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Message From Massachusetts:
Insurance Requirement Can Provoke Anger

May 31, 2009

Gary Cloutier

Gary Cloutier at his auto body shop in Westfield, Massachusetts. Cloutier objects to the Massachusetts law that requires most people to buy health insurance. While he has gotten an exemption from the penalty, he says he still can't afford an insurance policy: “Where am I supposed to get the money from?” he asks. (photo by Karen Brown)

This story is a collaboration between KHN and  NPR

This story was revised on June 23, 2009.

WESTFIELD, Mass. -- If Congress wants all Americans to get health insurance, it will have to win over people like Gary Cloutier, owner of Cloots Auto Body Shop.

The stocky 47-year-old shows up every day to a cluttered, fume-filled garage, even when there are few cars to repair. His business has plunged 40 percent in the last year, since people stopped getting their fenders fixed. Some months he doesn’t pay himself a salary, and his utility bills pile up unpaid. So the idea of buying health insurance right now seems ludicrous. "Where am I supposed to get the money from?" Cloutier asks.

His question is directed squarely at the state of Massachusetts, the first in the nation to require residents to have health insurance. But it also goes to the heart of what President Obama and many in Congress are working towards – universal coverage. Achieving that goal would likely require most Americans to pay some or all of the cost of obtaining policies at a time when people are losing jobs and income.

Massachusetts Law:

  • Requires nearly every resident to have health insurance.
  • Provides free or subsidized insurance for people making up to three times the poverty level (about $32,000 for an individual) who don't have the option of employer-based insurance.
  • In 2009 imposes a penalty up to $1,068 at tax time on people without insurance. It’s waived for those who make too much money to qualify for a subsidy but not enough to reasonably afford private insurance.
  • Establishes minimum requirements for all health policies, including drug coverage, a cap on hospital deductibles and unlimited sick visits.

In this regard, Massachusetts has become a laboratory for national policymakers. Today, three years after its health care law passed, 97 percent of state residents are insured, the highest coverage rate in the country. But a primary tool to achieve that rate – the requirement that nearly all people obtain insurance or risk a hefty penalty – remains the most controversial part of the state’s health reform efforts.

Cloutier is angry even though his roughly $40,000 a year income qualifies him for a waiver, meaning he would not be fined for failing to buy insurance. The state, in his view, still wants to force “something down my throat.”

 Public resistance has mostly revolved around the high cost of private insurance plans and the limits of government subsidies. It hasn’t helped that the legislature – trying to balance a deeply stressed budget – is proposing to take away coverage from some people, including legal immigrants awaiting permanent status, who are currently in the state’s public health insurance plan. That would push thousands more into the private insurance market, a move that has drawn dire warnings from consumer groups that have, up until now, supported the mandate.

The problems that dog Massachusetts, a relatively wealthy state, could be even more daunting when stretched across the nation. For one, most other states are starting with considerably more uninsured residents than Massachusetts had. Poorer states have higher rates of unemployment, fewer companies willing to subsidize their workers’ policies and tighter state budgets. Imposing a mandate in those conditions would either anger more people – or require even larger public subsidies.

Yet, prominent Washington Democrats – including Sen. Max Baucus of Montana and Massachusetts Sen. Edward M. Kennedy – see the individual mandate as a pre-condition of universal coverage. By forcing all people into the insurance mix, advocates say, the cost of everyone’s premium will go down.

But arguments against a national mandate come from all political corners. Some opponents on the left insist that a mandate puts an undue burden on the low and middle class; that it’s essentially a gift of millions of new customers to the insurance industry, and that it would be fairer to tax everyone and create a government-run system. Conservatives are more likely to view the mandate as government interference in health care, and complain about the public cost of subsidizing people who can’t afford private insurance.  

Spreading the risk

And then there’s the consumer point of view, which – as Massachusetts has shown – depends very much on whether you will now be told to buy insurance, and whether you can.        

The Massachusetts mandate grew out of a debate on how to bring down the number of uninsured residents, then estimated at around 600,000, without bankrupting any one entity. Lawmakers settled on a model of “shared responsibility," in which the growing burden for health costs is shared between government, business and individuals.

“The way to spread the risk is to get everybody on board,” says Neil Cronin of the Massachusetts Law Reform Institute, which advocates for low-income consumers. "If you leave an insurance system only to the sick and the elderly, and everybody else gets out of the system, then the cost of that care or that insurance rises dramatically for those people who are heavy utilizers.”

Reformers were also taking aim at uninsured people who could afford coverage. When they got sick or had an accident, taxpayers ultimately had to help pay the resulting hospital bills. "The whole system was subsidizing that group of people,” says Andrew Dreyfus, vice president of Blue Cross Blue Shield of Massachusetts and an early architect of the reform law. “And I think it makes sense to bring them in."     

Gary Cloutier doesn’t agree – at least, not the way Massachusetts is going about it. He makes too much money to qualify for a state subsidy but not enough to buy a policy. "Given the toxic chemicals that I'm dealing with day in and out in my line of business, I'm probably a walking cancer time bomb right now,” he says. “If I could have afforded insurance, I’d have it by now.”          

