Massachusetts Adopts Universal Mandatory Private Health Insurance Plan

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Massachusetts will require all of its citizens to buy private health insurance and subsidize those too poor to afford it. The Massachusetts plan incorporates features of a proposal for mandatory universal private insurance I made a while back. One feature that seems to be lacking in the Massachusetts legislation is rolling Medicaid and SCHIP monies into vouchers that allow the poor to select the private health insurance coverage they want. Of course, the devil is in the details, but ideally by experimenting with various health insurance systems on a state by state basis, the rest of the country can learn what works and what doesn't. Still, this could be a way to avoid national single payer government provided health insurance, a.k.a. completely socialized medicine.

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  1. Is there a big demand from Medicaid recipients for options that offer fewer services and much higher administrative costs for the same money?

  2. Still considerably worse than “I don’t want insurance anyways”. But that wouldn’t be deemed “good for me” by those who think they know best.

  3. Is universal health insurance really any better, market-wise, than a single-payer system? It’s still a ‘somebody other than consumer’ payer, isn’t it?

    What am I missing?

  4. lunchstealer,

    What am I missing?

    Ideology.

  5. Still, this could be a way to avoid national single payer government provided health insurance, aka, completely socialized medicine.

    It is hard to unpack the disingenuousness from the strawmen here.

    I suggest, if you have any interest other than preaching to the converted, that you address actual issues and address the actual concerns, counterarguments and evidence with regard to health care.

  6. What if I choose not to buy any health insurance at all? What about children whose parents are too irresponsible to buy insurance? What if, because I’m an idiot, I miss a payment?

    To compare it to car and homeowner’s insurance is unrealistic. Don’t pay your car insurance, you get arrested for driving without insurance. Don’t pay your homeowner’s insurance and the bank takes your house. Don’t pay your mandatory health insurance? Do doctors let you bleed to death on the emergency room floor?


  7. What am I missing?

    Comment by: lunchstealer at April 5, 2006 10:58 AM

    It depends on who is getting paid. Pharma and Healthcare corporations being paid off by forcing the citizenry to buy insurance is ok because the industry lobbyists will in turn be paying off the legislators for screwing the citizenry.

  8. Um, Ronald, I don’t suppose you own any stock in insurance companies, do you?

    Because we can’t possible address the merits of your views until we know.

  9. Lunchstealer: Nope–the idea is that consumers will be able to shop around for as much health insurance as they want once they’ve met the mandatory minimun. Under single payer, everybody gets the same equally bad health care. See my article on Canadianizing the Golden State for some more details.

  10. I saw this on the news this morning. It really seems like nothing more than a shakedown of businesses. If a business doesn’t provide health insurance to all its employees, they have to pay a $295 fine per year. I mean, if the state was serious about health care for all, why not make the fine $295,000? So what will happen is that lots of companies will pay the fine instead, and that money will go to __________(big cookie jar).

  11. theCoach: Why don’t you actually read my proposal before putting words in my mouth? You might find that I actually address some the alleged counterarguments to which you so coyly allude. Or do you really expect to hear them all in a blog post? Isn’t that what links to other articles is for?

    RC Dean: Thanks for asking. I own no health insurance company stocks nor hospital stocks and yes, as any H&R reader/poster knows already I own minor amounts of stock in several biomedical company. Now that that’s done, surely you’re correct that people can now begin discussing the actual merits of mandatory private insurance. 🙂

  12. There are basically two ways to improve the US health insurance market in the US.

    One way is to consolidate the customers to thereby diminish the amount of market power the healthcare supplier oligopoly has. That is what is being proposed here. i think of this as the 2d best solution.

    Another way is to decentralize the healthcare oligopoly into a competive market to thereby diminish the market power of the suppliers.

    The best thing of all would be if some states try Bailey’s preferred solution and other states try mine and we see who ends up with the best results. I’m with Ron, this Massachusetts thing is potentially a step in the right direction.

  13. Mike
    What if I choose not to buy any health insurance at all?

    In that case, they will do what they do best-
    “Individuals who can afford private insurance will be penalized on their state income taxes if they do not purchase it.”

    If I were a business, I would gladly pay the $295 per employee/year to not have to deal with the health care benefits of my employees.

