Wednesday, April 12, 2006
Every uninsured citizen in Massachusetts will soon have affordable health insurance and the costs of health care will be reduced. And we will need no new taxes, no employer mandate and no government takeover to make this happen.Well how about that! So how do we invent this? Mitt's plan has three parts:
Some 20% of the state's uninsured population qualified for Medicaid but had never signed up. So we built and installed an Internet portal for our hospitals and clinics: When uninsured individuals show up for treatment, we enter their data online. If they qualify for Medicaid, they're enrolled.
That isn't free, then -- it's a cost shifted onto the Federal system.
Another 40% of the uninsured were earning enough to buy insurance but had chosen not to do so. Why? Because it is expensive, and because they know that if they become seriously ill, they will get free or subsidized treatment at the hospital. By law, emergency care cannot be withheld. Why pay for something you can get free?
That's a gross oversimplification. They may choose not to buy insurance for many reasons that make perfect sense, including the possibility that they are healthy. Yes, emergency care may be needed in catastrophic circumstances, but the solution to that is a catastrophic plan. The welter of insured services demanded by the Mass plan goes far beyond catastrophic care.
Arnold Kling points out that if the costs go beyond the premium by much in this case, the insurance companies -- who have been compelled to create these plans -- will have a claim on the state to hold them harmless. So what we will have, in short, is state-provided catastrophic care, rather than individual-mandated. In short, Kling says, if you are requiring premia of less than $2000 for health insurance that on average pays out $6000 per policy, someone is getting soaked and it won't be the insurance companies for very long.
Another group of uninsured citizens in Massachusetts consisted of working people who make too much to qualify for Medicaid, but not enough to afford health-care insurance. Here the answer is to provide a subsidy so they can purchase a
private policy. The premium is based on ability to pay: One pays a higher amount, along a sliding scale, as one's income is higher. The big question we faced, however, was where the money for the subsidy would come from. We didn't want higher taxes; but we did have about $1 billion already in the system through a long-established uninsured-care fund that partially reimburses hospitals for free care. The fund is raised through an annual assessment on insurance providers and hospitals, plus contributions from the state and federal governments.
How did the fund gain such a surplus? It is paid by a combination of general tax revenues from other state government, the federal government, and a tax on insurance providers and hospitals. The last are being taxed with one hand and given back part of their money with the other. The rest of their money -- which before would have made up for the shortfall from free care -- now would be given to individuals instead to subsidize their purchase of health insurance.
If I understand this right, the fund becomes irrelevant if nobody is uninsured ... so what keeps putting money in that fund?
As Don Boudreaux says, damn reality.
*There Ain't No Such Thing As Free Health Care For All