Massachusetts Healthcare Giveaway

Erin Thompson May 4, 2006

Big insurance and pharma poised to make billions, citizens saddled with the bill.

Ted Kennedy supports it. Hillary Clinton supports it. And the insurance, hospital and pharmaceutical industries most certainly support it. Welcome to Massachusetts’ brave new world of healthcare reform, which promises to banish “the old single-payer canard,” in the words of Republican Gov. Mitt Romney, by emphasizing “personal responsibility” and mandating that all state residents purchase private health insurance. Massachusetts is set to become a testing ground for profit-driven healthcare reform and a possible model for other states.

“I think other states might try to pass this bill, but they’ll find out, like Massachusetts, that this bill is a hoax,” said Dr. Steffie Woolhandler, an internist and associate professor of medicine at Harvard, and a founder of Physicians for a National Health Program (PNHP), a single-payer advocacy group.

“It’s a bad bill – it is a political response to a political problem,” added Dr. Alan Sager, director of Boston University’s Health Reform Program. He notes that bipartisan enthusiasm for the bill had less to do with its feasibility than with the impending loss of $385 million in federal Medicaid funds if the state failed to address the problem of the uninsured.

Lawmakers estimate the number of uninsured in the state at 550,000, while the U.S. Census Bureau put it at 750,000 in 2004.


The new law mandates that beginning in July 2007 all Massachusetts residents either purchase a plan or be taxed up to 50 percent of the cost of insurance, which averages $4,000 per individual and $11,000 for family coverage in the state. For those making less than 100 percent of the poverty level, their insurance will be fully subsidized, while those earning up to 300 percent would receive a sliding scale of subsidies.

Implementing the program might be more difficult than passing it. “I wouldn’t put too much on [the] initial wave of endorsements,” said Benjamin Day, executive director of Mass-Care, a healthcare reform advocacy group. Day thinks there is a good chance the program will be delayed and called it “a step in the wrong direction.” He said that the bill lacks “any attempt to contain or cut costs.”

Massachusetts healthcare costs are estimated at $59 billion for 2006 alone, and the program offers little in the way of subsidies. The bill budgets $58 million for private insurance subsidies in the first year, and $125 million in subsequent years, far below estimates that it will cost up to $4 billion to provide these subsidies.

“It’s a sham,” said Dr. Leo Rodberg, an associate professor of health policy at Queens College and a co-founder of PHNP. According to Rodberg, most of the subsidies won’t even make it to the intended recipients. Instead, the money will go “mainly to the large hospitals that serve the poor. Almost no new money is [in] this program to provide insurance,” he said.

If subsidies are inadequate, those who can’t afford the cost of insurance will have to buy barebone policies that won’t guarantee healthcare, in what Dr. Sager called, “imaginary health insurance for real people.”

For single-payer proponents, the program represents a “last ditch attempt by the corporate insurance companies and their cohorts to keep the profits coming into their coffers,” said Marilyn Clement, executive director of Health Care-Now, which is pushing for a national single-payer system.

The program was heavily pushed by insurers, pharmaceutical companies and hospitals. According to the Boston Globe, healthcare lobbyists received $7.5 million in 2005, far more than any other industry lobby in the state. Big spenders on lobbying included Blue Cross-Blue Shield of Massachusetts and Harvard Pilgrim Health Care, which stand to gain tens of thousands of new customers. Big businesses in general also joined the lobbying battle, replacing a provision which placed a steep tax on employers that fail to provide health insurance with a modest levy of $295 per employee instead.

“If you look at the money involved here, it’s very clear what this is about and what it is not about,” said Rodberg.

The perceived success or failure of the new law could prove to be a watershed as other states eye their own healthcare crises. “[This is] a high-profile bill… All eyes will really be on Massachusetts,” said Day.

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