  14. My wife thinks the big effect of this is that a lot of companies that used to offer health care will take the $295/year option to have official permission to not do so any more. Companies offer health care these days largely because of a social expectation than any sort of rational calculus; given the official sanction of the state for not offering health insurance, they’ll take it.

    My view is that given how closely MA regulates what insurance companies do and don’t provide, the “competition” and “choice” offered by this plan are illusions. Citizens will be required to choose between a number of basically identical plans, and the plans will lobby the state to regulate them into closer and closer indistinguishability so as to solve their collective action problems and form a price cartel.

    If we’re both right, it will be socialized medicine by way of a semi-private cartel, combining all of the big disadvantages with none of the meager benefits.

  15. Dave W.,

    If a competitive market is all your shooting for just get the government out of the health care business altogether and allow free entry. The free market does the rest.

  16. I don’t get this plan.

    If you make over 48 K/year you have to buy insurance or else you face tax fines and penalties. But you don’t get a subsidy or a sliding scale, you basically are forced to pay the market rate out of pocket.

    If an employer has more than 10 empployees and doesn’t offer insurance, the employer has to pay the state $295/year/employee. If said employers workers make more than $48K, they get absolutely no benefit whatsoever.

    It seems like anyone who is making around 50K -60 K /year is gonna get screwed if they are all ready tight for money.

    (Note some number pulled from this article)

    What am I missing? How does this plan not force the hand of the working middle class and potentially screw people whose budgets are tight?
    How can the government mandate to people “who can afford it” to buy insurance?

  17. Dave W.

    A vast majority of the issues would be solved by eliminating the health care deduction given to businesses. The biggest problem to overcome with market oriented healthcare is the inelastic demand curve related to emergency care. The MA plan does not address that, and neither does yours.

  18. What “metalgrid” and “sage +P” said. “Mandatory” nearly always = Bad.

    Do doctors let you bleed to death on the emergency room floor?

    Doctors reap great financial rewards from their State sanctioned/enforced monopoly. So, as far as I’m concerned, they can “repay society” by providing nominal emergency care for free, as in: they don’t get paid for it.

  19. I remember Ron mentioning that health insurance should be mandatory, such as how auto insurance is required for those who drive and property insurance is required for homeowners. I’ve never believed that companies should be forced to provide health plans to their workers, for reasons that affect both the employer and employee.

    This development in Massachusetts is an interesting one. I’ll want to see how it plays out and how other states follow its lead.

  20. et the government out of the health care business altogether and allow free entry.

    Substantially this is my plan, although I don’t think there will be free entry, or a free market, absent some substantial antitrust enforcement.

    My belief (though I can’t prove it) is that doctors managed to consolidate in the first place precisely because “insurance” is exempt from antitrust scrutiny.

    But, yeah, my preferred plan always has been that the government stays out, except for antitrust to ensure free entry and consumer information requirements (eg, those warnings on the cigarettes). Despite these qualifications, my preferred plan always has meant less gov’t involvement, and also that what gov’t involvement there is be uber-transparent (like an antitrust lawsuit or a warning label).

  21. What am I missing?

    ChicagoTom, you accurately describe some of the ways in which this plan is such an unholy mess that you have to believe it was designed to fail. Probably as a prelude to yet another doomed venture into single-payer.

    Doctors reap great financial rewards from their State sanctioned/enforced monopoly. So, as far as I’m concerned, they can “repay society” by providing nominal emergency care for free, as in: they don’t get paid for it.

    How is requiring someone to provide a service to someone else, on demnand and for free, not slavery, again?

  22. matt & Ghotissa: Just for the record, yours is the 1st best alterntive and mandatory private health insurance is a 2nd best alternative. I would prefer what you’re suggesting, but I’ve very afraid that we’re headed the other way (single payer) and offer my proposal as a way to at least maintain private health care and some competition.

  23. A vast majority of the issues would be solved by eliminating the health care deduction given to businesses. The biggest problem to overcome with market oriented healthcare is the inelastic demand curve related to emergency care. The MA plan does not address that, and neither does yours.

    I certainly did advocate getting employers out of healthcare. Most recently on this forum yesterday. I know it is harder to track all my posts now that I am taking slightly greater anonymity related precautions, but honest, I did.

