Mandatory Coverage Is Easier Said Than Done - New York Times

 

Mandatory Coverage Is Easier Said Than Done

Rick Friedman for The New York Times

AFFORDABLE Jon Kingsdale, executive director of the Commonwealth Health Care Connector, in Boston. The group is a state authority in charge of overseeing an insurance market for individual buyers.

By REED ABELSON
Published: June 11, 2007

IT’S a seemingly simple solution to a nationwide problem: if people do not have health insurance, just require that they buy it. The idea of making coverage compulsory to help reduce the number of uninsured Americans — currently 45 million — is gaining momentum. With a law passed last year, Massachusetts became the first state to mandate coverage. Gov. Arnold Schwarzenegger of California has supported the idea, proposing that his state do the same. In Illinois, mandatory health insurance has become part of a broader discussion of health reform.

Requiring people who can afford health insurance to buy it — the same way that car owners must buy auto insurance — appeals to those who believe that mandatory coverage is fairer than asking everyone else, directly or indirectly, to pick up the health care costs of those who choose not to buy it.

In Massachusetts, lawmakers were able to pass the measure because it was viewed as a grand compromise among employers, the government and individuals.

But the state is discovering that making health insurance mandatory is easier said than done. It has spent the past year dealing with questions about how much basic coverage people need, and how much they can be expected to pay. (The poorest residents receive free or subsidized coverage.)

The state has had to work with insurers to create a market for individual insurance where affordable policies were not readily available. With a half-dozen companies, it developed an array of plans that it offered for the first time last month.

Up to now, Massachusetts has maintained the public’s support for the mandate, said Paul B. Ginsburg, a health economist who is president of the Center for Studying Health System Change, a Washington research group. “So far, there has not been any evidence of uproar,” he said, because the state has been sensitive to those who may not be able to afford insurance and has been slow to levy a large fine on anyone who fails to get coverage.

A mandate is critical, however, to helping the state achieve near-universal coverage, Mr. Ginsburg said. The compromise asks something of corporations, the state and individuals. Companies with 11 or more workers that do not offer insurance to their employees are required to help finance the program by paying $295 a year for each worker. The state is providing money from its Medicaid program and some of the hundreds of millions of dollars it normally pays hospitals and clinics each year for care for the uninsured.

“Nobody’s done this before, so we’re going to be very flexible in our approach,” said Jon Kingsdale, executive director of the Commonwealth Health Care Connector, the state authority creating the market. After much debate, for example, the state is requiring that plans cover prescription drugs, but it allows some plans to have high deductibles.

Nevertheless, forcing people to buy coverage can be difficult, especially when some people do not think they need it. Almost half of the roughly 400,000 uninsured people in Massachusetts are single males, and many young men think “health insurance is for sissies,” Mr. Kingsdale said. Because young males are generally healthy, adding them to the pool of insured would most likely reduce the average cost of coverage over all, given that this particular group is not liable to need expensive treatment.

The goal, therefore, is to generate a market where insurers offer affordable coverage to attract not only these young males but also people who otherwise could not pay for it. The law imposes a fine ($219 the first year and up to half the cost of premiums for the least-expensive policy in 2008) if proof of coverage cannot be shown; residents receive a form to file with their state tax return.

Affordability is critical. To address concerns that a slice of the population is too poor to afford a policy yet not poor enough for free or subsidized coverage, as many as a fifth of the state’s uninsured may be exempted from the law.

Which means that universal coverage remains an elusive goal. “We’ve gotten over a number of significant policy humps,” said John McDonough, the executive director of a Boston consumer advocacy group, Health Care for All. He cautioned, however, “This is not the magic solution that produces genuine, affordable coverage to everyone.”

Most people in the United States rely on their employers or a government program for coverage, and individuals seeking insurance on their own are faced with a difficult, sometimes impossible, task. In a 2005 survey, the Commonwealth Fund, a nonprofit group in New York specializing in health care research, found that nearly 9 out of 10 people who thought about buying individual health insurance never did. Some of those surveyed said they could not find a policy they thought they could afford; others said they were denied coverage.

Shopping for insurance “is not easy or straightforward,” said Parimal Patel, a retired executive in Bedford, Mass., 20 miles outside of Boston. Mr. Patel and his wife are not eligible for Medicare yet, so he looked for a plan to replace the coverage provided by his former employer. He found a comprehensive policy for both of them for $1,350 a month, he said, several hundred dollars less than the policies available before the state worked with insurers under the new law.

To create a viable market for people like Mr. Patel, Massachusetts took several steps, including merging the markets for individual insurance with one for small groups, thus spreading the risk to lower costs. It asked some insurers to come back with plans with lower premiums after reviewing their original bids.

A result, Mr. Kingsdale said, has been plans that offer better insurance for less money. Before the law was passed, a 37-year-old in Boston, for example, would have had to pay $335 a month for a policy with no coverage for prescription drugs and a $5,000 annual deductible. That individual could now buy a plan, including drug coverage, for $175 a month and a deductible of $2,000. To appeal to young adults, the insurers are offering policies for people 19 to 26 years old for about $100 a month.

But some people still find the plans too expensive, especially because the state has mandated that the plans meet certain standards, like prescription-drug coverage.

“If you make everyone buy a Cadillac, you’re going to have more people who can’t afford it,” said Devon M. Herrick, a senior fellow at the National Center for Policy Analysis, a nonprofit research group in Dallas that favors market-oriented solutions.

Massachusetts was also able to lean heavily on the state’s insurers, which are regional nonprofits, like Blue Cross Blue Shield of Massachusetts and Harvard Pilgrim Health Care, as it tried to figure out how to lower the cost of these plans. “We’ve had extraordinary support and cooperation from the local health plans and, frankly, from everyone else, the hospitals and doctors,” Mr. Kingsdale said.

Whether other states will be as successful with insurance companies is unclear, said Edward Kaplan, an executive with the Segal Company, a New York consulting firm that works with employers and others on benefits issues. Many areas of the country are dominated by large national insurers, which may not be as motivated to cooperate in such reforms.

It remains uncertain whether Massachusetts can continue to find the money to pay for free or subsidized coverage, and insurers are also waiting to see whether they can afford the low premiums they are offering. States with more uninsured residents and fewer resources might have trouble finding the money for a similar plan.

Before an individual mandate becomes as commonplace as compulsory auto insurance, Massachusetts must see whether the requirement for insurance helps reduce significantly the number of the uninsured at an acceptable cost. “We’ll try to be the test laboratory for the rest of the country,” Mr. Kingsdale said.