Massachusetts health care:
propping up the private insurers while pretending they can provide universal coverage

by Pete Brown in CV #40, August 2007

The health insurance system in the U.S. is in crisis. Just since the year 2000 the average cost of insurance premiums has gone up by 87%. Workers with health insurance are faced with rapidly rising premiums, co-pays and deductibles. And over 45 million people in the U.S. have no health insurance at all; that's about one out of every six people in the country. People without insurance are forced to put off medical treatment unless absolutely necessary, which undermines their health and puts a strain on hospital emergency room services. The American system of reliance on the private market for health insurance has left one-sixth of its citizens completely out of the system and is threatening millions more with financial ruin.

Many capitalists are concerned about the rising health care costs. Businesses and government entities don't want to pay for rising insurance premiums for their employees, and they demand that workers pay a larger share of the cost. The auto industry, intent on cutting wages and benefits, wants to get rid of health care costs as well as pension obligations for its retirees. States and cities are letting the health care network collapse: hospitals are closing, emergency care is deteriorating, and medical programs along with other social programs are being privatized.

The crisis is not universal. Rich health-care consumers are taken care of by top-of-the-line insurance or by simply paying cash, which they can afford. When conservative pundits insist that "American health care is still second to none," this is the group of consumers they have in mind. These people really can afford to have the world's best medical care. But for the average worker, and especially for the poor and the unemployed, it's a completely different story.

Health care corporations are mostly unharmed by the present crisis. In fact they're profiting from it. The large pharmaceutical companies are wallowing in huge profits. A larger and larger share of the health care dollar goes for the profits and administrative expenses of the private insurers and HMOs. CEOs in all parts of the health care industry are getting high payments.

The capitalists talk of solving the health crisis, but at the same time they want to preserve these havens of profit. So they're coming up with numerous plans to broaden insurance coverage while actually extending the privatization of health care. This is in accordance with the neo-liberal script: pretend to be doing something to meet the people's needs while actually extending the scope of private profiteering. Just as they've been privatizing school systems, prisons and water companies, neo-liberal government and corporate leaders are launching a wave of new health-care "reform" plans.

Previously the federal government stepped in with Medicaid as a stopgap insurance program for the poor. But neo-liberal de-federalization programs of the last couple decades have replaced federal mandates for health care with mandated limits on financing. Instead of mandating that state and federal governments deliver a certain level of medical care to poor people, today only a limited amount of federal funds are turned over to the states, and it is then up to them to use it as they wish. They can supplement it, they can spend it in state-sponsored programs or spend it on private insurance programs; but in any case only a certain amount is given out. Under Bush the rate of growth for Medicaid spending is not keeping up with rising costs of health care. Bush and Congress have squandered $600 billion on imperialist adventures in Iraq and Afghanistan, yet they claim there's not a penny to spare when it comes to medical needs of the poor.

Now the government and corporate leaders want to solve the crisis in a way that serves their interests. They want government and corporate bodies to be taken off the hook for the rising health care costs. But they don't want any curtailment of profits for health insurance companies, drug companies or health care providers. No, they want to preserve these profit havens. Their idea of a solution is to shift the burden onto ordinary working people through higher taxes and higher costs for health consumers.

Massachusetts' "universal" plan:
Extending the private insurance market

The most notable plan so far is that of Massachusetts, passed into law in 2006 and implemented this July 1. The Massachusetts plan is mainly notable for the new provision of "individual mandates", which means all individuals in the state are mandated to acquire some kind of health insurance, either through their employer or by buying it themselves. The state acts as coordinator for the private insurance firms and as enforcer imposing penalty taxes on "criminals" who don't purchase a private insurance plan.

In their insistence on maintaining and even extending the scope of private health insurance, Massachusetts legislators are going against the evidence of what works, most efficiently, in providing universal coverage. There are plenty of examples from Europe, Canada, etc. of national health care programs run by the government which provide universal coverage much more cheaply and efficiently than the jumble of private plans typical of the U.S. Some thousands of people have managed to get new health insurance under the Massachusetts plan, and this is a good thing; but the same could have been accomplished, more quickly and cheaply, by simply funding an extension of straight Medicaid.