    On that same thread, I also tackled the inelasticity versus elasticity of emergency care. Basically, I think this curve would get more elastic is insurance did their actuarial processing honestly. yeah, you get your emergency care, but you will also get something of a rate hike if you dare to live. that kind of thing.

  24. Ron, I did read it.

    Just for example:

    When it comes to health care policy, Republicans are Democrats Lite. “The Republicans always say, ?We?re going to give you the same program, only less than that proposed by the Democrats,?” says Tom Miller, former director of health policy studies at the Cato Institute. “Republicans just offer cheaper, more apologetic programs.” Witness the new Medicare drug benefit, which John Kerry immediately denounced as “a raw deal for America?s seniors and a big windfall for the big drug companies.” No matter how much they give away, Republicans can never give away enough to satisfy the demands of the nationalized health care advocates.

    This is indicitive of the problem with your approach — your metric here is spending, and only govt. spending. Forget the the actual Democratic plan cost less than then Republican proposal (because of give aways to big drug companies).
    Everything is black or white with you – black being government money, white being private money. This is why I quoted your line “national single payer government provided health insurance, aka, completely socialized medicine”, because it completely obscures actual policy arguments in favor of ideological fault lines.

    There is a difference between single payor and government-provided. There can be blends of government provided and private insurance. In fact, the US currently spends more on government funded health care than many countries with universal care, and we have what is mostly, a private insurance system.

    This:

    The answer proposed by John Kerry and John Edwards is to continue the creeping socialization of medicine that Americans have been experiencing since the 1960s. That course would mean the end of private health care in the U.S., …

    is accurate in a Bushian sense. Technically, it is true, but it is hard to read it without being misled. The answer proposed by John Kerry, involved many things, including a government provided insurance for insurance companies faced with catastrophic costs – from memory I believe over $50,000. The design of that is to address problems with the insurance model, not to replace them. As with most things, to make a straightline projection that this (implicity) leads to the end of private health care is overreaching.

    But the increasingly successful campaigns to privatize Social Security and expand school vouchers suggest a way out: mandatory private health insurance.

    I would suggest that your predicting ability here is suspect. From my view of the world privatizing Social Security was not “increasingly succesful”. And to quote Bill Thomas, one of the architects of the Medicare Part D fiasco, is anotehr indicator that your assumptions about how things will work out, just ain’t right.

    Maintaining our private medical system is vital because American health care and medical science are the most advanced and innovative in the world. If a national single-payer health care system is adopted, most medical progress will be stopped in its tracks. The proposal for mandatory health insurance offers a way to maintain our private system, expand consumer choice, lower costs, and allow medical progress to continue.

    Now, there may be something to this. However, after stating “There?s no reason to put off the campaign for a mandatory private system until we?ve worked out all the details” you may want to allow the same latitude for people working from a different angle.
    The way in which we fund medical advances is definitely inefficient, and allowing for changes to that system may actually improve the rate of research, and better align it with our values.

    I apologize for the rather shoddy response – you are correct that a blog post is too short to really get into details, and I do not have the time any way to get into those details. My basic point, is that the sense I get from reading you piece is basically a mischaracterization of competing ideas coupled with cherry picking ( in a strange example, you bring up the third reason for concern in your article, the cost of paperwork, is not directly responded to [at least I did not see it] — but this is one of the big problems that most requires an explanation of how paperwork will be reduced by maintaining many different carriers rather than a single payer), and then unfounded projections of complicated issues based on very simple slogans and ideology.

    Now, let me try to be constructive. If you are interested, follow the link to Dean Baker’s piece, and explain why he is wrong without relying on questions of political viability that you do not hold yourself to (If you are using the same standard for political viability, that is fine).

    Second, you allude to waiting lines, a notoriously unserious diversionfrom health care results. But you do add:

    Such delays have a serious impact on quality of care: A patient has to wait longer for a good diagnosis, increasing the probability that his treatment will not prevent a lasting disability.

    Here is your chance to provide empirical evidence to the non-converted. There are no such things as increased probabilites without actual cases in a sample this large. Let’s see the data on increased “lasting disabilit[ies]” (previously, you pretty much concede that there is no such indication of increased deaths). This would be evidence that I would find convincing, although, it would also have to outweigh the difference in cost.

