Why the Massachusetts Plan is Doomed
Massachusetts, led by Republican governor Mitt Romney, recently adopted a form of universal healthcare. (If you haven't kept up on this story, read here, here and here.)
I applaud the impulse, but unfortunately the plan does not address the problems that are driving people out of the system. In fact, it appears likely the Massachusetts plan will quickly make matters worse for that state.
The plan requires every citizen to find and purchase health insurance for themselves and their familes. Residents who fail to comply will pay extra on thier income taxes, an amount estimated to be $1,000.00. Employers are required to provide health insurance or pay a fine of $295.00.
What the plan fails to recognize is that people respond to incentives. For most individuals and businesses, it will still be significantly cheaper to pay the added taxes than to enroll in health care plans.
So the effect is to pass a large tax increase under the guise of health insurance reform.
If the plan did work as intended, it could only drive up costs by increasing demand.
The real problems of the healthcare system, as both conservatives and liberals have noted, is that the current system is a misbegotton state supported olgiopoly with no cost controls. In a true free market, where people could become informed of the actual price of the goods and services they are shopping for, and actual competition was permitted, the plan might make sense.
Instead, I predict the state will see costs rising even faster than the current dizzying pace while state revenues lag far behind. I see large numbers of employers choosing to pay the fines that cost far less than insurance, thus driving more individuals into the market for indivual health insurance. Forced to pay 100% of the cost of their own insurance, these people will be looking to change the mess they've created.
I only hope this misbegotten plan does not yet again set back the cause of reform.
I applaud the impulse, but unfortunately the plan does not address the problems that are driving people out of the system. In fact, it appears likely the Massachusetts plan will quickly make matters worse for that state.
The plan requires every citizen to find and purchase health insurance for themselves and their familes. Residents who fail to comply will pay extra on thier income taxes, an amount estimated to be $1,000.00. Employers are required to provide health insurance or pay a fine of $295.00.
What the plan fails to recognize is that people respond to incentives. For most individuals and businesses, it will still be significantly cheaper to pay the added taxes than to enroll in health care plans.
So the effect is to pass a large tax increase under the guise of health insurance reform.
If the plan did work as intended, it could only drive up costs by increasing demand.
The real problems of the healthcare system, as both conservatives and liberals have noted, is that the current system is a misbegotton state supported olgiopoly with no cost controls. In a true free market, where people could become informed of the actual price of the goods and services they are shopping for, and actual competition was permitted, the plan might make sense.
Instead, I predict the state will see costs rising even faster than the current dizzying pace while state revenues lag far behind. I see large numbers of employers choosing to pay the fines that cost far less than insurance, thus driving more individuals into the market for indivual health insurance. Forced to pay 100% of the cost of their own insurance, these people will be looking to change the mess they've created.
I only hope this misbegotten plan does not yet again set back the cause of reform.
posted by Mike at 5:05 AM
0 Comments:
Post a Comment
<< Home