This is not the first time Massachusetts has passed a "universal" health system law. Back in the 1980s the state passed health-care legislation that was supposedly going to provide universal coverage by 1992. But when it came to implementing the law, the state's capitalist employers balked at the law's employer mandates which demanded that employers either provide health insurance to their employees or pay a new tax. And insurance firms complained about new regulations over them. Bowing to the capitalists' complaints, state government scrapped the new plan before it was implemented. The new 2006 plan also has an employer mandate, but the alternative tax is set so low that employers can hardly complain. In fact, this is one of the things that's likely to doom the new plan employers happily paying the penalty tax, leaving it up to their employees to go out and purchase expensive private health insurance on their own.

Individual mandates or, "Make the workers pay"

. The key provision in the new Massachusetts plan is the individual mandate, the requirement that every individual in the state must purchase a health insurance plan. This differentiates Massachusetts from Maine, which passed a "universal coverage" plan a couple years ago. The Maine plan was voluntary, with the state supposedly encouraging universal coverage but also holding back on subsidizing the plan; so it wasn't very successful. The Massachusetts plan by contrast forces everyone to buy insurance or pay a penalty tax. The penalty tax is fairly light the first year, but the plan is for it to quickly accelerate, to force individuals to get coverage.

This addresses the problem of uninsured patients complained of by health care providers clinics, doctors and especially hospital emergency rooms. It ensures that health care providers will get paid for their services by some insurance company. But for health care consumers, who are mostly working class people, it adds another financial burden to what might already be a very tight personal budget.

To lighten this load, the state is subsidizing insurance premiums for poor and low-income residents. For people whose income is below the federal poverty line, their insurance premiums, co-pays and deductibles will be paid 100% by the state. For those whose income is up to three times the poverty level, the state will pay a portion of their insurance costs on a sliding scale. This has resulted in a rush of new people more than 130,000 signing up for health insurance.

Most of those newly signing up qualify for the free or subsidized insurance payments. This illustrates once again, for those who needed any convincing, that the great majority of those without insurance are poor working class people who simply could not afford the private insurance premiums. The Democratic governor of Massachusetts, Deval Patrick, blames "young folks" for not getting insurance because "they don't think they're ever going to be sick." But the fact is, young workers are quite happy to get health insurance if they can afford it if their employer provides it, or if they can qualify for a state-subsidized plan. The problem is affordability.

And affordability remains a problem for employed workers and those outside the lowest poverty guidelines. Meanwhile, the Massachusetts plan is another bonanza for the private health insurers as if they needed any more. They are guaranteed to get a rash of new customers who will have to pay the standard (high) price for health insurance. Many of these new customers will have premiums subsidized by the state, which means the insurance companies are guaranteed payments. So, like health care providers, the insurance companies are enthused about the new law.

Conservative ideologists are also enthused about the new law. The Heritage Foundation hails its "move towards the goal of a consumer-based health system" (i.e., it makes consumers pay). Mitt Romney, who was governor of Massachusetts when the bill was passed, is now running in the Republican presidential primaries and bragging about his making 'individual responsibility" (individual mandates) a key part of the bill.

But the individual mandate will be a headache for workers who don't qualify for subsidies. Many of them have already applied for a waiver from the mandate because they cannot find a plan they can afford. Workers who are employed, and whose employer offers a health plan, are ineligible for subsidies. Yet for many of them insurance remains out of reach because their wages are low, and the plan their employer offers demands high payments for premiums, deductibles and co-pays. The state has already started giving out waivers to such people, which relieves them from the anxiety of meeting the new mandate, but it also leaves them without health insurance right where they were before the supposed "universal" health plan was passed. The state now estimates that at least 60,000 workers are eligible for the waiver.

