This structure will produce a fiscal disaster. Considering the high premiums for those who have to pay, many will opt to remain uninsured. The fine of $216 will be more attractive than the premium. Politicians will face strong pressure not to enforce the mandate if the fines increase. Indeed, before the program started they exempted 20 percent of the target population.
At the same time, the premium subsidy makes the plans a bargain for individuals who expect to consume large quantities of health care. The insured will be older and less healthy than the average citizen. Spending will skyrocket. The taxpayer will be forced to pay or services will be rationed.
So far, this downward spiral appears to be well underway. The average age for those enrolled in the free plans is far younger than that of the plans for which a contribution is required. Not surprisingly, usage is higher for the paid plans as well.
And the doctors, they may like the plan in the short run as they will receive higher reimbursement rates for seeing Medicaid patients but in the long run, the picture is not as bright. As costs rise, they will be faced with payments being limited, rationed care, more bureaucracy, and less freedom on how they want to practice medicine.
Massachusetts may be able to limp its plan along for a few years with a combination of tax increases on employers, restrictions on enrollees, and price cuts to providers. It will not, however, achieve universal health insurance or a meaningful structure for cost control. Its most likely legacy will be to have created another government health bureaucracy, ratcheted up taxpayer health spending, and bolstered calls for a complete government takeover of health care.