Health: A Good Model

Massachusetts has set a constructive example for the nation with its adoption of legislation mandating basic health insurance for virtually all workers in the state.

Under provisions of the new law, all employers with more than five workers will be required to provide basic health-insurance coverage or pay a premium on their wages that will be used by the state to ensure the protection. The plan will be phased in, to be fully operational in 1992. When it comes on line, its net cost to the state for the first year, including some special funding for hospital improvements, will be $195 million, a small fraction of a total state budget of $11 billion.

In Massachusetts, an estimated 10% of the population is without health insurance. That is lower than in many states, including California. As in most states, the majority of those without insurance are employed, but at low wages, or are the dependents of the working poor. A particular advantage of the Massachusetts plan is that it is expected to encourage employment for people on welfare, who now cannot afford to take low-wage jobs because they would lose the health insurance available to them on welfare.

The action in Massachusetts has taken on national implications because of the presidential candidacy of the state’s Democratic governor, Michael S. Dukakis. The bill is the handiwork of a leading Democrat, Patricia McGovern, chairman of the Senate Ways and Means Committee, but it has been strongly supported by Dukakis. Indeed, because of his close association with it, Republicans in the state senate who had earlier supported the measure voted in opposition on the final vote.

It is the second significant universal health-care proposal to emerge from Massachusetts. A similar measure to mandate health insurance on a national basis has been introduced by Sen. Edward Kennedy (D-Mass.) and has passed its first committee hurdle in the U.S. Senate. Both measures address an extraordinary gap in the American health-care system that has left more than 30 million persons without any protection. Recognition of the problem is growing in Washington, fortunately, for the best solution would be a national program rather than attempting, state by state, to solve the problem.

The Massachusetts legislation uses as its insurance base a cost of $1,680 a year, thought to be enough to ensure basic family health-insurance coverage. Employers who fail to provide health insurance would be taxed at 12% of the employee’s first $14,000 in earnings, equal to $1,680. If the employee earns less, the tax would be 12% of the actual earnings, with the state making up the difference from the general fund to meet the basic insurance cost. Employers paying for costlier programs would not have to pay the surcharge.

Opponents have argued that the program will be catastrophic, ending the economic boom that Massachusetts is now enjoying. Sponsors of the legislation argue the contrary, confident that the new benefit will help attract even more people to meet labor shortages created by the boom. We think the sponsors are correct.