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Bill of Health
Massachusetts's legislators recently passed legislation designed to implement universal state health care coverage. The law has garnered broad acclaim from editorial boards across the country as a bipartisan compromise led by the Governor Mitt Romney, a Republican, and the state legislature, which is overwhelmingly Democrat.
The bill hinges on a mandate requiring individuals to purchase health insurance, although it also contains subsidies for low-income residents and a schedule of fees and fines designed to prod businesses and individuals to buy into the system. As advertised, new coverage for hundreds of thousands of individuals will be financed with existing funds and a relatively small ($125 million) infusion of new cash.
Kling, writing in the Wall Street Journal today, is very skeptical that the math in the plan actually passes arithmetic 101:
The plan includes tax incentives and penalties for employers and individuals to get everyone covered by a health-care policy. It also promises affordable health insurance for people with modest incomes, under a program yet to be negotiated between the state and private insurance companies. Nevertheless, three numbers stand out: $295, the annual penalty per worker a company must pay to the state if it does not provide health insurance; $0, the deductible on the typical state-subsidized health-insurance policy under the plan; and $6,000, the average annual expenditure on health care for a Massachusetts resident. ...
The law also envisages a "health exchange" that will certify low-cost plans on offer to businesses and individuals. The temptation for interest groups to pad the plan and take advantage of state subsidies will probably be impossible to resist.
Bay state policymakers are probably going to learn that expanding access to health services is easy; cutting back on those services once they prove too expensive is much harder. Massachusetts residents will also still be limited to in-state insurance options, limiting their ability to shop for the best combination of price and value. On the whole, policymakers and pundits should approach Romney's plan with extreme caution. Still, heaping either praise or blame on the plan now may prove to be premature—it isn't scheduled to go into effect until July 2007.
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