High hopes for compulsory contribution health care

July 31, 2012

Free Market Foundation

In April, the U.S. state of Massachusetts agreed on a health care plan that would provide private medical insurance coverage to almost everyone in the state.

Basically, Massachusetts citizens will be required to purchase private health insurance, or they will be taxed to pay for it, much like mandatory auto insurance that most states require. For those who can’t afford the premiums, state taxes will pay for them mostly from the $1 billion fund the state already spends to subsidise hospitals that care for the poor.

But the plan still has many hurdles:

Critics of universal coverage claim that it is too complicated or costly there are too many economic variables, too many technologies developing too rapidly, too many unreasonable expectations, too few market limitations and too many political vectors to contain in any single box.

Even at the state level, universal health care programmes have been tried and failed. California, Minnesota, Hawaii and Vermont have attempted to broker universal coverage, only to have eligibility, coverage or financing erode or disintegrate.

Late last year, Tennessee dramatically slashed its TennCare programme once a model for state health insurance programmes – reducing benefits and cutting more than 190,000 people from its rolls in order to eliminate most of a $650 million health care budget shortfall.

Jonathan Gruber, an economist intimately involved in the architecture of the Massachusetts plan, said there are other potential minefields as the plan moves into place in July 2007. He is concerned with the effect on families caught in the middle with too much income to qualify for subsidies, but too little money to afford premiums now estimated at $325 per month.

“My greatest fear is that in the process of converting, we find a whole segment of the population that simply feels they can’t afford to participate,” says Gruber.

Source: Allen Pusey, High Hopes for Health Care, Dallas Morning News, June 11, 2006.

For text (subscription required): http://www.dallasnews.com/sharedcontent/dws/dn/opinion/points/stories/DN-pusey_11edi.ART.State.Edition1.908d9b8.html

For more on Health: http://www.ncpa.org/iss/hea/

FMF Policy Bulletin/ 20 June 2006