THE INDIVIDUAL MANDATE IS ABOUT TO GET SERIOUS by John McDonough

The most unprecedented aspect of Chapter 58 is about to get real. Many uninsured Massachusetts residents over 18 will face financial penalties if they don’t have health insurance by 12/31/07. Because insurers don’t sell coverage for a day, buying coverage for 12/31/07 requires buying coverage beginning 12/1/07, and that requires purchasing coverage by about 11/15/07.

The penalty for not having coverage on 12/31/07 will be loss of one’s personal tax exemption, about $220, when state income tax forms are completed next year. Beginning January 1, the penalties mount month by month, up to half the cost of the most affordable monthly Connector-approved premium.

Not every uninsured person will be penalized. Many have already been determined exempt because there is not affordable coverage available to them. Others may obtain individual waivers. And some unknown number will face penalties. No one knows how many will fall into these three categories.

Only two governmental entities on the planet, the Netherlands and Switzerland, place a similar requirement on their residents. Like the U.S, both rely largely on private insurers to provide coverage, though at no more than two thirds the cost of ours – the most expensive health coverage on the planet.

The individual mandate was not advanced by Health Care For All or the Affordable Care Today coalition. The Blue Cross Foundation’s Roadmap to Coverage project first advanced it as one possible component in June ‘04.

Then Gov. Romney – who now criticizes Sen. Clinton for her embrace of such a requirement – made it the centerpiece of his agenda in late ‘04. Importantly, Gov. Romney made the mandate a central feature of negotiations with the federal government for renewal of the State’s vitally important 1115 Medicaid waiver to preserve about $1.1 billion in safety-net financing that otherwise would have disappeared. Finally, Speaker DiMasi embraced it as part of his agenda to combine both individual and employer responsibility in the fall of ‘05.

ACT!! accepted the mandate provided it only apply to those for whom affordable coverage was available and in combination with a major expansion of affordable coverage for lower income uninsured. While neither of these was implemented as far as we preferred, both were addressed in a serious way. By our estimate, more than 200,000 now have obtained affordable coverage (many more to come), and the affordability schedule adopted by the Connector exempts most of those for whom affordable coverage is not available.

No one should misunderstand – the consequences of non-implementation would be severe. The existing 1115 waiver with the federal government, predicated on the mandate’s implementation, expires on 6/30/08. Non-implementation would guarantee the loss of many hundreds of millions of dollars, and perhaps billions, in funds directly infused into the Commonwealth’s health care safety net, plus the collapse of Commonwealth Care which already covers more than 125,000 lower-income persons.

Success in this endeavor is tough. Failure would be far tougher.

Still, public acceptance of the mandate as fair and reasonably enforced is essential to ensure its success. As we approach this critical period, we propose several additional adjustments:

First: simplify penalties. Chapter 58 requires penalties to be no more than half the cost of the most affordable coverage available. Because Commonwealth Choice policies are age rated, uninsured individuals in their 50s and 60s face premiums as high as 13 percent of their gross income – and penalties that stretch the public’s sense of fairness. We propose no one should be penalized if the most affordable premiums will cost them more than 10 percent of their gross income.

Also, the Administration (Connector and Department of Revenue) is planning a schedule of penalties which will vary based on age and geography. This is too complicated and will be seen as unfair for many, particularly older residents. We propose the Administration develop a smaller and simpler scale of penalties for non-coverage.

Second, simplify the exemption process. The forms and procedures are bureaucratic, complex and daunting. For example, the exemption form is lengthy, poorly laid-out, and hidden on the Connector web site. Forms can’t be filled-out and submitted on-line. We propose that the Connector and the DOR need to work with professionals to re-design and simplify forms (with literacy consultants) to write materials in understandable terms.

It’s all part of making this experiment work.

John E. McDonough
Executive director, Health Care for All