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Owning Up to the 'M' Word in Massachusetts

APRIL 19, 2006 -- The "individual mandate" requiring uninsured residents of Massachusetts to obtain health coverage is widely perceived as the key to the political breakthrough that led the state last week to adopt a plan for virtually universal health care coverage. But the truth is that an employer mandate also is a key part of the mix, state policymakers said at a Washington forum Tuesday.

Massachusetts House Speaker Salvatore F. DiMasi, a Democrat, told the forum that come Monday or Tuesday of next week, Massachusetts lawmakers intend to vote overwhelmingly to override Republican Gov. Mitt Romney's veto of the law's employer mandate. Under the mandate, employers with 11 or more full-time workers would be required to pay $295 per year for each worker without coverage.

Boosters of the Massachusetts law note that its mandate is far milder than employer mandates that doomed past attempts to provide universal or near universal coverage in the U.S.

And universal coverage just won't happen without some form of mandate, said another speaker at the event, John McDonough, executive director of Health Care for All, a Massachusetts advocacy group funded by various foundations.

The liberal advocacy group, Families USA, sponsored the event.

In the debate over the Massachusetts law, the "default" position of advocates of either type of mandate was to do nothing at all if their own approach did not prevail, McDonough recalled. But he said DiMasi helped save the day by saying, "Wait a minute, let's do both."

Critics of the individual mandate who thought it was unfair to penalize individuals without coverage rallied around the plan once it was revised to also penalize employers who fail to provide coverage, McDonough said.

Had employers not been also asked to contribute, a backlash against the individual mandate would have doomed the plan politically, DiMasi said.

Fees collected through the employer mandate would go to help pay for subsidies to low-income residents to buy coverage. Romney has said there is enough money to make the plan work without the penalty on employers.

If individual mandates by themselves are non-starters politically, Urban Institute researcher John Holohan emphasized that that is definitely the case for employer mandates alone.

Veterans of past campaigns to cover the uninsured have failed repeatedly with that approach and in Massachusetts wanted to at least fail in a different way by also trying an individual mandate, he said.

DiMasi said the key politically for other states that want to follow his state's lead is not only having both mandates but also avoiding new taxes. Holohan opined, however, that taxes in the state may have to be raised at some point to assure adequate subsidies for low-income residents to buy coverage, but only modestly.

Phil Edmondson of Health Care Today, a coalition of religious, consumer, provider, and union groups in Massachusetts seeking wider coverage, said businesses were willing to go along with the plan because they were tired of paying the costs of caring for the uninsured through cost-shifting. Hospitals charge higher rates to employer health plans because of costly emergency room care given to uninsured patients.

Those rates should come down if the uninsured have coverage and get primary care at the doctor's office instead of waiting until their medical condition gets bad enough to require costly emergency room care, boosters of universal coverage contend.

Although the relatively low penalty Massachusetts employers must pay for failing to provide coverage helped the plan get through the Massachusetts Legislature, some analysts wonder whether it will lead employers to drop health coverage. One attendee at the event asked why employers wouldn't just pay the penalty to avoid the much higher costs of providing health coverage.

Edmondson responded that employers could avoid coverage costs completely now by dropping coverage altogether but offer it to attract good employees—a dynamic he suggested will remain under the law.

Speakers at the event were all boosters of the law and of its employer mandate. Romney will weigh in next week in Washington at a "Policy Insiders" breakfast April 25 sponsored by the U.S. Chamber of Commerce.

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