On Friday, the Foundation for Taxpayer and Consumer Rights stated that a recently implemented Massachusetts law that makes the owning of health insurance mandatory for all state citizens fails to be a healthy model for California health reform.
Under the new Massachusetts law, by April 15, 2008, all residents have to prove on their tax returns that they have purchased private health insurance or be charged with financial penalties.
A proposal modeled on the Massachusetts law was put forth on Wednesday by California Governor Schwarzenegger. The FTCR says that his proposed law fails to take into consideration the affordability crisis faced by Massachusetts residents while also including a provision of that would encourage insurance companies to raise their premiums. Under that proposal, California health insurance providers will be allowed to keep 15% of premium revenue for overhead and profit.
The FTCR points out that coverage in Massachusetts is already considerably more expensive than promised and insurers, whose premiums are not capped or regulated, have indicated that they will increase their premiums again next year.
“Insurers, who will keep 15% of premiums no matter what they pay doctors and hospitals, will be all too happy to pay more–and charge policy holders more–in order to keep more,” said Jerry Flanagan of the FTCR.
Massachusetts officials have estimated that 18% of those residents currently uninsured cannot afford insurance at all , and the vast majority of new enrollees since the ostensible July 1st, 2007 deadline have needed to receive subsidies to pay for their policies.
“They will end up paying more for less health care — an inevitable outcome when individuals are forced to purchase private health insurance and costs are not regulated. While it is beneficial to provide health care to the working poor, the Massachusetts plan is far from solving the un-affordability of private insurance for middle-income workers. The plan, with its very small employer penalties, also may encourage employers to steeply reduce or eliminate work-based coverage,” said Carmen Balber of the FTCR.
Some critics have already pointed out that mandatory health insurance requirements, such as those proposed on the federal level by Democratic Presidential hopefuls John Edwards and Hillary Clinton, are un-Constitutional, and they say that the Massachusetts law, which is the first of its kind and is modeled on a state law, common in most states, mandating all drivers of motor vehicles to carry motor vehicle insurance, is in fact in violation of that state’s constitution.
These critics contend that health insurance cannot be treated like auto insurance. In order to drive a car in any state, one has to attain a license, which is issued by the government to legalize one’s ability to drive. In order to maintain the legalized privilege to drive, one has to comply with all stipulations-which in most states includes carrying motor vehicle insurance. If one fails to comply, one becomes unable to drive legally and the government will penalize them if they drive illegally.
However, they say, health insurance is by its nature a private contract between an insurance company and an individual. Nobody requires a license from any government to enjoy and protect their good health; and for any state or the federal government to try that in the United States would violate the Constitution, as it would violate the Right to Life. Without the need to comply with licensing stipulations to legalize a privilege (which is distinct from a right), protecting one’s own health cannot be turned into a mandatory act, is the conclusion.
Some economists are also critical of mandatory health insurance plans, saying that such plans do nothing to address the real problems facing America’s health care system and will only compound the existing financial problems tangled up within the current system.
Foundation for Taxpayer and Consumer Rights (PR Newswire), “Massachusetts Mandatory Health Insurance Purchase Law is No Model for California”