With health care reform in the air because of the current presidential primaries, I thought I would explore the Massachusetts Healthcare Plan which some candidates past (Romney) have touted as the solution for all of America. Health care reform is something I feel strongly about and an issue that is both complicated and confusing.

The highlights of the Massachusetts are:

  • Individual Mandate - Forces individuals to pay for insurance or impose a fine that’s nearly 50% the cost of insurance
  • Subsidized Health Insurance for Low Income Earners ($29,400 for Individuals and 60,000 for a family of four)
  • Penalties for Employers who fail to offer insurance to employees
  • A government run marketplace for private individual and small group insurance - The Health care Connector

The Massachusetts plan is a hybrid private/public solution. It uses the legal power of the Government to mandate that both individuals and employers contribute to sharing the cost of health care either by purchasing insurance or penalties if insurance is not chosen while still allowing consumers choose specific plans offered by private insurance companies. It shifts some of the monies that have in the past gone directly to paying for the cost of caring for the uninsured towards subsidies for individuals to help pay for health insurance.

I thought I would shop for a plan and compare it to the plan I currently have via my employer. The Massachusetts’s Health Connector effectively breaks the plans into three categories; Bronze, Silver and Gold

  • Bronze - Smaller Network, Low Payments, Higher Co-payments and Deductibles
  • Silver - Moderate Co-payments, and higher Deductibles than Bronze plans and smaller networks than Bronze plans
  • Gold - Comprehensive Network, Low Co-payments, No Deductibles

While I personally would most likely opt for a Bronze plan with the higher out of pockets costs, I would actually prefer higher out of pocket costs and a comprehensive network. This is not an option. This is no great loss, however since people like me generally already have insurance through work - which I do.

I compared three different plans, one from each category.

  • Bronze, Neighborhood Health Plan, $201.30 Monthly Premium,  $2,000 Deductible, $5,000 Max, $25 Doctor Visit, 20% co-insurance on lab tests
  • Silver, Advantage HMO Select 750, $271.50 Monthly Premium, $750 Deductible $5,000 Max, $15 Doctor Visit, lab tests covered under deductible
  • Gold, Blue Cross Blue Shield, $526.90 Monthly Premium, No Deductible, $10 Doctor Visits, lab tests are free

These plans are not cheap, but like many fortunate Americans, I don’t actually know if these plans are expensive. I have never shopped for health insurance. I’ve always had insurance through work, and as a result have had no reason or option to shop around. For comparison my insurance has no deductible, $1,250 Annual Max I pay out of pocket, and $25 Doctor’s visits.  While I know I pay approximately $200 from the “flex” dollars I get as part of my benefits package, I actually have no idea what the total cost that is actually paid by the company.  One reason insurance and health care is so expensive is neither the cost of insurance nor the cost of health care is transparent.  I don’t know what insurance costs, and I definitely don’t know what lab tests cost.  Neither doctors or individuals are given incentive to minimize costs.

I think part of this lack of transparency is related the employer paid nature of health insurance. Why is health insurance tied to an employer, and full time employment for that matter? That linkage has increased the incentive for employers to prefer temporary or part time workers over full time employees. While I think that companies and individuals should share the social burden of health insurance, it would be much simpler to do so via a payroll tax (while potentially cutting other taxes) to help insure the uninsured. I also believe if we let individuals not only pick and choose their insurance but give them actual exposure to the cost of care, lower prices would result. This was the hope in Massachusetts, but it has yet to happen. The road to sustainable universal health insurance is a long one, and one that will require tinkering. Not everyone will get everything they want. Those who already have quality care may find waiting times for appointments may go up and we will probably have to accept that universal care will not truly cover everyone for everything.