learn from Massachusetts that things get done if people compromise.” He urged California lawmakers to “embrace two critical elements of the Massachusetts plan. First, Massachusetts mandated shared responsibility,” and, second, “Massachusetts made coverage affordable,” Bodaken said. He said the problems in California are “much tougher” than they are in Massachusetts, “but we must succeed.”

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