  25. Ron:
    Mandatory, universal health insurance is nationalized, socialized health care. Mass. made no efforts to improve health insurance products and have done their best over the last 20 years to regulate health insurance into the ground. So they created a problem that is now solved by a mandatory tax on every person in Mass. to subsidize a very expensive and inefficient socialized healthcare system.
    It is just a different definition (read Germany).
    Let’s just add health care on to social security, Medicare, state disability, federal, state and local taxes to provewhat caring, ignorant sheep we are.

  26. How many many many times do I have to correct you, my dog Bailey:

    Some of the so-called socialized medicine systems beat the pants off our craptacular so-called amazing somewhat private one.

    http://mattwelch.com/archives/week_2005_04_03.html#003088

    Even libertarians can be reality-based, after all.

  27. Matt, we miss you. Hope you like your new job.

  28. Matt, keep posting that link. It’s gets less and less persuasive each time. Which is pretty impressive given how unpersuasive it was the first time.

    “My subjective experience is that socialized medicine is better, therefore socialized medicine is better. QED bitch!”

    – Matt “8th grade debate champ” Welch

  29. Matt, why do you keep linking to the same anecdote on your web site about the French health care system in the belief that this is somehow irrefutable evidence for the advantages of socialized medicine? Some comparative empirical data please.

  30. It’s Romney moving a bit more left to counter Hillary’s drift right. Holy crap batman, there way too much time left to have to suffer all the smegma now. Oh excuse me, my cynic is showing.

  31. I don’t know for sure, but it sounds like Mass, in requiring it’s citizens to buy health insurance, is violating the constitutional rights of it’s population. I’m glad I moved away from there last year. Most bureaucratic state going. I always say in MA you can’t pass gas without a permit. And you’ll pay big bucks for that permit.

  32. “But, yeah, my preferred plan always has been that the government stays out, except for antitrust to ensure free entry and consumer information requirements…”

    Anti-trust does nothing to ensure competitive entry into a market. You don’t need it (in fact, it probably does the exact opposite of what it is intended to do). The idea that having X number of small firms makes a market “competitive” is true only in the static neoclassical blackboard model, not in the real world. If one wants to promote free-market competition in an industry, it’s pretty easy: Get rid of the entry barriers (subsidies, regulation, etc.) With minimal entry barriers, entrepreneurs who sense a profit opportunity enter the market and compete with the more inefficient, established firms.

    Will this happen in health care or any other currently cartelized industy? I ain’t holding my breath.

  33. if this law applied to me it would basically be a TAX of several thousand dollars a year. Might as well double/triple my state income taxes. I currently pay Zero for health insurance and I dont use doctors or medicine. If I do I pay around $60-80 for an office visit out of pocket.Once a year max. Can I get insurance for $5-10 a month? I also don’t ask that the state provide my “healthcare.” The state doesn’t pay my housing or food nor do they mandate I spend a minimum amount on rent,groceries, vehicle or anything else I deem essential. Will the state also mandate that I pay for a car insurance plan that pays for oil changes and gas? How about a 3rd party payer of groceries? What’s the difference?/ Why can’t healthcare be like anything else in life and you pay out of pocket: cash/check/credit? I can understand high deductible catastrophic coverage, but why do you need to insure against a hangnail or a cold?To me, insurance is the problem, not the solution. I don’t get in car accidents, either. But at least my mandated car insurance is liability only, has a high deductible, and doesnt cover oil changes and tuneups. Best of all it costs me about $300 every 6 months. Can I get individual private health for that?

  34. From Boston.com (The Boston Globe):

    Single adults making $9,500 or less a year will have access to health coverage with no premiums or deductibles.

    Those living at up to 300 percent of the federal poverty level, about $48,000 for a family of three, are also big winners. Under the bill, they will be able to get health coverage on a sliding scale also with no deductibles.

    Ignoring all the other problems with this bill, the “no deductibles” thing will ensure failure. With no deductibles, these people will go to the doctor for everything, totally breaking the bank. This kind of stupidity beggars belief; yet it’s true! (BTW, Germany instituted a 10-Euro co-pay for some types of doctor visits. The result: roughly 20% fewer visits. It seems that people wouldn’t pay 10 Euros for trivial health matters.)

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