Yes, this is a shameless plug! (And no, I don't get any money for article sales.)
The Fall 2008 issue of The Objective Standard will be carrying my article on mandatory insurance and the Massachusetts health plan entitled, "Mandatory Health Insurance: Wrong for Massachusetts, Wrong for America".
The full text is only available to subscribers, but nonsubscribers can purchase copies of the PDF file here for only $4.95. The print edition of the journal will also be available for purchase in many Barnes & Noble bookstores.
For those who are interested, here is the free preview of the opening section:
"Mandatory Health Insurance: Wrong for Massachusetts, Wrong for America"
by Paul Hsieh, MD
The Plan and Its Popularity
In April 2006, Massachusetts became the first state in the nation to require that all of its residents purchase health insurance. This mandatory insurance was the centerpiece of a "universal" health care law hailed by analysts as an "innovative bipartisan plan."[1] Republican governor (and former presidential candidate) Mitt Romney proclaimed that "every uninsured citizen in Massachusetts will soon have affordable health insurance," that costs would be reduced through "market reforms" encouraging "personal responsibility," and that the plan would require "no new taxes... and no government takeover."[2] The plan had support from organizations and individuals across the political spectrum, including the conservative Heritage Foundation, the liberal group Health Care for All, and Democratic Senator Ted Kennedy.[3]
The Massachusetts plan was, in part, a response to today's health care costs, which are rising twice as fast as inflation, making insurance increasingly unaffordable for many employers and individuals.[4] Currently, approximately 47 million Americans have no health insurance.[5] In an effort to solve the problem in their corner of the country, Governor Romney and the Massachusetts state legislature enacted this plan with the twin goals of reducing the cost of health care and guaranteeing coverage for all Massachusetts residents.
The Massachusetts plan consisted of the following major elements: The state would establish a quasi-governmental authority known as the Commonwealth Health Insurance Connector (or "Connector") to serve as a clearinghouse through which individuals would be able to purchase state-approved insurance plans. Every resident would be required to purchase a health insurance plan, either from a private insurer or though the Connector, with stiff financial penalties for those who failed to comply.[6] Residents who could not afford insurance would have their expenses subsidized by the state in part or in full, depending on their income. Employers with more than ten employees would be required to provide health insurance for their workers or pay a special fee to subsidize coverage for low-income individuals.[7] In theory, the plan would lower individual patients' insurance costs by
enlarging the pool of insured patients. In particular, younger, healthier patients (who often choose not to purchase insurance) would be required to do so, thus paying a portion of the health costs of the larger population.[8]The plan was attractive to liberals and conservatives alike. Liberals embraced it because it supposedly promised "universal coverage" without requiring them to support politically risky Canadian-style "single-payer" socialized medicine.[9] Conservatives embraced it because it supposedly encouraged "personal responsibility" while preserving a "market framework" for health insurance.[10]
For these reasons, mandatory health insurance has become popular with politicians in both major political parties, including Republican California governor Arnold Schwarzenegger and former Democratic presidential candidates Hillary Clinton and John Edwards.[11] The idea has been endorsed by the National Small Business Association and the National Business Group on Health (an association of large businesses).[12] Several states besides Massachusetts and California--including New Jersey, Ohio, Rhode Island, Pennsylvania, Illinois, and Colorado--have considered or are considering some version of mandatory health insurance.[13]
Yet two years after its inception, the Massachusetts plan has failed to achieve either of its goals. The plan did not lower health care costs, nor did it achieve universal coverage. Thus, given the growing popularity of mandatory health insurance, Americans would do well to take a close look at the results of the Massachusetts plan--and, more importantly, at the reasons for those results...
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Endnotes
Acknowledgments: I would like to thank Diana Hsieh, Lin Zinser, and Brian Schwartz for their enormously helpful suggestions and advice.
1 William C. Symonds, "In Massachusetts, Health Care for All?" Business Week, April 4, 2006.
2 Mitt Romney, "Health Care for Everyone?" Wall Street Journal, April 11, 2006.
3 Edmund F. Haislmaier, "The Significance of Massachusetts Health Reform," Heritage Foundation Web Memo #1035, April 11, 2006; Marilyn Werber Serafini, "The Mass.-ter Plan," National Journal, June 10, 2006, pp. 3-4.
