MASSACHUSETTS HEALTHCARE PLAN ALREADY FAILING

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[From a group of Massachusetts physicians]

MASSACHUSETTS PHYSICIANS - In 2006, our state enacted a law designed to
extend health coverage to virtually all state residents.  Political
leaders in other states as well as several Democratic presidential
candidates have embraced this model.

Massachusetts' law mandates that uninsured individuals must purchase
private insurance or pay a fine. The law established a new state agency
to ensure that affordable plans were available; offered low income
residents subsidies to help them buy coverage; and expanded Medicaid
coverage for the very poor. (Immigrants are mostly excluded from these
subsidized programs.) Moneys that previously funded free care for the
uninsured were shifted to the new insurance program, along with revenues
from new fines on employers who fail to offer health benefits to their
workers. In addition, the federal government provided extra funds for
the program's first two years.

Starting January 1, 2008 Massachusetts residents face fines if they
cannot offer proof of insurance. Yet as of December 1, 2007 only 37% of
the 657,000 uninsured had gained coverage under the new program. These
individuals often feel well served by the reform in that they now have
health insurance. However, 79% of these newly insured individuals are
very poor people enrolled in Medicaid or similar free plans. Virtually
all of them were previously eligible for completely free care funded by
the state, but face co-payments under the new plan. In effect, public
funds for care of the poor that previously flowed directly to hospitals
and clinics now flow through insurers with their higher administrative
costs.

Among the near poor uninsured (who are eligible for partial premium
subsidies) only 16% had enrolled in the new coverage. And barely 7% of
the uninsured individuals with incomes too high to qualify for subsidies
had enrolled according to the official state figures. Few can afford
premiums for even the skimpiest coverage; the lowest cost plan offered
for a couple in their fifties costs $8,200 annually, and carries a
$2,000 per person deductible.

Moreover, the state's cost for subsidies is running $147 million over
the $472 million budgeted for fiscal year 2007. Meanwhile, collections
from fines on employers who fail to provide coverage are 80% below the
original projections.  The funding gap will widen in future years as
health care costs escalate and insurers raise premiums. Already, state
officials speak of making up the shortfall by forcing patients to pay
sharply higher co-pays and deductibles, and by slashing funds promised
to safety net hospitals.

While patients, the state and safety net providers struggle, private
insurers have prospered under the new law, and the costs of bureaucracy
have risen. Blue Cross, the state's largest insurer, is reaping a
surplus of more than $1 million each day, and awarded its chairman a
$16.4 million retirement bonus even as he continues to draw a $3 million
salary.  All of the major insurers in our state continue to charge
overhead costs five times higher than Medicare and eleven-fold higher
than Canada's single payer system. Moreover, the new state agency that
brokers private coverage adds its own surcharge of 4.5% to each policy
it sells.

A single payer program could save Massachusetts more than $9 billion
annually on health care bureaucracy, making universal coverage
affordable.  But because the 2006 law deepened our dependence on private
insurance, it can only add coverage by adding costs.  Though politically
feasible, this approach is already proving fiscally unsustainable.  The
next economic downturn will push up the number of uninsured just as the
tax revenues needed to fund subsidies fall.

The lesson from Massachusetts is that we still need real health care
reform: single payer, non- profit national health insurance.

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