|
|
|
 |
|
Home / Washington Business - March/April 2007 / Policy and Politics: Massachusetts plan is not the example to emulate |
|
|
|
 |
|
|
|
Policy and Politics: Massachusetts plan is not the example to emulate |
|
|
|
Written On: March/April 2007 |
|
|
|
Written By: by Richard S. Davis, VP Communications |
|
|
|
Over the next few weeks, we’re all going to hear a lot about various health care reforms. They’ll wear different labels. Right now there’s some support for a Washington Health Insurance Partnership, although its acronym—WHIP—leaves something to be desired.
The main themes peg off something called the Connector. It’s not an Internet dating service or the name of one of Batman’s villains. It’s this year’s "next big thing" in health care reform. And it does have a lot in common with both matchmaking and mischief.
The idea has flown west from Massachusetts, where a revolutionary new plan serves as the centerpiece of that state’s celebrated (and currently troubled) health care reform. The Massachusetts law also imposes an individual mandate, requiring every person to have health insurance, and a requirement that employers who do not provide health insurance contribute to a fund to offset the costs of treating the uninsured.
According to Robert Moffitt of the conservative Heritage Foundation, the Connector is the revolutionary piece of the Massachusetts plan. It is a statewide marketplace connecting individuals and employees of small businesses with health insurance. That’s the matchmaking.
Heritage worked with Mitt Romney, then governor of Massachusetts, to design the plan to get around the "800 pound gorilla of health care policy"—the federal tax code—which lets employers, but not individuals, deduct the cost of health insurance. That inequity, he says, effectively adds 40 percent or more to the cost of insurance for individuals not insured by an employer. The Connector allows them to buy policies with pre-tax dollars.
President George W. Bush proposes a simple correction: a standard tax deduction for health insurance. The change would rectify the inequity and invigorate the individual market, expanding consumer choice and reducing the ranks of the uninsured. Unfortunately, Congress has little interest in making the change. Without it, we’ll continue to see workarounds like the Connector.
In Moffitt’s view, the Connector is only "a way to process the paperwork" to get around the barriers set up by current tax law. He emphasizes that the Connector is not a regulatory agency. It does not negotiate rates and benefits. It does not establish a comprehensive benefit plan. And it is not an instrument to establish mandates. He likens it to the stock exchange, simply a neutral platform for transactions. For the exchange to work properly there must be a vibrant health insurance market. A stock exchange that offers investors only six stocks wouldn’t be much of a marketplace at all.
And here’s the mischief.
Health care reformers often have their own ideas about what the insurance market ought to look like. That’s why insurance plans tend to be heavily laden with mandated benefits, which add costs. Reformers also like to push as many people as possible into a few regulated plans and pools, limiting consumer choice but increasing government’s purchasing power.
It doesn’t always work out.
Romney originally hoped that a basic plan could be offered for $200 a month; the best estimates now put it closer to $300 or more. With the individual mandate taking effect soon, the plan’s administrators are scrambling.
Moffitt calls the pricing problems being experienced in Massachusetts "reality therapy for liberals." Massachusetts imposes too many mandates and did not deregulate the market. That keeps costs high. The Connector didn’t create the problem. It does expose the policy consequences.
While wonkish types call states "the laboratories of democracy" that allow governments to experiment and learn from each other, that’s a bit off. States often act more like five-year-olds on the soccer field, all chasing the same ball at the same time, with little appreciation of patience or strategy. For experiments to have value, we need to know the results.
Let’s be sure that the Connector isn’t just another Massachusetts millstone. If we want the benefits of the matchmaker, we should minimize the regulatory mischief.
|
|
|
|
|
 |
|
