Article created by the The Century Foundation.
Yesterday, the Massachusetts House and Senate overwhelmingly passed a bill that would make the state the first to require all residents to have health insurance coverage. If signed by Governor Mitt Romney and successfully implemented, the Bay State could be the first U.S. state to achieve near-universal coverage. (Hawaii has a universal access law and employer coverage mandate on the books, but hasn’t come close to getting all its residents covered.)
The bill’s passage, which happened with stunning speed, boosts tremendously the cause of national universal health insurance coverage. As Governor Romney—whose presidential aspirations, not incidentally, also got a boost—rightly pointed out, it helps trump the perception that universal coverage must go hand in hand with big tax hikes and big government expansions. This perception (though substantially false) helped sink the Clinton plan. The Massachusetts bill calls for just $125 million in new state spending and finances the program through a combination of federal reimbursements, payments by employers who don’t offer coverage, and new premiums or tax assessments from individuals who could afford coverage but choose not to buy it.
Even more impressive than the plan’s intricate financing is the consensus, even if it proves short-lived, among legislators, health industry, and public advocacy groups that the bill is worthwhile. The head of the Massachusetts group that has promoted the main single-payer alternative to this approach called it “an important, meaningful step forward.” The CEO of Tufts Health Plan, one of the state’s biggest insurers, said that the bill was “definitely a major advance.” To be sure, Tufts and other insurers stand to gain members through new subsidized insurance plans, and big employers won’t have to pay a steep payroll tax if they don’t offer coverage. But even though industry lobbyists and health reform advocacy groups lobbied fiercely on behalf of their respective plans, they were willing to compromise on a good alternative that pleases no one completely. At least for the moment, getting care to those who need it took precedence over ideology.
Such flexibility needs to carry over to a national debate.
Perhaps it will.
Policy types are salivating over seeing how several key features of this type work in practice. For instance, a number of analysts (including
this author) have recommended that individual mandates and a government agency that oversees and works directly with private health plans (this umpire’s role is called the Connector in this bill) be prominent features of a workable national plan. These ideas now exist mainly on paper and not in real life, but they are well worth trying.
Those are the headlines, here’s the fine print. Massachusetts has several features that are very advantageous to reaching universal coverage. These will be hard to replicate in many states. The state has very high rates of public and private coverage and one of the lowest percentages of uninsured residents in the country. Just over 11 percent of the state’s residents now lack coverage, compared with over 16 percent nationwide and as high as 25 percent in some states. Rates of private coverage in Massachusetts also substantially exceed the national average. Almost two-thirds of employers offer health insurance to their employers, compared with 56 percent nationally. With fewer people outside the existing system, the costs of getting to universal coverage are more modest.
It remains to be seen if employers will stay on board if health care costs continue to go up and the costs of covering employees or paying penalties rise. Many employers continue to complain that the bill does little to contain the cost of care. This could be a huge red flag. For the moment, Romney is finessing the issue by saying that the “pay or play” provisions will affect relatively few employers, and that he will veto any effort to make employers pay a larger share. But if employers start dropping coverage or if the financing seems to falter, this issue will be revisited early and often.
Ambitious state health reform efforts have foundered in the past because state revenues fluctuate significantly from year to year, and states cannot readily run budget deficits to smooth over ups and downs in the revenue cycle. In 1988, the Massachusetts legislature actually passed another universal coverage plan that never materialized because it was never funded. (Some of the public health program expansions that survived this truncated legislation were building blocks for the current reforms.) Uncertainty over sustained revenue streams is one of several reasons—the constraints of federal ERISA laws on seeking employer mandates is another—why it would be hard to reach universal coverage nationwide on a state-by-state basis. Massachusetts may prove to be no exception. As Eileen McNamara
correctly notes in the Boston Globe, without an earmarked source of revenue the promise to subsidize care for the poor—a critical element of the plan—easily could fall prey to annual budget politics.
However, these concerns pale in comparison to the main take-home message. Massachusetts brings to national attention a vital trend—state leadership on health care reform—that hasn’t gotten enough front-page play. Inside the Beltway, leaders express gloom about the prospects for comprehensive reform and dither over relative minutiae such as annual Medicare payment updates to providers. From Massachusetts to Illinois (Healthy Kids) to Maine (Dirigo health plan) state legislators are implementing actual legislation that moves toward universal coverage. It’s time for these smaller steps to galvanize a national debate.