Proceed with Caution

The new Massachusetts health plan has dominated the policy conversation over the past week, causing more division among conservatives than liberals.

The law, designed to make the state the first in the nation to achieve universal health coverage, was signed on Wednesday by Gov. Mitt Romney. He was flanked at the invitation-only ceremony by the Democratic leaders of the Massachusetts legislature and by Sen. Ted Kennedy, a long-time advocate of universal health coverage.

The biggest concern among conservatives is the requirement that every individual in the state must purchase health insurance or face financial penalties.

Mandates are almost impossible to enforce, even with the fines and other enforcement provisions in the law. Further, the state must specify what kind of insurance people are required to buy and how much they should pay, taking away the ability of markets to freely compete and for people to purchase the coverage of their choice.

We were also concerned about the back-door employer mandate. The legislature wanted to force employers with 11 or more employees to pay a $295 annual fine for any employee without health insurance. The Governor vetoed the provision, but leaders of the heavily Democratic House and Senate have said they will override.

House Speaker Salvatore DiMasi called the veto disingenuous, saying the law was crafted with concessions and compromise. “To change anything will disturb the delicate balance that made this law possible,” DiMasi said. Note to employers: $295 is only the beginning.

While many conservative groups, like the Pacific Research Institute, the Cato Institute, and the Council for Affordable Health Insurance, have been highly critical of the plan, The Heritage Foundation has been very involved in helping the Governor craft the legislation. The Governor credits Heritage with creating the new FEHBP-like insurance connector to offer insurance options and collect and distribute premiums. Bob Moffit of Heritage stood behind the Governor at the signing ceremony.

An integral provision is the requirement that every employer with more than 10 employees – think your local automotive garage – must offer a Section 125 cafeteria plan so employees can use pre-tax money for their insurance premium contributions.

And that’s only the beginning of the reporting requirement, mandates, penalties, and other enforcement provisions in the new law, for example:

  • The law requires every employer and employee in the state to sign “under oath” a Health Insurance Responsibility Disclosure form, testifying to whether the employer has offered insurance and whether the employee has accepted or declined.

  • It creates at least 10 new boards and commissions to create and run the new health system, such as the Health Care Quality and Cost Council, the Payment Policy Advisory Board, and the Health Access Bureau.

  • New and existing state agencies will be checking on individuals’ insurance status, monitoring their income to see if they qualify for subsidies, and tracking individual health habits (like smoking and wellness activities) to determine their insurance rating category.

There also is a major expansion of Medicaid and S-CHIP to cover children up to 300% of poverty, and the state makes it clear that it is doing all it can to maximize collection of federal matching funds to help finance the new plan.

My biggest concern is over the financing. The state says it is just moving money around – redirecting about $1 billion in uncompensated care money to subsidize health insurance for those under 300% of poverty (about $50,000 a year for a family of four).

But there is nothing in the law to keep health insurance costs from soaring. Policies offered through the new health insurance Connector must have first dollar coverage and include all of the 40 coverage mandates on the books, with none of the provisions that are working in the private sector to engage consumers as partners in managing health costs. Estimated premiums are unrealistically low and will quickly lead to higher taxes and “assessments” on individuals and employers.

Nonetheless, newspapers around the country are falling over each other in their effusive praise of a Blue state, led by a Republican governor, building a bridge across the political chasm to go where no other state has gone before.

Gov. Romney’s term ends this year, and he is likely to be spending a lot more time in Iowa and New Hampshire than in Massachusetts as this plan gets up and running. But I worry that he has laid the foundation for what can become a very intrusive, onerous, and expensive health plan for Massachusetts. Other states, which are firing up their Xerox machines now, should wait to see how this works out before rushing to follow the Bay State’s lead.


And Health Policy Matters will skip next week because Grace-Marie will be attending the Heritage Resource Bank Meeting in Colorado. Best wishes to everyone for a blessed Passover and Easter.

Grace-Marie Turner


  • Health savings accounts: It’s all good
  • Health advisors will facilitate consumer decision-making
  • Don’t get caught in the last-minute chaos
  • Most seniors enrolled say drug benefit saves money
  • Power to the patients
  • Two-thirds of large employers now offering incentives to improve employees’ health

Author: Grace-Marie Turner
Source: Orange County Register, 04/06/06

Grace-Marie Turner weighs in on the debate over the value or danger of Health Savings Accounts (HSAs) in a commentary in the Orange County Register. “HSAs are not a silver bullet but one tool in stabilizing our health sector by helping to reduce the number of uninsured people,” writes Turner. She argues that studies from Blue Cross Blue Shield, Deloitte’s Center for Health Solutions, America’s Health Insurance Plans, and others dispel many of the myths about the dangers of HSAs. “Unless more people and businesses find ways to cut health costs, we will certainly see a further deterioration in the number of people with health coverage,” concludes Turner. “HSAs and their accompanying higher-deductible health coverage can keep individuals and small businesses in the game.”
Full text:

The White House released two fact sheets on Health Savings Accounts last week. They can be found online at: and

