Health insurance lessons from Massachusetts;

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San Jose Mercury News (California)

SACRAMENTO, CA — As Gov. Arnold Schwarzenegger and legislative Democrats wrestle over universal health care, one overriding issue is holding up a deal: how to provide decent, affordable insurance to everyone without breaking the bank.

Another state on the East coast is learning firsthand how vexing that dilemma can be.

Massachusetts captured the nation’s attention last year when Republican Gov. Mitt Romney and the Democrat-dominated Legislature teamed up to pass a law they said would all but eliminate the ranks of uninsured.

The plan resembles Schwarzenegger’s universal health proposal in some important ways: Both require everyone to carry insurance, make it more accessible through free or subsidized coverage for lower-income people and penalize employers that don’t provide insurance for workers.

Eighteen months later, a few things stand out about the Massachusetts experience. About a third of the state’s uninsured have enrolled in coverage, a group that includes some of the most needy.

At the same time, the high costs of health care already dealt one blow to the program, and skeptics say the initiative may buckle under money pressures in the coming years.

“We’re covering more people, but it’s not sustainable over the long haul. The law does nothing to control costs,” said Alan Sager, a professor of health policy and management at Boston University. Still, he added, “Massachusetts is much better off with this law than without it.”

About 200,000 people who were uninsured a year ago now have coverage, state officials say, a remarkable feat in the eyes of many.

“People who were uninsured and using emergency rooms for care have jumped at the chance to get health insurance,” said Brian Rosman of Health Care for All, a Massachusetts advocacy group.

But all but a fraction of those who have become insured have signed up for free or heavily subsidized insurance.

The bigger challenge — reaching those who don’t qualify for government help and must buy insurance on their own — is proving more difficult, even though officials are just beginning to fully implement the law.

In short, Massachusetts is struggling to reconcile the law’s central tenet — a requirement that everyone in the state carry insurance — with the high, ever-growing cost of health care.

That issue is at the crux of health care negotiations in California, too. Schwarzenegger wants everyone to have to carry insurance, much like the Massachusetts plan does; Democrats say it won’t work without some assurance it will be affordable.

But defining what’s affordable, the Massachusetts experiment shows, isn’t easy.

Earlier this year, officials exempted about 60,000 people (estimates of the uninsured there range from about 400,000 to 650,000) from the health care mandate after concluding that making them buy insurance would eat up too much of their income.

Concerns about affordability are expected to escalate in the coming months, when residents will face fines of hundreds of dollars — and, later, thousands — if they fail to buy insurance.

How people respond to that requirement could determine whether the Massachusetts effort ultimately succeeds or fails. There are also questions about whether the state will have the money to keep pace with rising insurance costs.

The state agency enforcing the health initiative has launched a full-fledged ad campaign to educate people about the law.

Massachusetts residents soon will have to show proof of health insurance on their state tax returns, an idea that Schwarzenegger also has embraced.

“The theme of the ads has been to purchase health insurance because you’re better off with it,” said the agency’s spokesman, Dick Powers.

“A couple of weeks ago we started to harden that message: If you don’t buy it, you’ll face a penalty. We’ll find out in a couple of months if that increases enrollment. We’re certain there will be people out there who will resist.”

The fine for not obtaining insurance would be about $216 this calendar year, but in subsequent years the state intends to fine people half the cost of a minimum insurance plan.

Even the insurance that officials have deemed affordable could be a stretch for many families.

The least-expensive insurance plans offered through the state program lack prescription drug coverage and include a $2,000 per year deductible for individuals and $4,000 for families (checkups and other preventive care is typically excluded from the deductible).

That means people with significant medical needs could be forced to spend more than 10 percent of their income on health care. Democrats in the California Legislature, by contrast, are pushing for an out-of-pocket cap of 5 percent.

Massachusetts tackled health reform from a much stronger position than California is in now. Seven percent to 10 percent of Bay State residents were uninsured at the start, compared with 18 percent to 20 percent here.

A higher percentage of people are insured through work than is the case in California. And Massachusetts already had in place regulations on insurers that Schwarzenegger suggested, so fewer reforms had to be made at once.

“Massachusetts faced far fewer hurdles in reforming its health care system than California does,” said Carmen Balber of the Santa Monica-based Foundation for Taxpayer and Consumer Rights, which is tracking Massachusetts’ efforts and says California needs to regulate insurance rates as part of any health reform effort.

“Nevertheless, as far as the affordability of health care goes, it’s not working there.”

Celia Wcislo, a longtime health care union organizer in Massachusetts who sits on the state board implementing the law, said the panel spent many hours debating the proper balance between affordability and the need to insure people. Critics, she said, are premature in declaring the law a failure.

At the same time, she acknowledged that the program may be on shaky financial ground. Health care costs continue to rise at a faster clip than inflation. And the reform plan assumed that about 7 percent of the state’s residents were uninsured — on the low end of estimates, Wcislo said.

“We’re OK for now,” she said. “But if it turns out to be significantly higher, the state Legislature will have to figure out how to raise more funds or tax somebody else.”

A few possibilities being raised: boosting the tax on businesses that don’t offer insurance, currently $295 per worker; or increasing the cigarette tax.

Whatever its flaws, it’s clear the Massachusetts plan has helped tens of thousands of uninsured residents get coverage.

They include people such as Jim Farioli, a 61-year-old Springfield resident who lost his job as an ink technician a few years ago when his shop closed. Farioli had stopgap insurance through a federal Cobra plan, but at more than $400 a month he couldn’t afford it on his $10-an-hour security guard salary.

After hearing an ad earlier this year, Farioli called the Massachusetts health program, known as Commonwealth Care, “on a whim” and quickly was enrolled.

A few months later he was treated for a heart condition that required a four-day hospital stay. He never saw a bill.

“It’s a good thing I had it, or I probably would have lost my house,” said Farioli, who qualifies for virtually free coverage because he earns less than $15,000. “It’s been a real blessing.”

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