More Evidence I Was (Unfortunately) Right About The “Massachusetts Miracle”

February 23, 2007

Reuters files an update about the Massachusetts health reform law as reality starts sinking in:

“Now comes the tricky part, say policy experts and people involved in Massachusetts’ law: designing affordable plans for the many uninsured people whose earnings put them only slightly above the poverty line.”

Here’s one problem:

“A state board created to help arrange coverage is reviewing those standards following estimates that the average uninsured individual would need to pay $380 a month for health coverage.”

Officials say that is too high.”

A Boston health administrator explains the obvious:

“‘The penalty in the first year is the loss of your personal tax exemption. For a working poor person that can range from nothing to $150 a year. Why would you buy health insurance at a cost upwards of $3,000 a year if you’re relatively healthy and the penalty is likely to be $150?’ he said.”

Here’s what I wrote at the time (and I felt like a voice in the wilderness, as politicians and bigshots congratulated and high-fived each other):

The fine for not participating in year 1 is $150. Premiums will be in the thousands, even with subsidies – and that’s for the healthiest pool of candidates, young adults. (Others are guessing $2,400, but I’d be willing to go as high as $3,000.) So participation in Year One will be limited to people who have every reason to believe they’ll get $2,000 or $3,000 worth of care out of the system. They’re likely to be pretty sick folks.

So, as a refresher, here’s what happens next. The insurers will have horrible underwriting experience as only the sickest buy this coverage. Then they’ll raise their rates even more in year 2. Lower-income people will have the chicee of paying usurious rates or becoming tax refugees, to all intents and purposes.

It’s supposed to be satisfying to say “I told you so.” Not in this case.

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