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Health Insurance -- Looking For A Model

by Joshua Brustein, May 04, 2006
 
Nearly every person in Massachusetts will have health insurance by next July, officials there claimed recently, thanks to a plan that combines government action with responsibilities for employers and individuals. Maryland is toting its plan to force large employers to provide insurance (actually, the law applies only to Wal-Mart), and the former governor of Oregon believes that his state should abolish Medicaid and Medicare, replacing them with a public health plan that all state residents are eligible for.

State governments have always played a role in providing health insurance. But experts say there is increasing energy coming from state officials, largely because there is so little of it in Washington.

In New York State, almost 3 million people lack health insurance -- six out of ten of those live in New York City. The uninsured have less access to health care, and, consequently, poorer health, than those with insurance. In addition, the large uninsured population also places financial burden on both the governments and private hospitals that serve them.

Unlike some places elsewhere in the country, New York State officials are not hard at work on a magic bullet for universal health care coverage. A bill is advancing through the legislature, however, that would require large employers to insure their workers. The bill's supporters are optimistic its chances, but they also acknowledge that at best it is only a small piece in the puzzle. So as they develop state policy here, officials and health experts have been watching more ambitious plans elsewhere.

A PIECE IN THE PUZZLE?

Across the country, state legislators are considering bills that would penalize employers who don't provide health insurance. Such a law already exists in New York City. The law's scope is fairly limited, but is currently in court because Mayor Michael Bloomberg has challenged its legality.

New York State's more ambitious attempt at an employer requirement is called the Fair Share for Health Care bill. This bill would require all businesses with more than 100 employees to pay $3 per hour per employee for health insurance, an amount based on the estimate of how much it costs actually to insure someone.

Supporters of the legislation argue that some large employers rely on public health insurance programs for their employees, instead of providing health insurance themselves. This is both a drain on taxpayers and an unfair advantage over those employers who do provide health insurance. Advocates for such laws nationwide say that the momentum for employer requirements is already putting pressure on large companies like Wal-Mart to reassess providing health insurance for their employees.

But critics say that it distorts the labor market. In other states employers have found loopholes, or have cut back on the amount of business they do, argues Regina Herzlinger of the Heritage Foundation.

The legislature is planning hearings on the bill for May. Even if it passes, though, its supporters say there will hardly be a reprieve. This bill is intended to keep employers from exploiting Medicaid, said Richard Gottfried, its primary sponsor in the assembly; it "is not meant to be a solution to the uninsured."

A MODEL FOR UNIVERSAL HEALTH CARE?

Massachusetts became the center of attention in April when it announced a plan that it claimed will provide near-universal health coverage for its citizens by the middle of next year. Everyone from the state's Republican governor to the New York Times' editorial page heralded the plan as a possible model for other states.

Democratic gubernatorial candidate Eliot Spitzer recently indicated his "great interest" in the plan, and Republican candidate William Weld (himself once governor of Massachusetts) said it could be a "brilliant political achievement."

Not everyone believes that the plan will work for Massachusetts. Even if it does, say others, there is no guarantee it would work in New York, which has a greater percentage of uninsured workers and a larger population in general.

But there is no question the plan is being watched carefully.

"The project is both novel and ambitious," said Alex Navarro of the Working Families Party, which is working on the Fair Share for Health Care bill and is dubious of the potential of the Massachusetts plan. "Those are qualities that get people's attention."

Massachusetts has patched together a mixture of action by individuals, employers, and the state government to form its plan.

Everyone in Massachusetts must find a way to get health insurance by July 1, 2007 – supporters compare the requirement to the one that says drivers must have auto insurance. Using information from tax returns, the state will determine who does not have health insurance, and fine them.

The success of this approach will rely on whether people actually buy insurance – and that means helping those who have not been able afford it in the past. The state will subsidize health insurance for those whose incomes are less than triple the poverty rate. Massachusetts also plans to expand Medicaid, the government health insurance program for low-income people.

Employers who do not contribute to the health insurance costs of their workers must pay a $295 annual fee for every employee.

The political success of this approach is that it has managed to be all things to all people. The government and business contributions appeal to liberals; the stress on personal responsibility and consumer choice pleases conservatives.

"All Massachusetts citizens will have health insurance," wrote Massachusetts Governor Matt Romney in the Wall Street Journal. "It's a goal Democrats and Republicans share, and it has been achieved by a bipartisan effort."

But everyone didn't really agree on everything.

Romney toted the plan's "market reforms". But he called the portion that required employers to contribute to health insurance "unnecessary and probably counterproductive", and vetoed it. The legislature is expected to override this move.

Meanwhile, critics questioned the market's ability to solve health care problems. Unless there are enormous subsidies, they say, decent health coverage will remain unaffordable for those with low incomes who don't qualify for Medicaid. Some have also described the employer's role as simply symbolic.

"It's hard to imagine that they're going to be able to provide high quality care to everyone with the money they intend to spend," said Mary O'Brien of the New York chapter of the Physicians for a National Health Plan, a group that has referred to the plan as a "cruel hoax."

 


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