Mass. Law Uncovers More Uninsured Than Expected

How to achieve universal health coverage is a major issue in this year's presidential campaign. Massachusetts has implemented a 2006 law requiring nearly every citizen to sign up for health insurance or pay a tax penalty.

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STEVE INSKEEP, host:

Much of the presidential campaign is focused on the candidates' personal stories, but you can find differences on the issues, and this morning we are going to examine one of those issues, healthcare. Barack Obama and John McCain contend we do not need sweeping mandates to get all Americans insured. Senator Hillary Clinton, however, favors a health plan similar in some ways to a law in Massachusetts.

That 2006 law requires nearly every citizen to sign up for health insurance or pay a tax penalty. This morning NPR's Richard Knox checks in on how the Massachusetts plan is doing.

RICHARD KNOX: Dee Cook is just the kind of person the Massachusetts insurance law is aimed at. She's a 59-year-old hairdresser.

Ms. DEE COOK (Hairdresser): I've don it for 40 years. Yeah. Yeah, in March it will be 40 years since I got out of hair dressing school.

KNOX: Cook hasn't had health insurance for 13 years. Her current employer doesn't provide it and she hasn't been able to afford it.

Ms. COOK: My children have been on me about it. You know, Mom, you really need to get some health insurance. But up until last year, I just got out of debt management last year. I finished paying everybody off.

KNOX: Finally, last November she signed up just under the deadline.

Ms. COOK: I had to get it because of the new laws.

KNOX: Cook is one of 16,000 or so Massachusetts workers to sign up for health insurance that they pay for entirely by themselves. Most of those who've signed up in Massachusetts are poor and near poor people who get coverage heavily subsidized by the state. Leslie Curwen(ph) is the state's top budget official. She also chairs the new agency set up to implement the new insurance law.

Ms. LESLIE CURWEN (Budget Official, Massachusetts): I think it's a great success so far. We've celebrated 300,000 people newly enrolled in health insurance, which is a real milestone.

KNOX: In fact, you might say the Massachusetts plan has been too successful. Tens of thousands more people have signed up for state subsidized coverage for poor and near poor than state officials expected.

In effect, the new law has smoked out far more uninsured citizens than the state knew existed. That's led to some confusing headlines implying cost overruns in the range of $400,000,000. In fact, Curwen says, most of that was planned growth. The overrun is closer to $120 million - a worry, she says, but not a catastrophe.

Ms. CURWEN: Is it without concern? Certainly not. We know that the sustainability of it financially is a concern. We need to work on that.

KNOX: Massachusetts' biggest worry at the moment is whether the Bush administration will renew a Medicaid waiver that allows the federal government to pay for about half the program. Recently the administration has told other states they can't use federal money for similar subsidies of the near poor.

Ms. CURWEN: It is absolutely critical that we maintain the support of the federal government for this program.

KNOX: Beyond the details, though, the Massachusetts program poses a question at the heart of the national debate. Is it going to be necessary to mandate that all individuals buy insurance in order to get to universal coverage? Hillary Clinton thinks so. Jonathan Gruber, an MIT economist who's on the board of the new Massachusetts agency, agrees.

Mr. JONATHAN GRUBER (Department of Economics, Massachusetts Institute of Technology): If you just simply said, we are going to take the kind of Massachusetts-style plan, you know, subsidies and a new reformed insurance market. And we are not going to have a mandate; you can at best cover about half the uninsured.

KNOX: Without a mandate he says, people with higher medical expenses will sign up, but many who don't expect to need care will stay out.

Mr. GRUBER: The right way that insurance works is that people have insurance all the time so that when they are healthy, they pay more than they would spend in that given year. When they're sick, they collect more than they pay in that given year. That's the whole idea of insurance.

KNOX: Barack Obama doesn't like mandates, except for covering children. He says penalties have to be too stiff to force people to buy coverage. John McCain doesn't propose mandates at all. Instead, he favors tax credits. Both believe if health insurance is made affordable, people will buy it, although Obama and McCain have major differences on how to do that.

But the debate over how to achieve universal coverage isn't just to the right of Clinton; many to her left also oppose mandated health insurance, like Bob Kuttner, co-editor of the American Prospect magazine and a Boston Globe columnist.

Mr. BOB KUTTNER (Co-editor, The American Prospect; Columnist, Boston Globe): It's a very bizarre position for a liberal to be in, to say to the citizen, rather than providing a service that's tax-supported because you as an American ought to have this service, we are going to make you go out and find something or you pay a penalty. This is exactly the sort of thing that causes people to resent government.