A poll by Harvard University and the Blue Cross Blue Shield of Massachusetts Foundation, published in October 2008, found that 69 percent of Massachusetts residents approve of the health reform law when it's presented as "universal coverage" for all state residents. But when the mandate was isolated on its own merits, only 58 percent approved. That number dropped to 37 percent among those who were directly affected.  

Harvard School of Public Health Professor Robert Blendon, who directed the poll, cautions policy makers in Washington not to underestimate that resistance – which, he adds, is likely to be even fiercer in states more conservative than Massachusetts. "There are parts of this country where there's sort of the libertarian argument that you just shouldn't make people do things, period."

Subsidies ease the pain

From the beginning, Massachusetts lawmakers expected some hostility to the mandate – and took steps to temper it. One way was to create a subsidized insurance program called Commonwealth Care for people making up to three times the poverty level, or $66,000 for a family of four. For those outside that category, the Connector Authority – an agency in charge of implementing the reform law – had promised to broker "affordable" private policies. However, bids from insurers came back much higher than expected; the average family premium is about $1,000 a month.

Some premiums rose more after the state came up with a list of minimum benefits every policy had to include, such as prescription coverage. "Here's the challenge and difficulty at this point," says State Representative John Scibak. "What the state has determined is affordable, and what the health insurance providers are offering, don't necessarily mesh."       

So the state extended one more olive branch: a penalty waiver for people who make too much for a state subsidy, but too little to afford insurance. It's based on an "affordability" formula put out each year by the Connector Authority. Blendon says the waiver – given to 76,000 people last year – has helped forestall a modern Boston Tea Party, but it hasn't completely solved the mandate's public relations problem. "Even though the law is written in a way that affordability is taken into account, there is an anxiety in a share of people in the state that it doesn't work out that way," he says.        

Some resistance stems from ignorance of the waiver section of the law. Initially, Cloutier was among many who didn’t even know he could qualify for a waiver until he filled out his taxes.

"(People think) the state is going to fine me, arrest me, throw me in jail," says Kate Bicego, who manages a helpline at the consumer group, Health Care for All. But "the vast majority … aren't going to be penalized."

That’s a relief to many, but it contributes to a lingering, hard-to-solve problem: getting the remaining uninsured, who number about 200,000, into health plans. Officials wonder how the increase in the penalty this year to $1,068 will affect consumers’ decisions to buy insurance.

Gambling on good health

Data reported by the state in December showed that a majority of those still holding out against the mandate are young, healthy adults. That's a key demographic the mandate was designed to bring in, because they tend not to cost as much in health care. And that's exactly why they tend not to buy health insurance.

"We're all arrogant and we all think nothing’s ever going to happen to us," says Lucas Wyant, a 27-year-old house painter with long hair and an easy-going manner. "I just try not to do anything too dangerous in my life. I actually think about not going downhill skiing and stuff.... I test my luck once a year and hope I don't get hurt."

Wyant makes roughly $35,000 a year, and would be eligible for a low-cost plan – less than $200 a month – that the state negotiated for young adults. "I could pay for it," he says, "but it would be a little bit hard for me to pay that much a month for something that I don't really use."

On the flip side, hundreds of thousands of previously uninsured people have obtained policies. Since the penalty went into effect, about 150,000 residents have enrolled in their employers' plans. Another 245,000 have signed up for free or subsidized state-funded insurance. And almost 40,000 Massachusetts residents have bought full-price policies on their own, even if they weren’t happy about doing so.

Michael Delaney is a self-employed title examiner in Easthampton who used to pay out of pocket for occasional doctor’s visits. He now spends $415 a month on an insurance premium -- about 10 percent of his income.

"What it means practically speaking is, I can't take a decent vacation," says Delaney, 59. "I can't save any money towards retirement, I can't prepay my mortgage.  I'm pretty much breaking even right now." Delaney does concede that, at his age, it's probably wise to have insurance, and even if his income falls below the threshold for a penalty, he'll likely keep his coverage.

There’s been no public discussion of rescinding the health care law or the mandate, but there are signs of strain. Pressure on two sides of the mandate – the rising cost of insurance premiums (two to three times the rate of inflation) and recession-fueled proposals to shrink the public subsidy – threaten to weaken public support further.

Whether the American public – and Congress – would support a national mandate remains a bigger question. In a December 2008 poll by the Kaiser Family Foundation and Harvard School of Public Health, 67 percent supported a mandate that included help for people who couldn’t afford to buy insurance.  But approval fell to 19 percent when they were told some people would be required to buy policies they found too expensive or didn’t want. (KHN is a program of the Kaiser Family Foundation.)

"I don't think [a national mandate] would be easy to pass, but I think it could pass," says Ron Pollack, president of Families USA, a nonprofit that advocates for comprehensive coverage for all Americans. He draws on a lesson from Massachusetts’ experience. "But it only makes sense if it is accompanied by enough subsidies so that people can actually afford coverage."  

Karen Brown covers health policy for NPR member station WFCR in Amherst, Massachusetts.

Editor’s Note: This story has been revised to clarify the fact that, based on his stated income, Gary Cloutier would not be required by Massachusetts law to pay a penalty for failing to obtain health insurance.

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