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Dick Davis Column: Avoid Rush to Judgment on Massachusetts Health Care Plan |
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Written On: May/June 2006 |
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Written By: By Richard S. Davis - President, Washington Research Council |
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The most worrisome concern of Americans today is health care. According to the March Gallup Poll, it's not crime and violence. It's not a future terrorist attack or immigration. It’s the availability and affordability of health care.
Voters rally to politicians who promise plausibly to relieve their anxieties. So Massachusetts Republican Gov. Mitt Romney may gain an early edge from his state's radical health care reform. For him, it's a high stakes political gamble; for businesses and taxpayers in Massachusetts, it’s a bold policy gambit with uncertain consequences.
The plan combines mandates on individuals and employers with insurance deregulation and subsidies. With the state’s Medicaid waiver due to expire, lawmakers had to do something or risk the loss of federal dollars. House Democrats proposed a pay-or-play scheme with a 5- to 7-percent payroll tax on employers.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, vigorously opposed the payroll tax and endorses the compromise legislation, which includes a $295 per worker assessment on firms that don't offer health insurance. (Lawmakers swiftly overrode Romney's assessment veto.) Employers who provide health insurance already pay into a state "free care" pool through their insurance premiums. The assessment spreads the obligation more equitably, says Widmer. Under the compromise, employers, while not required to provide insurance directly to employees, now "have an obligation to pay the costs of free care to cover [their] employees."
It's a "pretty modest assessment," agrees Richard Lord, president of Associated Industries of Massachusetts. Business didn't start out backing any employer mandates, as Massachusetts is "already a state with a high cost of doing business." As a compromise, though, he says it's reasonable and he generally supports the legislation.
As controversial as the fee is, the individual mandate attracts greater attention. This legislation makes Massachusetts the first state to compel citizens to buy health insurance, which backers liken to the requirement for car insurance. In The Wall Street Journal, Romney defended it, saying "... someone has to pay for health care...Either the individual pays or the taxpayers pay. A free ride on government is not libertarian."
The plan also permits insurers to offer more flexible and affordable policies, with fewer mandates and higher deductibles and co-pays. Major insurers are mostly noncommittal, while some question whether the legislation gives them enough flexibility. Folks with incomes up to 300 percent of the federal poverty line will be subsidized through the existing uninsured care fund.
The conservative Heritage Foundation worked with Romney's team to devise a state insurance clearinghouse to allow individuals and small business employees to buy portable policies and take advantage of federal tax breaks. Heritage's Edmund Haislmaier writes that the Massachusetts mandates may be "philosophically objectionable" but "unlikely to prove onerous in practice." More deregulation of the insurance market and expanded Health Savings Account plans will make it easier for individuals to meet their responsibilities.
Arnold Kling, an economist associated with the Cato Institute, derides "the Massachusetts delusion" on the TCS Daily blog. Reflecting libertarian objections (shared by many business owners), Kling says the plan moves away from market-oriented reform. Worse, it maintains the "myth that policy wonks can, with sheer cleverness, come up with a way to make health care affordable for everyone," without addressing the reasons costs are rising (discretionary spending, technology, and the like).
Already the lines are being drawn. Is the Massachusetts plan a stalking horse for single-payer led by a conservative Republican to applause from the Ted Kennedy wing of the Democratic Party? Or, has the state found that elusive middle ground that will allow market dynamics to help bring about universal coverage?
As Lord says, it's an experiment. Massachusetts has taken the first step on a long policy path, with many changes expected along the way. The unique combination of resources, politics, and external pressures in Massachusetts will limit the applicability of their solution to other states, although major facets of the proposal could travel easily.
The politics of health care dictate that any state-level response will be ideologically impure, a pragmatic — and worrisome — compromise satisfying no one completely. Disregard the early rhetoric. The Massachusetts experiment has just begun. If we're patient, we may all learn something from the experience.
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