Massachusetts offers a blueprint for change

May 19, 2006

Outlook

The last time healthcare news made such a big splash was late in 2003, when Congress offered seniors a long awaited Medicare drug benefit. Last month, the headliner was a single state-Massachusetts-which, among conservatives, is less known for innovative reform than for an especially unpalatable brand of liberalism.

And yet, despite a Republican governor and a Democratic-controlled legislative, the state surprised nearly everyone in early April by hammering out and passing a bipartisan bill for universal coverage. It's the first such plan of its kind in the nation. (Hawaii has an employer mandate for certain categories of workers.)

By July 1, 2007, Massachusetts expects every Bay Stater to have health insurance. Of the roughly 550,000 citizens currently uninsured, Medicaid will absorb about one in five. For those who earn too much to qualify for Medicaid but still make less than 300 percent of the federal poverty level-or $29,400 in 2006-the state will offer premium assistance on an income-based sliding scale. The state will help those with incomes above this amount to find and purchase lower-cost policies in the private market. To pay its share of the tab, Massachusetts plans to redirect a portion of the $1 billion it currently spends on the uninsured.

This "employer mandate" was a bitter pill for GOP Gov. Mitt Romney to swallow. After touting his state's groundbreaking effort, the 2008 presidential hopeful promptly used his line item veto to expunge this and several other provisions he didn't like. Within weeks, however, the Democratic-controlled legislature soundly overrode most of his vetoes, including the one on employer mandates.

Despite these skirmishes, response to the new law across the political spectrum has been surprisingly positive, although concerns remain. One is whether the state can induce private companies to offer reasonable plans at an affordable rate. If it can't, some worry, it will be forced to permit skimpy coverage or to make up the difference in premiums, thereby boosting the cost of subsidies to levels higher than the plan's architects anticipated.

Others, especially on the left, worry that employers may be tempted to drop coverage altogether. Their argument: for many companies a roughly $300 per-employee penalty per year is still far cheaper than paying health insurance premiums.

But not everyone buys this thinking. "Today, companies don't have to provide health insurance at all," says Phil Edmundson, a Massachusetts businessman and chairman of Affordable Care Today, a coalition of business, labor and other groups that supported the bill. "Like most businesspeople, I choose to pay that $3,000 or more a year in order to attract the best employees, and that won't change under the new law."

Will other states follow Massachusetts' lead? Yes, many say, but not in the sense of adopting the same model, since demographic and other factors differ from state to state. "Massachusetts has laid out a political blueprint for the rest of the country, not a policy blueprint," says John McDonough, executive director of Health Care for All, a consumer advocacy group.

In fact, if the Massachusetts plan teaches anything, it's how to achieve consensus on healthcare reform, despite political differences. It's a lesson that Washington lawmakers would do well to take seriously, too.