Author: Grace-Marie Turner
Source: Galen Institute, 04/13/06

Grace-Marie Turner has updated and expanded her report on the growing number of services in the health care marketplace to help people become smarter consumers of health care. “People do need expert help in navigating the growing complexities of treatment options, and the health sector is beginning to respond by offering options such as health coaches and chronic care management programs to help,” writes Turner. But she says that is only the beginning: “Health advisors will be an emerging force in the new world of consumer directed health care – trusted agents that people will rely on both for routine health care advice and for help in making complex medical decisions?Information leads to empowerment, especially when someone is facing a crucial medical decision,” writes Turner. “The need for Information can be solved by an information economy?Patients will get smarter, and they will force the health care economy to become more efficient and more patient centered.”
Full text:

Author: Grace-Marie Turner
Source: Galen Institute, 04/11/06

Grace-Marie Turner urges seniors to enroll in the new Medicare prescription drug benefit before the May 15 deadline in her latest op-ed running in newspapers across the country. “Seniors who don’t sign up by the May 15 deadline simply won’t get as good a deal as those who do,” she writes. “They’ll have to wait until the next enrollment period in November for their next chance to sign up. And their premiums will increase by 1 percent every month they delay, adding at least 7 percent to the cost.” Much of the media coverage of the drug benefit has been critical, but most new enrollees are satisfied. A survey by America’s Health Insurance Plans found that “[m]ost seniors — 85 percent — have experienced no problems using their new benefits, and 59 percent already are saving money,” writes Turner.

Grace-Marie also reminds seniors of the importance of signing up for the Medicare drug benefit in this audio news release:

Authors: Jeffrey H. Birnbaum and Claudia Deane
Source: The Washington Post, 04/12/06

A new Washington Post-ABC News poll found that of seniors enrolled in the Medicare drug plan, “three-quarters said the paperwork was easy to complete and nearly two-thirds said the program saved them money,” reports the Post. It also found that 6 in 10 seniors admit to not knowing a lot about the new Medicare program. “Retiree Nancy Hooper of Williamsburg, Iowa, 67, worried that the savings from Part D would not be worth the hassle — or the extra premium,” reports the Post. “But the cost of medications for herself and her husband were reduced by more than half, even after figuring in their $53.10 monthly premium.”
Full text:

Author: Peter Pitts
Source: The Wall Street Journal Europe, 04/12/06

Lifting the European ban on direct-to-consumer (DTC) advertising for prescription drugs could have a positive impact on health across Europe, writes Peter Pitts of the Center for Medicine in the Public Interest. “Many European officials seem convinced that drug ads would be harmful to the benighted masses ? who, upon seeing one, would lose their ability to make intelligent purchasing decisions,” writes Pitts. But evidence from other countries suggests that DTC advertising could have a positive effect on public health by encouraging unhealthy people to visit their physicians where undiagnosed ailments often are detected and treated. Further, a recent public opinion survey of eight EU member states shows that the majority of European consumers believe that more health care information would likely increase their quality of care. A European Commission patient advocate representative points out, “We are in this ludicrous situation in Europe, where anyone is free to give information, quite legally, about pharmaceutical products – except the industry which makes them.”
Full text (pdf):

Source: PricewaterhouseCoopers, 04/10/06

Two new surveys reveal that executives and physicians believe they have a long way to go to provide quality information to health care consumers. First, a PricewaterhouseCoopers survey of 135 top executives of major companies found that only one in four gives high priority to data about quality of care. The majority “offer their employees programs and incentives for improving their health and well-being?[but] only 19% of these describe these programs as strong or above-average.” Further, while 39% provide healthcare data to employees, only 36% measure employee satisfaction with the data. A second survey by the Commonwealth Fund finds similar problems among physicians. Commonwealth reports that while “a wide majority of physicians are in favor of ‘patient-centered care,’ less than a quarter score high in incorporating patient-friendly practices into the care they deliver.” Three-quarters of primary care physicians had problems with availability of patients’ medical records or test results, less than half have adopted patient reminder systems, and less than a quarter use electronic medical records.
Full text of PricewaterhouseCoopers’ news release:
Full text of Commonwealth Fund report:


The Cutter Incident: A Legal Tale of Unintended Consequences for Vaccine Development
American Enterprise Institute Event
Friday, April 14, 2006, 10:00 – 11:30 a.m.
Washington, DC

For additional details and registration information, go to:

Employer- Sponsored HSA Benefits Plans
HSA Working Group Briefing
Wednesday, April 19, 2006, 3:00 – 4:00 p.m.
Gold Room, Rayburn House Office Building Room 2168

This briefing will provide a chance to learn more about Health Savings Accounts from the marketplace; three stories of education, implementation and healthcare security. Please RSVP at:

Combating the Diseases of Poverty: Aid versus Innovation
American Enterprise Institute Event
Wednesday, April 19, 2006, 3:30 – 5:00 p.m.
Washington, DC

For additional details and registration information, go to:

Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features research and writings by participants in the Health Policy Consensus Group, articles of interest from the health policy world, and announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at

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