KNOX: Kuttner favors government sponsored health coverage, sort of Medicare for all. But he acknowledges that some kind of intermediate step, perhaps a mandate on employers to buy insurance, might be necessary. It seems safe to say that the debate won't be settled by November's election, so the Massachusetts experiment will remain relevant. Dee Cook, the newly insured hairdresser, is reserving judgment on it. I asked her if she thinks the Massachusetts law is a good thing.

Ms. COOK: Check back in a couple of years. See how it's working.

KNOX: Even staunch supporters of the Massachusetts plan say it's too early to declare it a success and it's too soon to call it a failure. Richard Knox, NPR News, Boston.

INSKEEP: We'll look more deeply at this issue on Monday when we will check the differences between the two leading Democrats on how they would achieve health coverage for all Americans.

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Q&A: Making Universal Health Coverage Affordable

A new Massachusetts law is requiring nearly every resident to buy health insurance, or face a penalty. Jonathan Gruber is a health economist at MIT and one of 10 members on the board of the Connector, the new agency charged with implementing the state's 2006 law. Here, he outlines how the program aims to provide affordable new health insurance options for the uninsured – and explains why he thinks citizens should embrace the plan.

Jonathan Gruber: What's going in Massachusetts is an attempt to solve really the three issues that stand in the way of universal coverage. The first is giving people a place to buy their health insurance. Right now, if you work for a large firm, you're offered a variety of choices of health insurance, and you pay some of the costs and your employer pays the rest. But if you're unemployed or self-employed or work for a small firm that doesn't offer health insurance, you have to go buy it in what's called the nongroup insurance market, where prices are very high and they're unpredictable. In many states, if you get sick, they can raise your price through the roof the next year or just drop you from coverage altogether.

So the first issue we're trying to address here in Massachusetts is to give people a place to go to buy health insurance in the same way that people in large firms have it. And that's called the Connector.

The second thing we're trying to do is make health insurance affordable. Health insurance is very expensive. The typical health insurance policy would be about $12,000 a year for a family. If you're at the poverty line, or two times the poverty line, which is about $20,000, or $40,000 for a family of four, you can't afford that. So the second thing we're doing is we're heavily subsidizing health insurance purchases up to three times the poverty line, or $60,000 for a family of four, to make coverage more affordable.

And the third thing we're doing is, we're saying look, if we want to have a universal coverage system, we need everyone to participate. And so we're going to mandate that everyone buy at least a minimal level of insurance coverage — so that everyone participates in the system, and so the healthy and sick come together to form a system that works for everyone.

Are there rules of thumb among household economists about what portion of income it's reasonable to spend on housing, food and health insurance?

I think you look at data and see what people are spending. But at the end of the day it's really a judgment about how much people can afford. There's not really a right answer on this. I think that we all have a sense that making someone pay 25 percent of their income for health care would be too much. We all have a sense that people could afford some percent of their income for health care.

I think an important fact to remember is that as Americans, we're now spending over 16 percent of our income on health care. So ultimately, we have to recognize that the lower we push down what people have to pay out of their own pocket, the more someone else has to bear the cost. And I think while people may find a number like 10 or 12 percent of income very scary, that's still less than the nation as a whole pays as a share of its income for health care. I think we have to remember that health care is a very expensive proposition.

Are you worried about a backlash when this actually begins to happen?

We're very worried about that. I think the people on the Connector board are incredibly dedicated to making this work for everyone in the state. We're not sitting in our ivory tower, just thinking about what we think is right, and not worrying about how people are going to react and how it's going to affect them.

The whole notion of insurance is about people with good luck subsidizing those with bad luck. That's what makes insurance go. Insurance is about the fact that there is uncertainty, that we don't quite know who's going to be sick tomorrow, who's going to get cancer tomorrow, who's going to get hit by a car tomorrow. And so we have to all pool together today to make those risks, to make that pool work for society.

Is there some way to market that idea?

How do you market altruism? How do you market solidarity? It's an excellent question. I think the best way to market it is, unfortunately, just confront people with the facts of the randomness of health care. That, you know, my wife and I were perfectly healthy and five years ago she got breast cancer. And we spent an enormous amount on health care over the last five years. The insurance companies lost a huge amount of money on us. But five years ago, we were losing tons of money on our insurance. We were paying for insurance every year and not getting anything for it. You can't know what is going to come up.

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