Universal Health Care

Thursday, April 6, 2006

NOT FOR the first time, innovative social policy is coming from a state. On Tuesday the Massachusetts legislature passed a bill that would require all residents to buy medical insurance and that would aim to make insurance affordable; the ambition is to extend coverage to more than 90 percent of the state's 550,000 uninsured residents. Other states have gone after the challenge of the uninsured, for example by allowing them to buy into state Medicaid programs at a subsidized rate. Hawaii requires companies to offer health coverage to all employees who work at least 20 hours per week. But Massachusetts would be the first state to impose a mandate on individuals.

The mandate is good policy. Individuals who don't buy insurance forgo routine and preventive care, but they still get free access to emergency rooms, which they may use to seek treatment for non-emergency ailments. Forgoing preventive care is bad for an individual's health, but it's also harmful to others. The cost of "free" emergency-room treatment is passed on to insured patients via higher premiums.

Having embraced the principle of mandatory insurance, Massachusetts had to wrestle with the challenge of making affordable coverage available. This being health care, the state has come up with a complex hodgepodge of fixes. It aims to reach 215,000 currently uninsured workers by sharpening incentives for employers to cover them; companies with 11 people or more would either have to offer health insurance or pay a penalty, and firms whose uninsured employees make extensive use of free emergency care would pay a surcharge on top of that. Next, the plan aims to cover 300,000 more residents by expanding Medicaid eligibility for lower-income residents and by creating a new subsidized state insurance program.

The state's Republican governor, Mitt Romney, lauds the plan as a way of achieving universal coverage without new taxes or a government takeover of the health system. Mr. Romney deserves credit for working with a Democratic legislature to come up with a promising plan, but not for his rhetoric. Though there may be no new taxes, there are new business "fees" -- and most experts predict that these will have to go up to make the plan work. Meanwhile, the bill envisages the creation of a government agency to decide which health plans are "affordable," which ones offer sufficient quality, which, if any, are deviously trying to cherry-pick healthy customers, and so on.

Mr. Romney, who is considering a run for president, may be tempted to argue that his state offers a model for others. But Massachusetts began with two advantages: an unusually low percentage of residents who are uninsured and a state-backed pool of money for compensating hospitals for free emergency care that provided reformers with a ready source of funds. Moreover, it isn't even certain that the Massachusetts plan will work on its home turf. Mr. Romney is thinking of using his line-item veto to reduce those business "fees." That would not be an auspicious beginning.


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