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.

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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