Massachusetts to Enact Universal Health Coverage

Squeezed April 4, 2006

Massachusetts has taken a big step toward providing universal health coverage (hat tip to Donklephant and The Moderate Voice):

The Massachusetts policy holds both businesses and employees responsible for health care coverage. Businesses with more than 10 employees that do not provide coverage for all staff must pay a $295 fee annually per uninsured worker.

Under the legislation, which is expected to be approved by Massachusetts Governor Mitt Romney, insurance agencies would expand health care coverage by offering state-subsidized, low-cost insurance plans with scaled-back benefits.

Admittedly, my first thoughts were, “So what?” Requiring businesses to cover employees and providing low-cost insurance coverage through private insurers is nothing new in Hawaii. The Prepaid Health Care Act, enacted here in 1974 and the first of its kind, requires business who employ individuals more than half-time to provide comprehensive coverage for their employees. And in 1994, Hawaii introduced QUEST, which at the time was considered innovative. Several private insurers contract with the state to provide QUEST plans.

But despite all of this, 10% of our population remains uninsured. Below average but still too much. (Part of this is businesses taking advantage of the half-time loophole and hiring only part-timers. No full-timers, no need to provide insurance.)

So, despite what the media is saying, it’s not an entirely new idea. Hawaii has lived with aspects of this law for years. However, Massachusetts does go further in requiring individuals to insure themselves or face a penalty of 50% of the lowest cost health plan.

While I certainly hope Massachusetts’ experiment works (and I’m not just expressing sour grapes because our government couldn’t come up with something like that first), I do have some concerns. For instance, the so-called fine. $295 a year per worker? Come on. What kind of a penalty is that? There’s got to be more teeth in that law than that. Here in Hawaii it typically costs a business upwards of that to insure one person for one month. And our premiums are below the national average.

And not only that, the Prepaid Health Care Act’s monetary penalties are $25 per day (or $1 per person per day, whichever is greater). And, they can shut you down. Result? Near universal (if grudging) compliance.

Although I may not agree with this blogger’s opinion regarding the law, I do agree that the fine as currently set won’t have any deterrent effect. It would be cheaper to pay the fine than cover their employees, and that would be counter-productive to their goal.

I hope the Massachusetts experiment works, and if it does, I bet dollars to doughnuts that Hawaii will come up with something similar. Because, like it or not, we’ve got competition.

Disclaimer: I speak for myself, not my employer.

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