Massachusetts spurs health-care debate

By Jason Szep
Reuters
February 22, 2007

BOSTON (Reuters) - Working the phones of a health-care hotline in Boston, Kate Bicego does something that is unique in the country: she explains how even the poorest people can get state-funded health coverage.

Nearly a year into its pioneering health-care law, Massachusetts offers both a way forward and a warning that puts the state at the center of a growing national debate over extending health care to millions of Americans.

"We're handling just an incredible amount of calls," Bicego said at the non-profit Health Care for All. "Everyone wants to know about this new program."

Massachusetts has signed up 105,000 of its poorest people for coverage, or about a quarter of the uninsured, since April, when it became the first U.S. state with near universal health insurance.

The law makes coverage mandatory, bringing it within reach of poorer people through subsidies and industry reforms in an attempt to reverse a trend that has left more than 47 million Americans uninsured as traditional employer-based coverage shrinks. For those in Massachusetts earning less than the federal poverty level of $9,800, coverage is provided free.

Other states are studying the law, with California pursuing even bolder legislation.

Health-care reform, which has foundered at the federal level, is emerging as a hot issue in the 2008 presidential race and President George W. Bush mapped out a plan on Wednesday to help the uninsured buy coverage.

But now comes the tricky part, say policy experts and people involved in Massachusetts' law: designing affordable plans for the many uninsured people whose earnings put them only slightly above the poverty line.

Some also question the law's financial viability over the longer term and whether states with bigger pools of uninsured and greater numbers of poor can replicate it.

"We think this holds together for the first couple of years but after that it's unclear," said Michael Widmer, president of the independent Massachusetts Taxpayers Foundation.

Former Republican Gov. Mitt Romney, who championed the legislation and signed it in April, has begun downplaying expectations and distancing himself from the plan as he seeks his party's nomination in the White House race.

SWELLING COSTS

The Massachusetts law requires all adults to obtain health coverage that meets minimum standards by July 1 or pay a penalty unless they prove they cannot afford it. Businesses with more than 10 workers but without "fair and reasonable" health insurance must pay an annual fee.

Insurers cannot reject people because of poor health and coverage includes some expensive procedures such as in vitro fertilization -- factors that have nudged up the cost.

At least 200,000 people who already own health insurance must buy more to meet the minimum standards, the non-profit Massachusetts Association of Health Plans said. "When you start requiring additional benefits it's going to start adding additional costs," said its vice president, Eric Linzer.

A state board created to help arrange coverage is reviewing those standards following estimates that the average uninsured individual would need to pay $380 a month for health coverage.

Officials say that is too high.

"We are actively engaged with insurance companies to see if we can't find a more satisfactory set of bids than we have right now," Gov. Deval Patrick said in an interview. "I do want this to work."

Without a big drop in cost, healthy people living just above the poverty line may forego insurance because paying the penalty is cheaper, said William Walczak, who runs Codman Square Health Center in Boston's Dorchester neighborhood.

"The penalty in the first year is the loss of your personal tax exemption. For a working poor person that can range from nothing to $150 a year. Why would you buy health insurance at a cost upwards of $3,000 a year if you're relatively healthy and the penalty is likely to be $150?" he said.

NATIONAL MODEL?

Some experts say the law may be hard to replicate nationally because Massachusetts has fewer uninsured, lower-income people than most states.

Ninety-three percent of Massachusetts residents, or 5.9 million people, had health insurance based on a 2004 survey. Of the 460,000 uninsured, about 40 percent earned more than the federal poverty level -- some much more.

"It's hard to know whether it will work as a national model in part because we don't yet have any experience with how successful this reform plan in Massachusetts will be," said Jennifer Tolbert, policy analyst at the Kaiser Commission on Medicaid and the Uninsured in Washington.

Manning the hotline, Bicego reports some early confusion.

"Getting word out that you have to be insured is a huge problem," she said. "Many don't understand that they could face penalties."