Like it or not, I am obliged by the insatiable lust of my adoring public to say something about the massive health care reform bill that just passed here in the People's Republic of Massachusetts. The conservative Republican governor is expected to sign it, although he may veto certain line items. If he does, he will no doubt be overriden, so this thing is going to happen.
Now, I'm supposed to be for it, because all my friends were for it - the folks at Health Care for All leading the way. What gives me pause, however, is that a lot of my not so much friends were also for it - including the Gov, the Mass Medical Association (wearing its enrich the doctors hat), the hospital lobby (which spent a fortune lobbying on the bill) and a good chunk of the business "community."
The bill is 145 pages long. I just printed it out but I haven't had time to read it. Based on information from the State House News, the basic ideas are:
- Employers who do not provide health insurance to their workers will be assessed a "fee" of $295/year. This is okay with the Governor because it's not a "tax." Whatever.
- Doctors and physicians get $45 million a year in rate hikes from Medicaid.
- The state will set up an insurance program called Commonwealth Health Care Insurance, that will offer subsidized premiums on a sliding scale for people up to 300% of the federal poverty level. Exactly what the premium and the amount of the subsidies will be apparently remains to be determined by the available funds.
- Everybody else who does not have insurance will be required to purchase it on the open market, so long as an "affordable" plan is available. What constitutes "affordable" will be determined by regulators. People who don't comply will lose their personal income tax exemption and be charged 1/2 the price of the "affordable" product. (What happens when they are hit by a bus is unclear.)
- Based on the assumption that there will be much less need for funds from the so-called "Uncompensated Care Pool," it will be drained to pay for the other stuff.
Okay, this is supposed to result in maybe 95% of citizens of the People's Republic having health insurance by 2008 or 2009 or some such date. Here are some reservations, problems, and questions to which I need answers:
- The employer tax is the most regressive possible kind of tax. It's a tax on jobs, which is even worse than a payroll tax. (It costs the same for a minimum wage worker as it does for an investment banker.) That only comes out of one place -- wages.
- Once the "affordable" product is out there, what's to stop employers from dropping health insurance for their employees? $295/year is still a lot cheaper than paying for insurance.
- How much will poor people have to pay for the Commonwealth Health Care product? Will they be able to afford it, or will it come out of rent and groceries? What will the benefits be? Evidently it can't have a deductible, but can it have co-pays?
Then there's that individual mandate. I can't really explain why it worries me so much without doing a lengthy lecture on the economics of health care and insurance markets, but here are a few points which may or may not make sense to you depending on what you already know.
- An individual mandate drives further fragmentation of the market and encourages insurers to selectively market to young and healthy people and force older and sicker people to pay more. Whether state regulations will prevent this is unclear.
- Think of Medicare Part D -- people are going to have to choose among a bewildering array of options and try to figure out which product is going to be best for them based on what might happen to them in the future.
- These plans will have high deductibles, which will discourage people from getting basic primary and preventive care, and force people who don't have medical educations to try to figure out what medical services to buy or not buy.
- The insurers will try to craft policies to encourage more desirable consumers to enroll. People who have greater medical needs may have great difficulty finding an "affordable" product.
- The mandate is regressive, forcing everybody to pay the same flat rate based on their age, the industry they work in, and other factors considered by actuaries, without regard to their ability to pay.
- The individual mandate will legitimize employers who drop coverage for their workers.
- The mandate will only increase the percentage of health care spending that goes to administrative costs and marketing, instead of health care.
- What's to stop insurers from offering a relatively affordable and decent quality plan now, and then just jacking up the price and cutting the benefits next year? State regulators will be at their mercy because they can always pull out entirely.