Universal Health Care: Proceed with caution

Illinois Sen. Barack Obama, a 2008 Democratic presidential candidate, told a FamiliesUSA conference this week that the country must achieve universal health care by 2012.

Former President Bill Clinton told a closed meeting of supporters recently that his wife will stress health care in her presidential campaign, rejecting the ?urban myth? that their plan was socialized medicine.

And California Gov. Arnold Schwarzenegger has announced his own ambitious plan to lead the nation?s most populous state into the realm of universal health care.

Schwarzenegger and many other governors are anxious to garner the same attention that Massachusetts Gov. Mitt Romney received for achieving what no other political leader had been able to accomplish: Enacting a broad health reform plan with strong bi-partisan support.

But not so fast. If Massachusetts is the model, others may want to go back to the drawing board. The details show Massachusetts may not have a miracle but rather a muddle on its hands.

The plan isn?t even in effect yet and already the state says health insurance that meets the minimum requirements for coverage will cost about $380 a month for an individual, almost twice the $200 a month that Mr. Romney had projected.

Massachusetts officials are stymied. They know that the plan is unaffordable, especially for up to 200,000 uninsured residents who don?t qualify for any premium subsidies. But officials are reluctant to strip the plan of benefits to bring costs down because they insist coverage must be comprehensive and generous.

State legislators created a plethora of mandates and enforcement provisions that many Americans would find not only unaffordable but onerous. State agencies will be checking on individuals' insurance status, monitoring their income to see if they qualify for subsidies, and tracking individual health habits (like smoking and wellness activities) to determine how much they should pay for their health insurance.

Other provisions cause equal concern:

? The individual mandate: You can?t get to universal health coverage without a mandate. In Massachusetts, everyone must purchase health insurance by July 1 or face financial penalties. Of further concern is the reach of the state in specifying what kind of insurance people are required to buy. The legislation stipulates that the policies available to lower and moderate-income workers must cover all of the state?s 40 mandates, from hair prostheses to in vitro fertilization, whether or not citizens would choose to buy that coverage.

? Affordability: Massachusetts plans to offer some subsidies for workers earning less than 300% of poverty ? about $30,000 a year ? but others will have to find the full $4,560 to buy health insurance or face financial penalties at tax time.

? A backdoor employer mandate: Businesses are nervous. Over the governor?s objection, the legislature voted to force employers with 11 or more employees to pay a fine of $295 if they don?t offer access to insurance and to pay any health costs above $50,000 that their uninsured workers incur. The state also is determining what employers? must contribute for their share of employee health coverage, likely to be half the cost of the policy.

A plethora of other mandates, reporting requirements, penalties, and enforcement provisions affect both individuals and businesses. For example, the law requires every employer and employee in the state to sign "under oath" a Health Insurance Responsibility Disclosure form, testifying to whether the employer has offered access to insurance and whether the employee has accepted or declined.

Massachusetts has created at least 10 new boards and commissions to run the new health system, such as the Health Care Quality and Cost Council, the Payment Policy Advisory Board, and the Health Access Bureau.

Jim Capretta and Yuval Levin argue in an article in a recent issue of The Weekly Standard that the Massachusetts approach ?is most notable as an example of health care federalism--that is, of a state-level response to the larger problem of the uninsured.?

True. Gov. Romney had a vision of creating a competitive marketplace for affordable health insurance and reallocating subsidies to provide health insurance for uninsured citizens who use hospital emergency rooms for medical care at taxpayer expense.

But the compromises demanded by the heavily Democratic state legislature are jeopardizing its success.

It will take several years to see how the Massachusetts plan turns out, but it could become so expensive that legislators may face the same fate as the employer mandate enacted under the administration of former Gov. Michael Dukakis nearly 20 years ago: It was repealed because it was unworkable and unaffordable.

A much better solution was offered by President Bush in his State of the Union address this week. Before taking out the hammer of a mandate for coverage, Mr. Bush has offered a remedy for a root cause of the health sector's high costs and consequent high uninsured rates.

"Changing the tax code is a vital and necessary step to making healthcare affordable for more Americans," Mr. Bush told the Congress in recommending a new standard deduction for health insurance of $15,000 for families and $7,500 for individuals.

He is offering a plan that can mean a tax cut for 100 million working Americans, gives families the opportunity to own health insurance that is portable from job to job, and provides new resources for the uninsured to buy coverage. And all of this without any new long term costs to the federal treasury.

That certainly seems a much better place to start in a freedom-loving country.

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Grace-Marie Turner is president of the Galen Institute, a non-profit research organization in Alexandria, VA, that specialized in free-market ideas for health reform. She can be reached at galen@galen.org or at P.O. Box 19080, Alexandria, VA 22320.