PUBLIC RADIO'S MARKETPLACE COMMENTARIES:

Marketplace, April 12, 2006

TWO CHEERS FOR MASSACHUSETTS

Forty-five million Americans are without health insurance, and the number keeps rising. Recently the state of Massachusetts unveiled a plan for reversing this trend. It would provide nearly every Massachusetts resident with health insurance – and the plan won’t require any additional state spending.

There’s no free lunch and no free health care. So how does Massachusetts plan to insure its half mission non-insured residents? By doing three simple things that every other state could do just as well.

First, its using the money it now pays hospitals for giving free emergency care to the uninsured. As it is now, most people without health insurance don’t see a doctor. They wait until whatever problem they have is so severe it becomes a health emergency. Then they go to the hospital emergency rooms that take in anyone needing emergency care. But by this time the health problem is hugely expensive to cure. So Massachusetts says, sensibly, let’s use this money instead to insure poor and working-class people (who aren’t poor enough to qualify for Medicaid) so they can see a doctor before their health problem becomes an expensive emergency.

Second, Massachusetts is bundling health insurance policies together so individuals and small businesses can buy health insurance as if they were parts of a large company. It’s called economies of scale. It’s roughly the same technique Wal-Mart uses to get great deals from its thousands of suppliers. As a result, health insurance will get cheaper in Massachusetts. This is also just good common sense.

Third – and here’s the most controversial step – Massachusetts is requiring middle and upper-middle class people who don’t now have health insurance to buy it for themselves. Many of these people are young – in their twenties and thirties. They don’t have insurance because they know their risk of having a serious health problem is very low. Like most young people, they think they’re indestructible.

Of course they’re not indestructible. Some of them will need health care. But when they’re required to buy health insurance, they not only insure themselves. They also add their money to an insurance pool that will be drawn on by everyone – including those who are older, poorer, and likely to be sicker.

Libertarians may holler about this but it seems sensible and fair. Mandatory insurance is not an invasion of our independence. We’ve got to buy car insurance if we want to drive. We have to buy home insurance if we want to get a mortgage. When we pay our local taxes we pay for fire fighters and police officers, even if we never use them – even if people who live in more run-down parts of down end up using more of them than we do. So what’s wrong with requiring that everyone who can afford it to buy health insurance, even if some people who are needier may get a bit more of the benefits?

The real gamble in the plan is whether the economies of scale Massachusetts gets by bundling policies together cuts costs enough so that every middle-class resident who will have to buy a policy can afford to. I’d prefer a single payer plan that would get rid of all the advertising and marketing costs that insurers and providers now spend to attract customers. That would surely make health-care far more affordable. But the Massachusetts plan is a good start nonetheless.

And it may work elsewhere. I’m not saying that as Massachusetts goes so goes the nation. Massachusetts is a bit, well, shall I say to the left of Kansas. But even Kansas might be attracted by a plan that insures nearly everyone without spending a taxpayer dime.