Consumer Group to Nunez: Massachusetts Mandatory Health Insurance Purchase Law Is No Model for California

   A California proposal modeled on the Massachusetts law, by Assembly Speaker Nunez, fails to correct for the affordability crisis faced by Massachusetts residents. In fact, a provision of Nunez's proposal encourages insurance companies to raise rates. Under that proposal, insurers will be allowed to keep 15% of premium revenue for overhead and profit.

   "Insurers, who will keep 15% of premiums no matter what they pay doctors and hospitals, will be all too happy to pay more -- and charge policy holders more -- in order to keep more," said Jerry Flanagan of FTCR. "Both the Massachusetts and California laws will inevitably lead to unaffordable costs for individuals and taxpayers."

   Under the new Massachusetts law, by December 31, 2007, residents must be able to prove they have purchased private health insurance or face financial penalties. Coverage in Massachusetts is already much more expensive than promised and insurers, whose premiums are not capped or regulated, have indicated rates will increase again next year. Massachusetts Senate President Murray has proposed mandatory hearings into rate increases over 7%.

   Massachusetts' law would require citizens to spend up to 10% or more of their incomes on health insurance. Co-pays and deductibles are not included in the 10%. Even at that stiff upper limit, the state estimates that 18% of the uninsured cannot afford insurance at all, including everyone making just over the subsidy cutoff of 300% of the federal poverty level. The same percentage of the uninsured in California would include over one million people.

   "In just six weeks, Massachusetts consumers must have health insurance or pay a penalty under the law. They will end up paying more for less health care -- an inevitable outcome when individuals are forced to purchase private health insurance and costs are not regulated," said Carmen Balber of FTCR, author of the report on Massachusetts' law. "Families with children, older consumers and middle class families are some of the most likely to be lacking health care. They're also the first to fall through the cracks under Massachusetts' mandatory private insurance plan because insurers won't provide an affordable product unless the state controls costs."

   Few middle-income Massachusetts consumers have enrolled in the new mandatory coverage. Only 6% of new enrollees are buying private plans with no subsidy. Most of the remaining 94% of new enrollees are under 150% of the federal poverty level and receiving full subsidies.

   "While it is beneficial to provide health care to the working poor, the Massachusetts plan is far from solving the un-affordability of private insurance for middle-income workers," said Balber. "Both California and Massachusetts plans, with small employer contributions, also may encourage employers to steeply reduce or eliminate work-based coverage."

   Keywords: Health Insurance, Foundation for Taxpayer and Consumer Rights.

   This article was prepared by Managed Care Weekly Digest editors from staff and other reports. Copyright 2007, Managed Care Weekly Digest via NewsRx.com.

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