4 Milt Freudenheim, "Health Care Costs Rise Twice as Much as Inflation," New York Times, September 27, 2006; Julia Appleby, "Health insurance premiums vault past inflation," USA Today, September 11, 2007.
5 John Donnelly, "47 million Americans are uninsured," Boston Globe, August 29, 2007.
6 "Health Care Reform Act of 2006," http://www.mass.gov/agr/news/health_care_reform_act.htm; and Boston Business Journal, "Mass. health insurance penalties to spike in '08," December 31, 2007, http://boston.bizjournals.com/boston/stories/2007/12/31/daily4.html.
7 Serafini, "Mass.-ter Plan," p. 4.
8 Betsy McCaughey, "The Truth About Mandatory Health Insurance," Wall Street Journal, January 4, 2008.
9 Christopher Lee, "Simple Question Defines Complex Health Debate," Washington Post, February 24, 2008.
10 Edmund F. Haislmaier, "The Massachusetts Health Reform: Assessing Its Significance and Progress," Heritage Foundation Lecture No. 1044, June 28, 2007, pp. 6-7.
11 Kevin Sack, "Massachusetts Faces a Test on Health Care," New York Times, November 25, 2007.
12 Kent Hoover, "Business groups split over individual health mandate," Silicon Valley/San Jose Business Journal, February 29, 2008; "Big business backs health insurance," Associated Press, January 30, 2008.
13 David W. Chen, "New Jersey to Consider Health Plan to Cover All," New York Times, March 18, 2008; "Healthcare Group Recommends 'Individual Mandate' on Health Insurance," Gongwer News Service Ohio, March 26, 2008; "R.I. studying Mass. health plan," Barre Montpelier Times Argus, November 26, 2007; Laurie McGinley, "Should Insurance Be Mandatory?," Wall Street Journal, June 30, 2007; Reed Abelson, "Mandatory Coverage Is Easier Said Than Done," New York Times, June 11, 2007; Tim Hoover, "Health coverage gets new push," Denver Post, March 28, 2008.
We look forward to hearing more about Dr. Hsieh's full article and argument.
Many people with varying perspectives can oppose the adult health insurance mandate being implemented in Massachusetts on various economic or philosophic grounds.
But it's wrong to critique the plan now, based on the fact that so far it hasn't lowered health care costs and that it hasn't achieved universal coverage. Both of these are straw arguments. These weren't the goals.
In any case, it's too early to make a judgment.
The mandate penalties are still being phased in. The 2007 penalty was token. The 2008 penalty won't get paid until April 2009. It's not until then that one can say the mandate has begun its implementation. Even after April 2009, most social change would occur over some period of time. So it's too early to evaluate.
Other parts of the plan, such as the small business Commonwealth Choice, won't be implemented until Jan. 2009.
In any case, any objective observer knew from the start that "universal" coverage was never the actual goal to judge the plan by. While politicians might have casually described the plan as universal, from the start it was always acknowledged that there would still be uninsured residents even after full implementation. The law itself provides for exemptions from the mandate, i.e, remaining uninsured. The law also continued the "Pool," the charity care reimbursement for uninsured. So it's unfair to judge the plan as a failure in its goals because it's not leading to universal coverage (it's fair to judge the plan in the abstract as not universal).
It is undeniable that so far, maybe halfway into implementation, the MA health reform plan has made remarkable achievements, not matched by any other state. Roughly 2/3 of the uninsured were covered as of spring 2008. MA had the lowest 2007 uninsurance rate, according to the Census.
Reducing costs was never considered a goal. At best, there was some hope, never definitive, that it would lower the rate of premium growth compared to other states. It's still too early to judge this. There are way too many confounding factors.
The reform did dramatically lower the cost of individual coverage, which went down by half or more. I hope that fact is included in the article.
So evaluate based on your values, or on economics, or other factors. But don't claim that it hasn't achieved its goals. In terms of goals, the plan is a success, so far.
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