Costs soar for Mass. health care reform

Steve LeBlanc

Two years after the state’s landmark health law was signed, the cracks are starting to show.

Costs are soaring and Massachusetts lawmakers are weighing a dollar-a-pack hike in the state’s cigarette tax to help pay for a larger-than-expected enrollment in the law’s subsidized insurance plans.

But that hasn’t dampened enthusiasm at the State House. Leaders there boast that in the two years since former Gov. Mitt Romney signed the law with a choreographed flourish at historic Faneuil Hall, the number of insured residents has soared by nearly 350,000.

Along the way, the law has been scrutinized by other states, sparked the ire of critics on both the right and the left, and drawn the attention of presidential candidates.

“It’s the very first question I get when I’m with other governors,” said Gov. Deval Patrick. “I don’t think anybody is prepared to say that what we have done here in Massachusetts is necessarily the formula for the rest of the country or for a national reform, but at least we are trying.”

No other state has launched as comprehensive a plan. California attempted their own health care expansion, but the $14.7 billion program failed to get out of a key Senate committee.

“The Massachusetts reform law remains the focal point for other states and the nation in trying to figure out if state-based reform is possible,” said Alan Weil, head of the Maine-based National Academy for State Health Policy. “It’s the biggest game in town.”

One of the most radical fixtures of the law is the so-called “individual mandate” — the requirement that virtually everyone have health insurance or face tax penalties.

Anyone deemed able to afford health insurance but who refused to buy it during 2007 already faces the loss of a $219 personal tax exemption. New monthly fines that kicked in this year could total as much as $912 for individuals and $1,824 for couples by December.

It’s not clear how many uninsured residents remain in Massachusetts. At the time the law was signed, estimates started at 500,000.

The law — and its individual mandate — has become a key talking point in the presidential race.

Hillary Clinton has made an individual mandate the centerpiece of her health plan. Fellow Democrat Barack Obama’s plan doesn’t include an individual mandate for adults, although he would require that children be covered. Republican John McCain wouldn’t require universal coverage.

Under the law, anyone making less than the federal poverty level is eligible for free care. Those making up to three times the poverty level can get subsidized plans.

Anyone earning more is required to get health insurance through their employer, on their own, or by purchasing lower-cost plans through the Health Care Connector, the independent state agency overseeing the law.

Businesses are also on the hook. Those with 11 or more full time employees who refuse to offer insurance face $295 annual penalties per employee. Already, 748 employers have failed to meet that threshold and have paid $6.6 million to the state.

Rick Lord, president of the Associated Industries of Massachusetts, said the state must be “very mindful of placing burdens on businesses that don’t exist in other states.”

“It’s a delicate balance,” he said.

John McDonough, executive director of Health Care For All, a health care advocacy group that pushed for the law, concedes it’s become a political punching bag.

Those on the left see the law as a poor substitute for a Canadian-style single-payer model, while those on the right say the law interferes with the free market.

“The two sides agree on nothing accept for one thing: They hate our little ecumenical experiment here in Massachusetts,” he said. “It’s almost as if they are the health care fundamentalists and we’re like the heretics because we are coming together.”

Michael Tanner, a senior fellow at the libertarian-leaning Cato Institute, said the law has been an unqualified failure.

Tanner was critical of the connector authority, a “super-regulatory agency” which has mandated levels of coverage. He also noted the vast majority of the newly insured are receiving subsidized care.

“They said it would get us universal coverage and reduce costs and it’s done neither,” Tanner said.

The biggest challenge is rising costs.

In 2006, a legislative committee estimated the law would cost about $725 million in the fiscal year starting in July. In his budget, Patrick set aside $869 million, but those overseeing the law have already acknowledged costs will rise even higher.

Lawmakers are hoping to close the gap in part with a new cigarette tax expected to generate about $154 million a year.

(Associated Press)