Half Measure

7 April 2006



Massachusetts Forces Residents to Buy Health Insurance

Massachusetts is awaiting Governor Mitt Romney’s likely signature on a bill that would require every resident of the state to purchase a health insurance policy. The plan won bipartisan support, marries liberal and conservative concepts, and is seen as a boost to the governor’s presidential ambitions. The fact that it is socialized medicine through the backdoor shouldn’t bother anyone.

The state house passed the bill 155-2, and the state senate gave the 145-page bill its unanimous blessing. Margins like that are evident that there is something in it for everyone. For the insurance companies, there will be 500,000 more customers, which makes business happy. In addition, people who can’t afford policies will get government subsidies to buy them. That makes social democrats happy while not offending “free marketeers” who don’t object to government giving subsidies to the private sector but who hate the idea of a government insurance entity. They are less happy about the requirement that businesses that have more than 10 employees have to provide coverage or pay $295 per worker per year, but not lethally so. For those who simply don’t want to buy health insurance but who can afford it (an attitude that is mysterious in the extreme), there will be tax penalties to force them to comply.

In Massachusetts, an estimated 500,000 people are without health insurance. That doesn’t mean that when they get sick or injured they aren’t treated. What it means is they consume a great deal of time and resources in emergency rooms without having to pay for it. The rest of the commonwealth picks up the tab. This bill ends that by bringing people into the system.

Naturally, if one really didn’t want to participate, Massachusetts isn’t such a big place that leaving, or merely altering one’s legal residence, is difficult. Opting out is merely a matter of having one’s official mail delivered to an address in Rhode Island, Connecticut, or Vermont. None of these is much of a commute.

While this plan offers a great benefit to the state, it is only a matter of time before the state discovers that insuring people indirectly through subsidies to the private sector doesn’t really provide efficient market-based solutions. Subsidies undermine market incentives and market disciplines. One can expect the costs to blow right through the estimates, and people will demand that something be done. From there, the only solution is a single-payer program with universal coverage because there is no way politically to remove health insurance from people who can’t pay once they have been given it. The question becomes whether this program succeeds well enough initially to spread to other states before its cost over-runs turn up. The farther it spreads, the bigger the mess will be to clean up. If it's big enough, Uncle Sam will have to step in and create what Harry Truman wanted done back in the 1940s -- federal health insurance for all Americans.

© Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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