Mass. Taxpayers Foundation has weighed in (or should I say, “piled on”) with a new report on the MA health reform process. In brief: individual mandate — good; payroll tax on employers who don’t cover their workers — bad; expanding Medicaid — don’t go very far. I might express disappointment — but MTF has been the leading public critic of the House plan since its release in early November. Let’s examine their first two conclusions:
Individual Mandate: “…least expensive approach and the one most likely to extend coverage to all Massachusetts residents.” MTF credits the Urban Institute’s “Roadmap” report for the Blue Cross Foundation as validating this approach. But MTF ignores the Roadmap’s conclusion that $900 million in new dollars is needed to fully support this approach. Plus, MTF — and Gov. Romney — assume that anyone over 300% of the federal poverty line can easily afford to buy insurance with no financial support.
Hmmm. 300%fpl for an individual is $28,710, $38,490 for a couple. If you live in Greater Boston, you are living in one of the highest cost-of-living places in the nation — housing, transportation, food, insurance, you name it. What’s the standard to say this is the magic affordability threshold? There is none.
And like the Governor, MTF assumes there will be “new low cost health insurance products” — the same ones we have been promised by Romney since last fall and have yet to see.
It is remarkable to hear MTF and business leaders cry about the affordability of insurance for wealthy companies like Dunkin’ Donuts and McDonalds, and have not even a smidgen of concern about affordability for real people who will face tax penalties and loss of drivers license if they can’t afford coverage. Love to see any of these folks try to live in Greater Boston on $28K.
MTF assumes enforceability of an individual mandate is no problem because we have one now for university students. But that’s a simple enforcement challenge at registration time — the envisioned insurance mandate will require the Division of Insurance, the Department of Revenue, and the yet-to-be-created Insurance Connector to swap confidential data about millions of individuals to determine who gets punished. Mark our words — if this happens, it will be a costly administrative and political nightmare. This is the place where a word of caution from MTF would have been advised.
Payroll Tax: Not surprisingly, MTF only discusses the negative and ignores any evidence to the contrary: “… it is inevitable that some employers who can barely afford the health care expenses they currently face would opt to drop their coverage and pay the tax instead. And employers who do not currently provide health coverage would have no financial incentive to do so.”
Would some employers choose to drop coverage and pay. Probably. Would some not paying now choose to cover instead of pay. Probably yes. Why? Because when an employer buys coverage for workers, his or her workers are the direct beneficiaries. When he or she pays the tax, some of his lower income workers will qualify for MassHealth, some will qualify for sliding scale subsidies to buy coverage, and the rest (the higher income and more valuable workers) would be on their own with not a penny of support from the employer.
So the employer faces a conundrum — pay the assessment and get little direct benefit, or buy coverage and directly benefit my own workers. Chances are many employers will see the benefit, even if paying the assessment is marginally less. That’s why MIT economist Jon Gruber, using his own econometric model, concludes some employers would drop, others would pick up, and the net result would be a wash.
Does MTF even entertain this possibility? Nope. There’s only a downside to the payroll assessment in their universe, and only an upside to an individual mandate.
MTF normally produces balanced, on the level analysis that is helpful to public officials and the public. In this case, they are taking an advocacy position, and their analysis should be recognized as what it is, an advocacy document.