Health care reform is hot this election season and presidential hopefuls from both parties appear weekly with promises of reforms that will supposedly solve our system's problems with universal coverage at affordable costs. A recent overhaul in Massachusetts that expanded taxpayer-funded health insurance and requires individuals to purchase government-approved policies is proving particularly compelling to many, not the least because its architect, Mitt Romney, is a leading Republican candidate.
In reality, the Massachusetts mandate provides a poor model for the rest of the country—unless we are looking for an expensive expansion of government. It won’t achieve universal care. It has increased government spending, bureaucracy, and regulation. It most certainly will prompt increased taxes.
The outline of the Massachusetts law is politically seductive: Require people to purchase health insurance, render it affordable, or at least tax-deductible, and fine those who don’t comply. An increased insurance pool, it is argued, will make insurance more affordable, and costs will come down as people who rely on charity care at emergency rooms will be redirected to more cost-effective venues.
If this could work anywhere, Massachusetts is the place. The Bay State started with a high level of the population insured--more than 90 percent. It had already spent substantial sums reimbursing hospitals for uncompensated care from state coffers. It already had a guaranteed issue law, so anyone applying for insurance and able to pay the tab could be accepted. If universal coverage was achievable by government command, Mitt Romney’s Massachusetts was the place to issue it.
It's one thing for politicians to promise that their mandates will decrease costs, it’s quite another when it comes to implementing the plan. In Massachusetts, the initial costs came in higher than expected. Faced with this reality, the bureaucrats in charge of the implementation at the Commonwealth Connector Board decided that universal coverage didn't need to be universal after all, and it promptly exempted 20 percent or one in five uninsured from having to comply with the mandate.
The Connector Board also bowed to political pressure and agreed to reduce the premiums, a move that boosted program costs by $13 million. Some plans are totally free--and have therefore been popular. Other subsidized plans for people earning between 150 and 300 percent of the poverty line will cost people as much as 9 percent of income for just the premium. Not surprisingly, these plans have proven less popular. Of the 79,800 people who've enrolled in the health plans as of June 1 of this year, 59,816 signed up for the totally free plans.
Sally C. Pipes serves as a health care advisor to The Rudy Giuliani Presidential Committee. She is President and CEO of the Pacific Research Institute. She is author of Miracle Cure: How to Solve America’s Crisis and Why Canada Isn’t the Answer.