Health Reform Lessons from Massachusetts, Part X

Unintended consequences for low-income workers

Four years ago, the Commonwealth of Massachusetts enacted a far-reaching health reform law that politicians and the media hailed as a model for other states and the federal government. That law has become the blueprint for health system change on a national scale, and its advocates have aggressively marketed a variation of the Massachusetts plan that has passed the Senate and House of Representatives. This is the tenth in an occasional series of posts that will continue to explore how well the Massachusetts law is working with an eye toward helping the press and the public understand its flashpoints. The entire series is archived here.

Kudos to Jeremy Smerd, a health care reporter for the business publication Workforce Magazine, for an illuminating piece about a little-mentioned consequence of the Massachusetts reform law. Smerd’s piece stands out from most of today’s health care reportage for several reasons: it’s long enough (but not too long) for the reader to get the gist of the problem he addresses; it discusses something the law’s cheerleaders and the media outlets that follow them are not eager to discuss; and it does so using an anecdote that’s neither predictable nor trite.

His lede:

Massachusetts’ health insurance mandate has more workers getting coverage through their employers but has left many low-wage earners in a financial quandary—and it hasn’t put a dent in rising health care costs. The state’s health care experiment offers a cautionary tale for federal health reform efforts.

Well, we know that the law has done nothing to reduce health care costs, but what is this business about low-wage workers being in a financial bind? Smerd reports that the Massachusetts law forces many low-wage workers, like home health aides, to buy the increasingly unaffordable health insurance from their employers. This puts additional stress on their already stressed household budgets. Mike Trigilio, president of Associated Home Care, told Smerd that his employees “are barely able to muster enough money together for rent or food, let alone health insurance. In the past a lot of employees would go without it. Now they are forced to take it, and it puts a strain on them and on our company.”

If a Massachusetts business with more than fifty full-time workers offers insurance and pays at least one-third of the premium, its employees are no longer eligible for state-subsidized coverage. As Smerd reported, these employees can decline the health insurance—but they will pay a fine for doing so, unless the state determines the premiums they would have to pay are not affordable. If they want insurance, though, they must take what their employer offers them, even if it busts the family budget. It’s the same old affordability question that has dogged people in Massachusetts and lawmakers in Washington as they struggle to replicate the Bay State’s law on a national scale.

Campaign Desk has pointed out that the state’s employers, and small business owners in particular, are facing huge rate increases this year—20 to 45 percent. Some are paying even more. This is a cautionary tale for the pols trying to craft some kind of bill that will please both Democrats and Republicans.

Smerd interviewed Richard Lord, who heads a business trade group, the Associated Industries of Massachusetts. Lord noted a conundrum that Washington is facing. He said that to make insurance more affordable in the state, legislators could have required employers to pay more toward their workers’ insurance and pay heavier fines if they didn’t. But that would have doomed the Massachusetts law. Exactly what obligations employers will have under national reform is still unclear, but employers have not been eager to assume greater costs for health insurance, and may get a pass in the end.

Smerd also offered valuable context for one of the Massachusetts law’s widely touted successes—that more people are getting their insurance from employers. The state’s employers tended to offer coverage even before the law was passed, and more people now are taking it. Smerd wrote:

Today, 96,000 more people in Massachusetts get their health insurance through their employer than before reform. The reason for this increase is that workers who are required to have insurance have few options.

This is the question on the table in Washington: What’s buried deep in those bills that would require workers—especially those at the bottom of the income ladder—to take their employer’s coverage even if they can’t swing it? What about their family members? Will they have to take it as well? Remember, the president has said repeatedly that people can keep the insurance they have, but he hasn’t said much about keeping insurance they can’t afford. Ah, another devil in the details!
