Health Care For All

Massachusetts passed legislation yesterday that seeks to provide health care for all. Before you say, "of course those liberals are going to tax and spend their way to that goal", go take a look at the details.

The foundation of the plan is the notion of individual responsibility. If you can afford to have health care, you are required to have it. If you don't, you get penalized on your taxes. If you cannot afford health care, the government steps in. Businesses with more than 10 workers are required to provide insurance or will pay penalties.

I am not an expert on this stuff, but this middle of the road approach sounds good to me. An important step to addressing our health care crisis in this country is getting everyone covered so that we can focus on preventive care instead of chronic care.

I hope other states, including New York, take a hard look at what Massachusetts did. It sounds like the way to go.

Comments

[COD]

By requiring everybody to be insured, aren't you in effect driving the demand for health care services up? I would think that people with insurance are more likely to use health care services. So if we increase demand with no corresponding increase in supply, aren't we raising prices, and probably negating whatever savings the state is expecting?

I'm not debating the problem. I've got good insurance and I still think the system is broken. I'm just not sold that insuring everybody is the answer. Actually, I think the answer lies in the opposite direction, with insurance covering less, and more routine care being paid for out of pocket by the end consumer.

[Rogel]

Fred,
The question of health care and government responsibilities are to complex in scope to argue here.
However we can be intellectually honest when we defining the issues. This bill is a lot of things but individual responsibility. If we accept individual responsibility then we are responsible for the results of having or not having Health insurance.
I wonder when Taxes become a valid Method to educate the citizens of a state rather then a method of funding public activity. I do not believe that the government should educate its employers but if it does it is anything but "individual responsibility"

[steve]

A victory, one hopes, for Planet Center -- the increasingly hard to locate place where labels like liberal and conservative, or red and blue, aren't barriers to (gasp!) compromise, then shared vision and action.

I sometimes have issues with my beloved but idiosynchratic Commonwealth of Massachusetts, but this makes me hugely proud of the Bay State.

[Brian Horey]

Fred,

One nuance that is important is that this plan doesn't attempt to fund health insurance on the backs of Mass. businesses. The "penalty" you referred to for businesses that don't provide coverage is a fee of $295 per employee per year. A fairly low burden, one that does not vary directly with payroll, and one that Romney may use his line item veto on anyway. (There is also some fine print in the WS Journal about companies being required to cover some or all of the cost of "free riding" employees who lack coverage and run up emergency room care in excess of $50K - which can probably be insured against at fairly low cost.)

The most important aspect of the plan is that it breaks the link between employment and health insurance and makes it an individual responsibility - as it was all along until employer funded health coverage became an unintended consequence of wage and price controls during WWII. Six decades later we are starting to make some progress on removing that distortion from the health insurance market (on about the same glacial pace as removing rent control from NYC).

It will be interesting to see the fallout from the requirement that young adults buy coverage or else pay a fine of $1200 a year via their income tax return. This will have the effect of exposing the degree to which young healthy people subsidize the cost of insurance for fossils like you and me and our parents. We may see more granular age (risk) based pricing beyond the "same price for everyone below 65" that we have today. It will also be interesting to see how many recent grads of all the colleges up there vote with their feet and move to NH or RI. We might find out what people actually think health care coverage is worth.

It won't solve all the issues with health care, but it will move primary care out of the emergency rooms for alot of people and more life threatening conditions will get caught earlier. It's an important experiment.

[Tom K]

COD -- the reality is that we already do insure everyone, since hospitals won't turn away emergency room patients on the basis of lack of insurance. Providing "real" insurance to everyone means they're more likely to get regular checkups, preventative care and proper medication, which reduces not only the nominal cost of their health care but also provides dividends in terms of greater productivity, quality of life, etc.

This reminds me of some recent studies into the downwards spiral for people who can't afford basic dental care -- as their teeth deteriorate, it spirals into larger welfare costs because they can't ever get better jobs that would allow them to care for their teeth.

[Tom]

Welcome to the end of the small restaurant. Either menu prices are going to go through the roof, or they will just say the hell with it and close the doors.

Not to mention the businesses that will flee the state. The law of unintended consequences will raise its ugly head big time on this one.

[Wille]

Take it from a european who has seen universal health-care:

I think Massachusets has just enacted the worst of both worlds:
Since health-care providers/insurers will no longer have to work to be able to provide services to low-income earners (since the state will pick up any slack), they no longer have to be efficient and can simply increase their prices to the provided minimum, thus increasing the costs at the lower end of the spectrum.

I forecast dramatically increased health-care costs and dramatically lowered health-care standards. Congratulations..

