A Promising Model for Universal Health Care

A groundbreaking universal health care coverage package went into effect earlier this month in Massachusetts (see “Massachusetts’ Groundbreaking Health Care Law,” in this issue). Massachusetts Gov. Mitt Romney signed the bill with one line-item veto. Both the program and the politics of this deal provide a model to states that are assessing the need for universal coverage.

Promising Program

The Massachusetts plan is composed of very pragmatic elements. It has government-funded coverage for the poorest people left uninsured by current public programs. This population mostly consists of nonparenting, able-bodied, nonelderly adults. The plan creates large insurance pools so that those in small businesses or buying coverage as individuals can purchase private insurance more economically. For the lower economic ranges, the plan offers publicly funded discounts to make the insurance affordable. The plan mandates that everyone in the state have insurance or else pay a tax penalty to help fund the program. And a free-rider surcharge promotes the purchase of coverage by all employers and raise funds to help fund the program from those who do not purchase coverage.

Some of these program elements are in Maine’s Dirigo program, in coverage expansion proposals in several states, including the Healthy Illinois proposal, and in other proposals under consideration by the Adequate Health Care Task Force for universal coverage in Illinois. This set of ideas and program features, adapted to particular states’ circumstances, seems to be at the core of an effort to secure universal coverage while preserving the current employer-based, market-style system. More or less, it is the last chance to see whether that system can provide universal coverage in a competent affordable way. If it fails, then a much larger role for government in universal coverage is inevitable.

The Massachusetts model is promising in that it meets the need for all sectors to agree to a certain level of change from the current system and it acknowledges the need for a substantial government role. Insurance companies dodge the bullet of single-payer but will get new competition from the government-supported programs that could press their prices down or threaten some sectors of their business. Health care providers will have far fewer instances of “uncompensated care” but will face potential downward rate pressure and a larger role for government insurance supplanting at least some private insurance (which generally pays higher and faster).

Consumers gain coverage but face a mandate to buy insurance with a guarantee that it will be affordable. Taxpayers, including those who already have insurance, gain relief from the upward pressure on their own insurance rates caused by all the uncompensated care to the uninsured. They gain much-improved public health and the long-term societal benefits and savings associated with it, but they will be asked to support a large part of the program. Businesses gain government help in insuring their workforces but would have faced the free-rider surcharge if they rejected the program.

Governor Romney line-item-vetoed the free-rider surcharge, which would have levied a $295-per-employee-per-year fee on employers who, with more than 10 people in their workforce, do not offer health insurance to employees. While this fee would have produced $45 million per year to be used to help fund the program, Governor Romney promised to find the money elsewhere. In vetoing this funding source, he did not scale back the program.

Governor Romney’s veto of the free-rider surcharge, while perhaps insignificant in the whole picture of funding the program, is very significant in that it upsets the symmetry of the gains and sacrifices levied on all the sectors. It eliminates the sacrifice required from portions of the business community and adds it to the sacrifices demanded of the taxpayers. Because the program was a painstaking compromise that passed with overwhelming veto-proof majorities in both houses of the Massachusetts legislature, there may be an effort to override the veto.

With or without the veto, if the program is adequately funded and competently administered, it could produce acceptable universal coverage.

Promising Politics

Massachusetts came to this outcome because its people demanded it. As in all states, the health system is in crisis, and too many people and businesses cannot afford it. All of the interest groups involved—unions, organized business, hospitals, doctors, other health care providers—appeared willing to try a universal coverage package with a reasonable chance to work. However, as in most states, there was no agreement on the details of a plan that would include some necessary sacrifices, and the situation had all the ingredients of a classic statehouse stalemate.

A widespread and mobilized voting public drove the statehouse players to accomplish much. Health care is a top issue for voters, but mobilizing voters into a political force moves policymakers to break through the usual stalemates and accomplish something. The grassroots organization, Greater Boston Interfaith Organization, together with the health advocacy coalition, Health Care for All, solicited hundreds of thousands of signatures on petitions to have universal health care on a referendum ballot this fall, thus injecting universal health care into the election. The politicians faced having to run on a popular universal health care issue not yet accomplished and risk being positioned as blocking it. Both parties decided to finesse this. Each party controls one of the houses of the legislature, and each chamber passed a version of universal health care this spring. Driven by the intense ongoing public actions and related media pressure, and the continuing threat of the referendum campaign in the fall, the two legislative leaders sat down with the governor and hammered out the compromise.

Illinois has seen the power of health care coverage as a motivating political issue over the last several years. With the Healthy Illinois plan gaining attention in the General Assembly and the Adequate Health Care Task Force scheduled to put a universal health care idea on the table in Springfield in late October of this year, the lessons from Massachusetts are worth noting.