The Massachusetts Plan: “Universal Coverage”?

David Cohen and Judy Atkins

“This is really a landmark for our state because this proves … that we can get health insurance for all our citizens without raising taxes and without a government takeover. The old single-payer canard is gone.”
-Governor Mitt Romney R-MA

“The Massachusetts Democratic Party will continue to work aggressively to attain a single-payer health care system that provides affordable, high-quality health care coverage for all families and individuals in this state.” – Massachusetts Democratic Party Platform

ON APRIL 12, 2006 Massachusetts Governor Mitt Romney signed legislation that is being touted nationally as the model for providing health care for all people. The goal of the legislation is to provide health insurance for the State’s 780,000 people who have no health insurance, by July 1, 2007.

The problems forcing passage of this bill were the reality that over 11% of the State is uninsured, that Massachusetts has the most expensive health care coverage in the United States, and that Washington was threatening to withhold up to $650 million that goes to the Massachusetts Medicare program unless something was done to cover the uninsured.
The most talked-about aspect of the legislation is its mandated coverage for all citizens of Massachusetts. This can be employer based, purchased through individual purchase or through a State-subsidized program. People who do not have health insurance by next July will be fined.

The law will create the “Commonwealth Care Health Insurance.” This will provide health insurance to all who are ineligible for Medicare and earn less then 300% of the Federal Poverty Level (FPL). There will be a sliding scale of payments. Those earning less then 100% of the FPL will be provided insurance without premium payments.

All insurance plans will be run by the private sector. Money currently directed to hospitals and community health clinics so that they can provide health care to the uninsured will be re-directed to providing subsidies or free insurance to the uninsured.

The next most discussed portions of the legislation are the “employer mandates.” Employers must provide health insurance for their employees and make a “fair and reasonable contribution to its cost.” Those who do not will be assessed a yearly payment of $295 per fulltime employee.

Employer organizations in the State lobbied heavily against this portion of the legislation and Governor Romney vetoed this section; the Democratic-controlled legislature quickly overrode the veto.

(In the Massachusetts House of Representatives there are 137 Democrats and 21 Republicans. In the Massachusetts Senate there are 34 Democrats and 6 Republicans. Governor Mitt Romney is a Republican.)

Criticism of the Legislation

Since the legislation provides health insurance through private insurance companies, there is no mechanism for controlling costs. Whereas Medicare spends about 2% of their total revenues on administration and Canadians, with their single-payer system, spend about 1%, approximately 20% of the money insurance companies take in goes to administrative costs.

The Chair of Mass-Care, the coalition of groups in Massachusetts that has supported a single-payer health bill, had this to say:

This Bill is going to exacerbate the crisis in Massachusetts health care…It will move more people into individual health plans, the costliest and most wasteful insurance plans on the planet, without taking any steps to contain the costs that neither the State, nor its employers or its residents can afford. Only a plan that consolidates health care finance and streamlines delivery, such as the single-payer model adopted successfully in much of the rest of the world, can provide quality, sustainable health care for all.

The Costs

A report issued by Alan Sager and Deborah Socolar, Directors of the Boston University School of Public Health, stated the following:

  • Health care spending in Massachusetts totaled over $52 billion in 2005 – more than $1 billion each week.
  • Massachusetts health spending was $11 billion higher in 2005 than it would have been if we spent at the national per-person average.
  • Health care spending per person averaged about $8,200 here in 2005, or 27% above the U.S. average, and more than in any other state.

What does health insurance cost in Massachusetts? In our experience, based upon negotiating many union contracts, a family plan that pays for all bills and has no deductibles that the individual must pay before insurance kicks in, costs about $1000 per month. The same plan for an individual costs about $500.

Yet a basic premise of the proponents of this legislation is that the State can provide (through private insurance companies) family plans costing $600 per month, and $300 for individuals. These plans, which the uninsured will be forced to buy, are not supposed to have any deductibles.

Much of the criticism of the legislation focuses on this problem. The only health insurance plans that are available in the State for this cost are either limited in what they cover, or have large deductibles people must pay before the insurance plan pays any bills.
The Legislature has yet to address this problem, except to issue statements that the figures they used of $600 for a family plan may be too low. We assume that the plans they finally come out with will either only provide catastrophic insurance (and not cover the day-to-day medical bills) or have upfront deductibles.

This will put low-wage earners who don’t have employer-based affordable insurance in the position of paying $600 or more per month for insurance that still leaves them with medical bills. If they fail to buy this insurance they will be fined, only to face another problem. Hospitals, which currently cannot turn anyone away, may be able to turn away those who don’t carry the “mandated” insurance.

The Employer Mandate Fiasco

The legislation did not define what constitutes an employer’s fair and reasonable contribution in order for an employer to escape paying the yearly $295 per employee penalty. This was left to one of the agencies created to oversee the implementation.

On June 30th the State revealed its plan. Any employer with at least 25% of its employees enrolled in the company’s health insurance, or any employer offering to contribute 33% of the cost of the health insurance plan, will be exempt. Employers are not mandated to offer family plan insurance.

Most people thought the $295 per year, per employee penalty was ridiculous. It provided incentive for employers to stop providing health insurance. When asked, people assumed they meant per month not per year. As an employer said to one of us, “I’d be crazy to not want to pay $295 per year instead of the $12,000 I’m paying now.”

By establishing the 33% employer contribution, the State has provided a way for companies to pay nothing and avoid the penalty. All an employer has to do is find a very expensive health insurance plan and then offer to pay 33% of the cost.

