Monday, May 14, 2007

The Massachusetts Health Plan--Even the Uninsured Deserve Choices

The publisher of Health Market Survey returns with comments on what he believes is the fatal flaw in the new Massachusetts health plan:

The Danger In The Massachusetts Health Plan

by Bill Boyles

Reputable and well-meaning people continue to applaud the Massachusetts health plan as a flawed but solid first start on covering the uninsured. A guest New York Times columnist last week fell into the trap (May 10). But this is a dangerous attitude which actually postpones the day we will have a scalable, national solutions that will actually work.

Almost everybody who knows health financing (versus academic theory) now knows that the Massachusetts health plan will fail. The name of the game is timing: how long can we stretch out the myth that this might work to get beyond the next election or until the public forgets.

The big goof is the one that is the most fixable. The idea of a single benefit design applied to a large uninsured population has never worked, and never will work. You can’t force Americans to buy health insurance they can’t afford. Instead a real plan will give the uninsured lots of benefit options – preferably dozens of options. Sure some people will pick the lowest premium with the least benefits – that’s their choice. I have no problem with creating a standard benefits package for prevention benefits only that is mandated because the impact on premiums is so small it is worth it to almost everybody.

The fatal flaw here is the perpetual variation in purchasing power across the uninsured population, something never mentioned by true believers. Purchasing power for medical care involves personal tradeoffs that are life-changing in the case of people with very low disposable income. No single benefits option can possibly address this because it will always be too rich for a majority of the uninsured. No tradeoffs are possible so nobody goes into the program. If you think they will force people in, just wait until they try it.

The only way to get at this is to offer variation in benefits options that give poor people tradeoffs they can make given their own values. A single package is something that works for government actuaries and state legislators. It will never work for low-income uninsured.
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