So it turns out that the Massachusetts plan is not really expected to achieve universal coverage. And the main burden for achieving a higher percentage of coverage rests on the working class, through the individual mandate. Doctors and hospitals will have higher security of payments, since more of their patients will be covered by insurance. So the doctors and hospital administrators can continue to receive their high incomes. The private insurers are guaranteed new customers, so they can continue to charge their high premiums, co-pays and deductibles. The executives and stockholders of the HMOs and private insurers are guaranteed a bonanza of high salaries and dividends. But the working class will be forced to pay for all this with mandated insurance premiums and penalty taxes.

Employer mandates: more escape clause than burden

The new plan's supporters say it's evenhanded because it also provides for an employer mandate, a burden imposed on the capitalists. Every employer who has more than ten employees is required to provide them with a health-care plan. An employer who fails to do this is required to pay into the state health care fund $295 for each employee; this money is then used to help subsidize the plan.

But in the first place, this mandate means nothing to most large employers, who already provide health care plans for their employees. There are no new taxes or obligations for such employers, so they aren't being asked to sacrifice anything for the state to achieve more universal coverage.

Secondly, the requirement that employers provide a health care plan does not have very specific rules on coverage and costs. So employers are still free to go out and buy cheap, crappy private plans which provide very little benefits and require high payments for premiums, co-pays and deductibles from their employees. As mentioned above, this is a major reason why the new Massachusetts plan will not really achieve universality; many employees who are eligible to buy these insurance plans simply cannot afford to pay for them.

Thirdly, the employers' penalty tax of $295 per employee is a joke. This is $295 per year for each employee; that's only about $25 a month. This is such a low amount that employers without a health insurance plan will have no incentive to go out and get one; it'll be much cheaper for them to just go on without insurance and pay the meager penalty. It must be borne in mind that even a cheap, crappy plan will cost hundreds of dollars per month for each employee. The cost of this would usually be shared by employer and employee, but the employer would have to expect to pay at least a couple hundred dollars, per month, for each employee. But now the state tells the employer he can avoid that cost and be excused from health-care responsibilities for his employees by paying a $25/month token fee. It's an open invitation to employers to avoid offering insurance plans at the workplace.

But the individual mandate remains in force against employees. They must now go out into the private insurance marketplace and purchase an insurance plan, paying for it 100% with their own money. Even a cheap plan can easily cost them three or four hundred dollars a month -- even more for older workers. So the worker is required to pay hundreds of dollars a month, at least, while his or her employer gets off with a $25/month love tap from the state. Not exactly "evenhanded."

So the burden of any progress toward universality is being laid on individual workers. Even worse, the penalty tax on employers is so low that it will likely result in employers scrapping their present health insurance plans and opting to take the $25/month penalty instead. This would mean a landslide away from more extensive insurance coverage to a situation where thousands of employees are left without insurance unless they pay high prices for it themselves. It would also mean intense pressure on the state to expand its subsidies for individuals without having the funds to do so, since the employers would be contributing so little. Hence a likely future scenario is the bankruptcy and scrapping of the whole plan.

Health care is a right!

The Massachusetts plan presents itself as a universal plan. But it's really designed to enrich private insurers while negating the masses' cry for real universal health coverage. Apparently it will provide health care insurance for the first time to some tens of thousands of people. That is good. But it's far from being a comprehensive solution to the health care insurance mess. It even exacerbates the problem by creating a new tangle of bureaucracy while propping up the private insurers. And it does this by establishing a new precedent of individual mandates, of making individuals responsible for bailing out the government and private insurers. This amounts to criminalizing the poor, declaring as renegades any poor workers who try to avoid handing out their spare dollars to the health insurance parasites.

A comprehensive solution to the health insurance mess needs to be based on the principle that health care is a right, available to everyone. It should not be restricted to those with expensive private insurance or those who are employed; it should be available to everyone as a human right, under a government plan. A comprehensive solution would make society as a whole responsible for making sure that every individual received care. But the Massachusetts plan goes in the opposite direction: it makes individuals responsible for taking care of the government's budgetary problems. Health care takes a back seat to finances, and taking care of finances includes taking care of the private insurers as well as the state budget. We need a reform that deals with the present crisis from the standpoint of the masses instead of being just another handout to the rich. <>


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