Wednesday, April 12, 2006

Gay Marriage Leads to Socialism

That undoubtedly is the opinion of many religious and social conservatives upon learning that Massachusetts, whose legislature approved same-sex unions last year, is now poised to make that state the first in the nation to mandate universal healthcare. And if they are seeking confirmation of their worst fears, they need look no further than the array of liberal bogeymen lining up to endorse it.

Senator Hilary Clinton of New York – former First Lady and failed dominatrix of national healthcare policy – praised the legislation as "bipartisan" and "commendable." Teddy Kennedy has made it clear that he will swim the extra distance to keep it alive. Democratic political strategist James Carville calls it "a feel-good story" and predicts it will mark Massachusetts Republican Governor Mitt Romney as "an ascendant guy."

The Berkshire Eagle, published out of Pittsfield on the state's western border, lauds "truly universal, affordable, continuous, equitable and comprehensive care to the citizens of the Commonwealth . . . a single-payer healthcare system, in which the government collects and administers the funds for healthcare." The catch is that the system it describes is what the Eagle believes Massachusetts needs instead of the package championed by Romney and the legislature.

There are aspects of the plan that should be viewed with hopeful optimism and there are others that deserve healthy skepticism. However, it is not a valid criticism to claim the bill amounts to socialized medicine. Romney himself describes the plan as "a Democratic ideal . . . but achieved in a Republican way."

That is not a bad way to characterize it – think "No Child Left Uninsured." Rather like the President's education initiative, the Massachusetts healthcare legislation is big on setting standards and punishing for non-compliance, while failing to address core problems and glossing over exactly how it will all be paid for.

The idea of states attempting to address health insurance gaps for their citizens is not new. Maine passed a law in 2003 to dramatically expand healthcare but that relies largely on voluntary compliance. Illinois approved a subsidy plan last year that dramatically increases coverage for needy children. Iowa provides health insurance for every resident earning less than two times the poverty level. Hawaii requires all employees who work more than twenty hours per week to obtain health insurance.

Massachusetts is unique, however, in being the first state attempting to truly provide health coverage for everyone and to make participation in its plan mandatory for everyone. It represents a combinatorial approach from two studies. In late 2004, the Urban Institute recommended the state impose a mandate on everyone to get insurance and in 2005, MassACT, a coalition of labor and religious groups, began calling for levying a hefty assessment on employers that do not provide insurance.

The Massachusetts bill entails both. Individuals earning less than the federal poverty level will be able to obtain subsidized policies with no premiums or deductibles. Individuals earning between the poverty threshold and three times that amount will be able to buy subsidized policies on a sliding scale, based on their ability to pay. Individuals earning more than three times the poverty level who refuse to get health insurance will face increasing tax penalties until they obtain coverage. Businesses with more than twenty employees who do not offer insurance coverage will be required to pay a $295 annual fee per employee.

This explains the enthusiasm by so many disparate camps, at least in theory, with which the legislation has met. Liberals like the ideal of coverage for the impoverished and mandated coverage by employers. Conservatives, meanwhile, embrace the idea of self-responsibility and the fact that private insurance companies will continue to provide actual coverage.

Romney is hoping its passage will provide his Presidential ambitions with a practical achievement that backs up the argument his experience as a Republican in a Democratic state will help him break the partisan gridlock of Washington. Healthcare is also an issue that polls show is an ever growing concern for U.S. voters.

However, the bill is also a practical product of necessity. It should effectively kill a proposed ballot question that also sought increased health coverage but by means such as raising cigarette taxes by fifty cents, imposing a payroll tax on businesses that fail to cover workers, and dramatically expanding government insurance programs. What is more, the new bill saves federal matching funds for Massachusetts to the tune of $385 million over each of the next two years. The money is promised if the state can show it is on a path to reducing its number of uninsured and was set to expire on July 1 of this year.

The proposed system is not without loopholes. Waivers can be given to people who cannot find insurance. If those waivers are drawn too generously, the number of remaining uninsured will exceed expectations. This could become significant if insurance companies cannot provide affordable policies to people just above the subsidy point. The Massachusetts plan cuts off all subsidies after three times the poverty level. Data compiled by the Urban Institute indicates that subsidies for up to at least four times the poverty level will probably be required.

Then there are the Cambridge Health Alliance and Boston Medical Center, the two hospitals most dependent on the state's Uncompensated Care Pool, which is supposed to be transferred into the new system. Fierce political patronage within the Massachusetts Senate assured neither would be hurt during the initial transition but it is not clear how long that can be extended.

The whole affordability of the plan is nebulous at best. Its viability hinges on the presumption that it will cost no more than current state-sponsored healthcare. Governor Romney remains Republican enough to refuse even considering the possibility of a tax increase. The plan also assumes only about five hundred thousand individuals are uninsured in Massachusetts today. However, Census Bureau data suggests that number is really closer to three quarters of a million people.

Then there is the inevitable complaint that mandating coverage for companies with as few as twenty employees will hurt small business owners. The lamentations of Jim Bailey, president and owner of car service company JB Livery Service Inc., which currently does not offer health insurance to its twenty employees, is typical. "We're operating on a tight margin . . . I'm just a little guy," moans Bailey. "And they wonder why companies are moving out of Massachusetts."

There is a legitimate point here but it is unrelated to government always attacking small businesses. Rather, it lies at the failure of this nouveau "Massachusetts Miracle" to deal with the real structural problem at play – the rising cost of healthcare and the unwillingness of insurance companies to supply affordable coverage.

As always, competition will force private insurance providers to lower prices to some degree. Yet as Juliana Kolson-Lyman, general manager of Savenor's Market, notes in the current issue of the Boston Business Journal, employers often have precious little wiggle room when negotiating with insurance companies today. If insurance carriers know that employers and employees are mandated to provide and obtain coverage respectively, that will only strengthen the industry's bargaining position.

Combine this with the fact that the penalty being assessed for noncompliance by business is relatively small compared to the ever-rising cost of health insurance – and Governor Romney wants to remove even this from the Massachusetts package – and businesses may increasing decide it is easier simply to pay the fine than provide the coverage. And that economic justification may be just as appealing for companies providing insurance today as for those who do not, as Robert Pozen, chairman of MFS Investment Management, pointed out in yesterday's Boston Herald.

Even if it all works out somehow, it seems unlikely to be easily translated to other states or the federal level, especially in places where the Executive and Legislative Branches are controlled by the same Party, unlike Massachusetts. That undercuts the national prestige and Presidential push that Romney hopes this bill will give him. It is something for the GOP leadership to think twice about.

Romney wishes to run as a moderate who can play off urban undecided voters against the Party's core. That might have worked for Bush in 2000 but I question if it will work today, especially with the issue of government mandated universal healthcare, which many conservatives will reject as anathema.

Edwin Amenta, professor of sociology at University of California Irvine and New York University and author of the forthcoming When Movements Matter: The Townsend Plan and the Rise of Social Security, wrote on Saturday in the Boston Globe that healthcare reform at any level "can happen only if the Democrats return to power."

Democrats may be more willing to raise taxes, as Amenta argues, to generate the necessary revenues to make the system work. But it seems to me that either Party is likely to topple the societal responsibility/individual responsibility balance that makes the Massachusetts plan so popular. Moreover, neither seems willing to go to the mat with either the Big Insurance or Big Health service industries to control costs.

The Romney/Massachusetts plan may be slapdash and only able to hold together temporarily but it may get a few more people temporarily insured and that is a good thing or at least better than nothing. However, a headlong rush into socialized medicine it most assuredly is not.

Posted by The_Bell.
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