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Critics Blow Holes in Mass. ‘Universal’ Health Plan

by Megan Tady, April 12, 2006

Massachusetts; Apr. 12 – While Massachusetts's new "universal" bill meets with a nationwide round of applause as a possible solution to the growing healthcare crisis, physicians and public advocates point to a long list of faults with a plan they consider a universal facade.

Many opponents say the bill, which was passed by the Massachusetts House and the Senate last Tuesday and is awaiting Governor Mitt Romney's signature, hurts low- and middle-income residents while bolstering profits for private insurance companies. According to a Boston Globe analysis, private insurers paid $7.5 million to lobbyists fighting for the bill.

Although the bill is designed to provide health coverage for Massachusetts's poorest residents and offers a sliding-scale subsidy for residents who earn up to three times the poverty level, some critics say low-income residents should be prepared for disappointment, because lawmakers have drastically under-funded the bill.

"The bill raises almost no new funds but promises to cover hundreds of thousands of new people," noted Benjamin Day, executive director of Mass-Care, a coalition of organizations working toward a single-payer healthcare system for Massachusetts. Day's group estimates that the $170 million allotted to subsidize lower-income residents will only cover about 45,000 of them.

That's less than a tenth of the state's uninsured residents, according to the most conservative official estimate of 523,000 uninsured people in the state. Lawmakers have based that estimate on data from a 2004 state survey that only counted people who were uninsured at the time of the survey and was conducted only in English or Spanish. When people who lacked coverage at any point in the year prior to the survey were added, the number of uninsured rose by 170,000.

"We don't think it was an accurate survey to make accurate policies," said Steffie Woolhandler, a physician at Cambridge Hospital, who also co-founded Physicians for a National Health Program, a nonprofit organization working toward a comprehensive national healthcare program.

What has thrown Massachusetts into the spotlight, however, is not the plan's pitfalls. Massachusetts is the first state to devise a healthcare plan that forces people to obtain health insurance. Those who exceed the income-eligibility threshold for subsidies are required to purchase their own health insurance or face tax penalties and fines. For example, an individual who makes $29,000 a year and whose employer does not provide health benefits must purchase health insurance through a private company.

Under the bill, uninsured individuals who don't purchase health insurance by July 1, 2007 will lose their personal income-tax exemption; by 2008, they will have to pay a penalty equal to half the cost of the insurance plan they could have purchased. Individual coverage typically costs a minimum of $4,000 annually in Massachusetts, and family plans cost as much as $11,000 a year.

Proponents of the bill say it will make insurance universally accessible through as-yet-undefined "market reforms" aimed at holding down costs.

Many organizations were immediately enthusiastic about the bill. "We were big smiles all around [when the bill passed]," said Brian Rosman, policy director of Health Care for All, a healthcare advocacy organization that pushed for the bill. "It's certainly not all that we'd hoped for, and there are some things that are not yet worked out or don't meet what our ideal bill is. But in terms of the legislative process, we're very pleased."

Others, however, see the bill as little more than a scheme to enforce payments to private companies.

"The poorest people did get some benefits from this bill, but the majority of the uninsured in Massachusetts are going to get precious little help," said Woolhandler. "So we don't think this plan is going to give us universal health care. But what it will do is force a lot of middle-income people – who are already struggling to make it in this expensive state – to pay thousands of dollars to private insurance companies."

According to the Massachusetts Department of Health and Human Services, 56 percent of the uninsured in Massachusetts live in households with incomes above twice the poverty level, or $37,700 per year for a family of four.

Defending the plan, Romney has compared the bill with requiring drivers to buy automobile liability insurance. But critics point out that insuring a car against accidents is not exactly akin to insuring one's health.

"Romney has this notion that health insurance should work like auto insurance, but people can choose not to buy a car," said Matt Singer, communications director of the Progressive Legislation Action Network, an organization that supports progressive legislation on the state level. "People can't choose not to have a body."

The bill would also impose a tax on some businesses that do not provide health insurance. But in contrast to the heavy penalties that individuals could face for not complying with the mandate by 2008, businesses employing more than ten people will only face a tax of up to $295 annually for every employee not covered by a company plan.

Although proponents of the bill say it would encourage employers and employees to share responsibility for providing broad health coverage, others see it as an anti-worker tactic.

"This is a rejection of the fundamental healthcare system in America, which is employer-based," Singer said. Traditionally, she explained, people have relied on the bulk-purchasing power of their employers to provide insurance for workers. "But this bill is taking that away and saying, 'Well, actually, we're going to put the burden on the individual, to the extent that we're going to penalize individuals who don't have health insurance.'"

Equally disturbing, said Singer, is the prospect that some residents who simply can't afford health insurance will end up paying the tax rather than buy a plan. "That's not a solution to America's healthcare crisis," he said.

While the bill states that "affordable" health care will be offered to residents, lawmakers were vague about the details of the cost of plans. In addition, officials have so far not indicated what exact incentives they intend to provide insurers to push them to offer low-cost healthcare plans. Critics expect the sheer cost of even basic health insurance will force many to buy low-cost plans that offer watered-down coverage compounded by high fees.

"Comprehensive, affordable policies don't exist," Woolhandler said. "Many people will be forced to pay thousands of dollars for a policy that is only a piece of paper. If someone actually does get sick, the policy will be so full of gaps – like large co-pays – that they could go bankrupt. They'll be facing the worst of both worlds: [being] forced to hand over thousands of dollars to the private health-insurance companies, and finding that they're not actually covered when they get sick."

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