One Size Doesn’t Fit All in Debate Over Healthcare

A Massachusetts law hailed as a national model for providing near-universal healthcare to uninsured residents would be difficult to duplicate in California because of high costs and the vast number of the Golden State’s uninsured.

In California, with an estimated 6.5 million uninsured residents, a similar program could cost $9.4 billion, according to a report by the California Healthcare Foundation.

“However you feel about its feasibility in Massachusetts, it won’t come cheaply in California,” said Mark D. Smith, foundation president. “If you’re having a rational debate about this issue, you cannot proceed with the illusion that it’s going to be free.”

With much fanfare, Massachusetts Gov. Mitt Romney last month signed a bill that created the nation’s most comprehensive healthcare reform plan. The law targets low-income residents without insurance and those who can afford coverage but have none.

Effective July 1, 2007, the plan will require all residents to obtain health insurance or face possible tax penalties.

A state-authorized pool will be created to help connect insurers with individuals whose employers do not offer health benefits; low-income residents will be eligible for government--subsidized discount plans and, in some cases, free coverage.

The program will be mostly paid for with existing state money, federal matching funds and $125 million from the state’s General Fund.

The landmark health reform bill was immediately hailed as a possible national model.

But Massachusetts, with a population of 6.3 million, enjoys a number of economic and demographic characteristics that would make its plan difficult to duplicate in such a large and diverse state as California with 37 million people.

Some key differences:

* California has roughly 6.5 million uninsured residents, compared with Massachusetts’ 600,000, thus a much larger share of the population would require financial assistance.

* California’s employers are less likely to offer healthcare coverage. In 2003, the state’s legislature passed an employer mandate to provide health coverage that was overturned in a ballot initiative the following year.

* Massachusetts will draw on a special $1-billion pool already dedicated to covering healthcare costs for the uninsured. The pool is financed through a variety of sources, including healthcare taxes, federal matching funds, tobacco settlement dollars and other state money.

California has no comparable fund to allocate specifically for the uninsured.

Despite such advantages, some question whether Massachusetts can sustain its plan, given the ever-rising cost of healthcare services, the difficulty of managing affordable coverage and the precariousness of federal subsidy programs.

Even if California chose to follow Massachusetts’ example, healthcare experts said, it would have to consider several major changes.

One option would be to require employers who don’t offer health insurance to pay more into the system, said Lucien Wulsin, director of the Santa Monica-based Insure the Uninsured Project.

That could prove politically difficult, however. The Massachusetts Legislature approved a provision that required employers without health plans to pay an annual $295 fee per employee.

Romney vetoed the provision, but legislators have vowed to override it.

Another option for California would be to require only that individuals buy a cheaper, bare-bones insurance plan, rather than the comprehensive plan Massachusetts requires.

“You need a hunk of money to subsidize [such a policy],” said Robert Blendon, professor of health policy and management at Harvard University. “The larger the policy you require, the larger the subsidy that the state would have to find from somewhere to make it feasible for people to buy.”

Blendon suggested states could start by requiring minimal catastrophic insurance for most individuals, ensuring coverage for major medical expenses.

But a similar plan, proposed by California Assemblyman Keith Richman (R-Northridge), was defeated last month in committee.

Also last month, the Assembly’s health committee passed a bill that would force employers without insurance to pay 75% of the cost of a worker’s healthcare to the state. But the bill received no Republican votes, essential for its passage.

“It would just kill small businesses,” said Scott Hauge, president of Small Business California, a bipartisan advocacy group.

The reason the Massachusetts mandate was able to garner support from both parties is because it spreads healthcare cost among individuals, government and employers, experts said.

“The burden can’t fall on any one group,” said Howard Kahn, chief executive of LA Care Health Plan, a Los Angeles-based health maintenance organization. “You have to bring the different groups together, including employers and health plans.”

But some officials said Sacramento is in no mood for broad healthcare reform in the midst of a gubernatorial election year.

“The real problem has been the lack of political will to address the problem,” said Assemblyman Richman.

“Our legislature is dysfunctional, and it has been in partisan gridlock.”

California has seen three failed attempts over the past 14 years to implement a comprehensive healthcare package.

Yet advocates expressed optimism that Massachusetts’ plan will spark greater debate in California about the idea of the “individual mandate,” which some see as the key to forcing those who can afford to buy insurance to do so.

“We’re not going to get a handle on healthcare coverage,” said Robert Hertzka, former president of the California Medical Association, “until everyone who can is making a real contribution to the cost of their healthcare.”

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A tale of two states

Differences between Massachusetts and California may make it challenging to implement similar health insurance reforms.

*--* California Massachusetts Population under 65 31,860,000 5,162,000 Per capita income $24,420 $28,509 Percent who are uninsured 21% 13% Insured with employer- 57% 71% based healthcare Insured with Medicaid/ 14% 11% Medi-Cal or Healthy Families Percent of private companies 56% 66% that offer health insurance

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Sources: UCLA Center for Health Policy Research, U.S. Census Bureau, American Community Survey Profile, 2003. Graphics reporting by Michelle Keller