In other words, if they can find a family plan for $1500 per month, they can offer to pay $500 per month, leaving the employees to pay $1000 per month, or about $250 per week. The odds are that most workers cannot afford this, but by offering insurance the employer is now exempt from the penalty.

Who Supported This?

The legislation was promoted by “Health Care For All,” a coalition of business groups and some unions that support an incremental approach to health care reform, as opposed to single-payer systems or an approach like the Conyers bill, which would create a national health care plan by expanding Medicare to everyone.

According to the preliminary records, lobbyists for the health care industry were paid over $7.5 million in 2005, most of it for lobbying around this bill. After spending $279,000 mainly on lobbying for lowering the employer penalty, the Associated Industries of Massachusetts was pleased with the outcome.

Insurance companies were the big spenders, with groups like the Massachusetts Hospital Association spending $263,000; Mass. Association of Health Plans spending $208,000, etc. With over 700,000 people going to be forced into health insurance plans, these companies stand to come out big winners.

Blue Cross-Blue Shield and Partners Hospital Group spent almost $500,000 in lobbyist fees. Partners Hospital will get 15% of the $270 million in increased Medicare reimbursement that was also part of the health care legislation.

The AFL-CIO came out against the plan. In a statement issued by President John Sweeney on April 5, 2006, he said:

Who would have thought that Massachusetts, long considered a bastion of progressive thinking, would take a page out of the Newt Gingrich playbook for health care reform? Forcing uninsured workers to purchase health care coverage or face higher taxes and fines is the cornerstone of Mr. Gingrich’s health care reform proposals. And it is unconscionable that Massachusetts has adopted this misguided individual mandate.

This legislation leaves middle-income families dangling without a safety net, jeopardizes families who currently have employer-sponsored health care, and gives employers a free ride.

Movement for Single Payer

Upon signing this bill the Republican Governor crowed about this ending the “single-payer canard.” Why would he do this?

The fact is that since the 1980s there has been a very large movement fighting for a single-payer health insurance plan for Massachusetts. The coalition Mass-Care has a membership of over 80 organizations that have endorsed single-payer legislation.

Among the tactics the single-payer movement has used are “non-binding advisory questions” that can be put on local ballots, to inform elected representatives of how their constituency feels on issues. In 1994 the Labor Party put the issue of single-payer on the ballot in six State Senatorial Districts and one State Representative District. In each area the question passed with 70-80% support.

In 1986 a statewide referendum question calling on Congress to create a national health care system passed by 66%.

Since then others have taken up this approach, which has passed in seven other State Representative Districts. Thirteen City and Town governments have endorsed the idea. Every poll that has been taken has shown that an overwhelming majority of the people of Massachusetts endorse the creation of a single-payer health plan.

Interestingly, at the time the Labor Party was campaigning for the advisory question on single payer there was also on the statewide ballot a binding referendum question (Question 5) mandating health care for all in Massachusetts, without spelling out how this would be paid for. The Labor Party ballot question, in contrast, specifically stated that single-payer health insurance could provide coverage for all by eliminating insurance companies and their profits.

The insurance industry waged an expensive campaign against Question 5, claiming it would be expensive and that people’s taxes would have to be raised to pay for it. Question 5 failed by a narrow margin, but the Labor Party single-payer question passed with over 70% in favor.

In our hometown of Greenfield, both questions passed, but the Labor Party question got about 15% more votes. Many told us on election day that they voted against Question 5 because they couldn’t afford more taxes, but voted for single-payer because it stated how it would be paid for.

So why don’t we have a single-payer plan in Massachusetts? It is not a matter of Republican opposition to single payer; for all practical purposes the Republican Party doesn’t exist in Massachusetts.

The problem lies within the Democratic Party. Although the official program supports single-payer health insurance, only 12 of 40 Senators and 33 of 160 Representatives have signed onto this year’s version of the Single-Payer bill. Money talks and this year showed that fact clearly.

Changing Consciousness

Our support for a single-payer plan extends beyond the fact that it is a cost effective way to provide health care for all. It also raises a valuable question with the ability to change class consciousness.

The heart of the single-payer concept is the elimination of the insurance companies’ right to make a profit from people’s basic needs. By putting forward the idea that capitalists should not have the unfettered right to make money off our basic needs starts people thinking.

Recently, one of us was talking with an older white man after we had just ratified a new union contract. The main issue of the negotiations, of course, was health insurance costs. I had always thought he was slightly conservative. During the discussion he raised the issue of single payer and said he was in favor of it. He then went on to say that it wasn’t right that big companies made money off food and gas and heating oil.

It is possible that the major problem here is that the working class of Massachusetts, although politically advanced enough to support the idea of single-payer health insurance, has not yet figured out that we need to create new forms of political organization to turn majority support into reality.

Breaking with the Democrats is too scary a proposition for too many in the labor movement, even when the Democrats barely give labor a nod any more. Too often the labor movement confines its demands to Unemployment and Workers Comp.

For the AFL-CIO to come out against the health care legislation was a big step forward, but it was also offset by SEIU turning away from the single-payer movement and endorsing the health care bill.

Will the Massachusetts Health Care legislation ever be put into effect? That remains to be seen. It will be a mess if it is, and there is a good chance that it will die before implementation. The driving force to keep it going will be the threat of the cutoff of Medicare funds.

Whatever the result, the real question we face in Massachusetts is how to create real forms of political organization for workers that can enable us to fight for systematic changes that make the other class pay.

ATC 124, September-October 2006