[Dave]

To assert that this is a good solution, as you seem to be doing, is the height of folly.

Surely a VC has a better grasp of market economics than that which you demonstrate in this post.

Or perhaps not.

[annextraitor]

This is an absolutely ridiculous plan, and it is no surprise that Mass. did it.

There are two reasons why health insurance is attached to employment: tax benefits that encourage employers to buy insurance (descendents of wage controls), and heavy minimal coverage mandates. 3rd party pays is the worst strategy for paying for anything, as you get high cost and low quality (plus very screwed up labour markets). Minimal coverage mandates make some sense once you've attached insurance to employment, as individuals have very little choice in or influence over what gets covered (especially back in the era of mass industrial employment). It does, however, massively increase the cost of insurance when sold to individuals and makes it especially unattractive for young and healthy individuals to buy insurance (thus further exacerbating the cost of individual insurance by making it a bad risk pool).

What we need, rather than more regulations and mandatory insurance purchase rules, is a deregulation of insurance. Catastrophic insurance needs to be legal, as it is the only thing that makes sense for most people. Coupled with HSAs for most of what's currently covered by "insurance", and you get consumer control of medical care, competitive cost conscious pressures to reduce the expense of healthcare, and a responsible attitude to healthcare.

There is absolutely no reason why people should have "insurance" that covers completely predictable expenses. Teeth cleaning, cavity removal, root canals, braces, birth control, flu vaccines, antibiotic prescriptions for a cut... These are not as random nor as egregiously expensive as the things that are covered by real insurance. Totalling a car, liability for a crash or accident in a house, tree falling through your house... these are random events that happen to anyone and need to be insured against. Health insurance should be for these types of catastrophes, not for getting the snivels, breaking a leg, etc.

The current system is even more screwed up than motor vehicle insurance (which is especially horrendous in NY and NJ thanks to minimum coverage). It should be legal to offer cadillac insurance for the extremely risk averse and those who are bad at math just as it is legal to buy first dollar collision coverage along with contents, replacement value +++ coverage. But basic insurance like the liability only available in most jurisdictions should be available for health care.

Eliminating the mass use of first dollar coverage will reinvigorate the cash market of medical services and bring list prices in line with actual prices paid as people actually pay cash and start to bargain over the list price. It is ever depressing and never surprising that in all areas but for technology you go for the socialist solution and neglect the power of consumers and markets.

If I was forced to work in Mass, I'd pay the fines, as they look to be several times (if not an order of magnitude) cheaper than commercially avaiable insurane as mandated by the ever so enlightened state of Massachussetts.

[Charlie Crystle]

I introduced single-payer healthcare in PA with a diverse group of business owners, but the bill is languishing in the Senate. And it will, as long as there are no limits to campaign contributions in PA...

[ellen]

Does anyone really know what happens with health insurance in Mass? If you are a small business with few employees you get hit with veey high premiums that businesses with many employees don't have to pay as much for, for the same coverage. Blue Cross increases the premium amount as you age so older people DO pay more for the same coverage younger people have.

The largest gap is with individually purchased plans. As an individual you can only get certain plans. A ppo blue cross plan for an individual can be $1209 amonth or $14,508 a year and there are plenty of co insurance payments made by the individual subscriber with this plan.

A friend is on an old grandfathered plan that is no longer offered, and he pays $718 a month with big deductibles and large co pays and no skilled nursing home payments.

Why do people think that just because you have health insurance you don't pay out of pocket?

As I read your comments most of your readers must work for large companies because they have no idea what insurance costs for either very small businesses or individuals?

Moreover just because you have insurance does not mean you are going to live at the doctor's office. Most people pay into the system for years before they use any part of their benefits.

Having had Blue Cross for many years, I have found that the premiums are astronimical and so many more services are not covered that once were covered.

I only know we have a terrible situation in Mass. and I am not sure whether this will fix the individual plans which need some financial relief. There are many people who cannot afford over $14,000 ayear so they end up on some assistance because even paying $9000 a year means you are exposed to so many deductibles and non-covered services.A serious illness can in some cases be a heavy financial burden since providers charge so much for health care.

We need a more eqitable insurance premium for individuals who are buying their own health insurance.

[Charlie Crystle]

Fred, our PA single-payer bill has been introduced to the PA Senate. Lowers costs for businesses, requires all businesses to pay in, covers everyone regardless of employment, eliminates malpractice insurance, etc etc.

The Mass. bill is deeply flawed; we worked with the originators of the bill, and it was a lot better when it started out. But it's been hacked to death. The insurance industry bullied their way into it and the thing is costly and inadequate.