OLD STORY
Middle class in crosshairs of health reform’s cost

Sunday, September 20, 2009

Massachusetts is being held up as a model for national health care reform. An honest examination of that state’s experience should accompany the debate in Congress.

“Massachusetts has been lauded for its healthcare reform,” wrote Dr. Suzanne L. King in the Boston Globe earlier this year, “but the program is a failure.” King listed the five criteria the Institute of Medicine calls essential for health care reform: Coverage must be universal, not tied to a job, affordable for individuals and families, affordable for society, and provide access to high-quality care for everyone. “The state’s plan flunks on all counts,” she wrote.

King noted that Massachusetts now has the highest health care costs per person — not only in the country, but in the world.

According to the Massachusetts Taxpayers Foundation, the state’s costs for expanded coverage have swelled 70 percent, from $1.04 billion to $1.75 billion, in just three years. Insurance premiums are rising 8 percent to 12 percent this year, double the average increase across the nation. And the state has raised taxes $1 billion and still can’t keep up with the rising costs.

We can thank the Republican former Gov. Mitt Romney and the Bay State’s Democratic legislature for providing such a clear preview of what Congress is preparing to foist on the nation.

Montana Sen. Max Baucus, chairman of the Senate Finance Committee, has released the long-awaited Senate version of health care reform. He lost the Republicans in the committee’s “Gang of Six,” in part because of the projected cost, and he lost many Democrats by not including a government insurance option. Baucus sought compromise, but the details pushed the players apart.

Finance Committee member Ron Wyden of Oregon, a Democrat on the committee who was not part of the negotiations, doesn’t like the bill. He said, “Many middle-class people would pay more than they are paying today and would face the prospects of a penalty if they don’t comply.”

That penalty, for not purchasing health insurance, would be a fine of $950 for an individual, up to $3,800 for a family.

This is one area where the Massachusetts experience is instructive. Despite the plan’s insurance mandate, tens of thousands of residents refuse to take out insurance, electing to pay the fines instead. So much for universal coverage.

That dilemma could be health care reform’s Achilles heel. The plans before Congress would require insurance companies to offer affordable insurance to everyone, regardless of preexisting conditions. The only way insurance companies could make that work is to bring everyone into the pool.

But as the Massaschussetts experience shows, the no-insurance penalty combiined with a universal coverage requirement can actually lead to fewer, not more people, buying insurance. For many people, it’s cheaper simply to pay the fine. They know that if they become seriously ill or are injured, they cannot be denied coverage. They buy it when they need it.

This is a tendency even now with the young and healthy, who make up a significant number of the uninsured. They choose to forego buying insurance when they are just starting out because money is tight and they presume any major health care needs lie years down the road.

Fining young people into compliance in a system such as Baucus proposes is a toxic political task. To work, the penalty must be steep.

How has Massachusetts solved the dilemma? It hasn’t. Although many of the state’s poor now have insurance, tens of thousands of middle class residents remain uninsured. By choice. And, with not enough “wealthy” residents to foot the bill for this experiment, the middle class is faced with soaring premiums — and higher taxes.

Undissuaded, Congress charges ahead. And as usual, the middle class is facing the brunt of the burden.