Costs could derail
Massachusetts health reforms
The USA is the only developed country that does not provide universal health insurance. Roughly 46 million Americans, about one in seven, have no coverage, up from 40 million 5 years ago. Most of the uninsured are low-wage workers who earn too much to qualify for Medicaid, the government-run insurance programme for the poor, but too little to afford insurance for themselves or their families. Without coverage, the uninsured are less likely to get cost-effective preventive and primary care and, when sick, are more likely to go to emergency rooms, where treatment is costly and often beyond their ability to pay.
Last week, the state of Massachusetts enacted legislation that supporters say will make health insurance available for all the state's residents. The legislation, which was passed near unanimously by the state's overwhelmingly Democratic legislature and signed by its conservative Republican governor, is being hailed by many as a major step towards reforming US health care. Whether it will prove to be, however, is by no means certain.
The new law allows the state to take the US$1 billion a year that it now gives hospitals for the free care they provide to the uninsured and use those funds to help the uninsured buy coverage. So, instead of subsidising hospitals for expensive emergency room and inpatient care, the state will now subsidise individuals so they can obtain more cost-effective preventive and primary care and pay for hospital treatment should they need it.
Massachusetts' job is made easier by the fact that it already has fewer uninsured than many states. According to government figures, roughly 500 000 of the state's 6•4 million residents lack insurance. About 100 000 of these are, in fact, eligible for Medicaid coverage but have not signed up. Under the new law, funds will be allocated to enrol these individuals in that programme. 200 000 of the remaining uninsured earn too much to qualify for Medicaid but earn less than three times the federal poverty level—$60 000 for a family of four. Under the new law, individuals in this income group will be able to purchase subsidised health insurance on a sliding scale. These are to be comprehensive insurance plans with no out-of-pocket costs. The 200 000 uninsured who earn more than three times the federal poverty level will be required by law to purchase health insurance. Those who do not will be subject to substantial fines. The only exceptions will be those who wish to self-insure, who will be required to put $10 000 in an interest-bearing account and will be subject to wage attachments for any unpaid medical bills.
To make health insurance easier to purchase, the law establishes a private, state-chartered health insurance market, called the Commonwealth Care Health Insurance Connector. This market will in effect allow individuals and small companies to become a large purchasing group that will have the bargaining clout now enjoyed only by large corporations. The law also lifts some insurance mandates, which the law's supporters say will allow insurers to put together more affordable policies. Many of these low-cost plans are likely to have high-deductibles and co-payments. To help consumers shop for the best care, the state will also set up an agency to collect and publish cost and quality information about hospitals and providers.
It is, in many ways, an innovative bill. But, as critics point out, it is regressive. Few people believe the claims of the bill's supporters that health insurers will be able to offer policies costing as little as $200 a month. Instead, many middle-class families are likely to be forced by the law to spend as much as 20% of their income for the mandatory, but bare-bones, health insurance plans.
But the greatest weakness of the bill is that it does little to tackle the biggest challenge facing the US health-care system and the reason why health insurance is unaffordable: cost. US health-care spending continues to spiral upwards, far outpacing inflation, and now consumes 16% of US gross domestic product, far more than is spent by other developed nations. Even the supporters of the Massachusetts reform acknowledge that their programme will run short of money in its third year. Unless some way is found to control costs, by reducing unnecessary and wasteful care, for example, and driving down the high administrative costs of private health insurance, the Massachusetts reform plan will likely collapse in a few years as other celebrated state reform initiatives have done before.
The USA is the only developed country that does not provide universal health insurance. Roughly 46 million Americans, about one in seven, have no coverage, up from 40 million 5 years ago. Most of the uninsured are low-wage workers who earn too much to qualify for Medicaid, the government-run insurance programme for the poor, but too little to afford insurance for themselves or their families. Without coverage, the uninsured are less likely to get cost-effective preventive and primary care and, when sick, are more likely to go to emergency rooms, where treatment is costly and often beyond their ability to pay.
Last week, the state of Massachusetts enacted legislation that supporters say will make health insurance available for all the state's residents. The legislation, which was passed near unanimously by the state's overwhelmingly Democratic legislature and signed by its conservative Republican governor, is being hailed by many as a major step towards reforming US health care. Whether it will prove to be, however, is by no means certain.
The new law allows the state to take the US$1 billion a year that it now gives hospitals for the free care they provide to the uninsured and use those funds to help the uninsured buy coverage. So, instead of subsidising hospitals for expensive emergency room and inpatient care, the state will now subsidise individuals so they can obtain more cost-effective preventive and primary care and pay for hospital treatment should they need it.
Massachusetts' job is made easier by the fact that it already has fewer uninsured than many states. According to government figures, roughly 500 000 of the state's 6•4 million residents lack insurance. About 100 000 of these are, in fact, eligible for Medicaid coverage but have not signed up. Under the new law, funds will be allocated to enrol these individuals in that programme. 200 000 of the remaining uninsured earn too much to qualify for Medicaid but earn less than three times the federal poverty level—$60 000 for a family of four. Under the new law, individuals in this income group will be able to purchase subsidised health insurance on a sliding scale. These are to be comprehensive insurance plans with no out-of-pocket costs. The 200 000 uninsured who earn more than three times the federal poverty level will be required by law to purchase health insurance. Those who do not will be subject to substantial fines. The only exceptions will be those who wish to self-insure, who will be required to put $10 000 in an interest-bearing account and will be subject to wage attachments for any unpaid medical bills.
To make health insurance easier to purchase, the law establishes a private, state-chartered health insurance market, called the Commonwealth Care Health Insurance Connector. This market will in effect allow individuals and small companies to become a large purchasing group that will have the bargaining clout now enjoyed only by large corporations. The law also lifts some insurance mandates, which the law's supporters say will allow insurers to put together more affordable policies. Many of these low-cost plans are likely to have high-deductibles and co-payments. To help consumers shop for the best care, the state will also set up an agency to collect and publish cost and quality information about hospitals and providers.
It is, in many ways, an innovative bill. But, as critics point out, it is regressive. Few people believe the claims of the bill's supporters that health insurers will be able to offer policies costing as little as $200 a month. Instead, many middle-class families are likely to be forced by the law to spend as much as 20% of their income for the mandatory, but bare-bones, health insurance plans.
But the greatest weakness of the bill is that it does little to tackle the biggest challenge facing the US health-care system and the reason why health insurance is unaffordable: cost. US health-care spending continues to spiral upwards, far outpacing inflation, and now consumes 16% of US gross domestic product, far more than is spent by other developed nations. Even the supporters of the Massachusetts reform acknowledge that their programme will run short of money in its third year. Unless some way is found to control costs, by reducing unnecessary and wasteful care, for example, and driving down the high administrative costs of private health insurance, the Massachusetts reform plan will likely collapse in a few years as other celebrated state reform initiatives have done before.
The Lancet , 21 April 2006
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