MANDATES: NOT A HARMLESS SOLUTION by Bill Walczak

Over the years, I’ve come to realize that very few people really understand the health care system, and this includes legislators and members of congress who vote on changes to this system. It also includes our presidential candidates, and I’ve watched the presidential primary process with amazement at both the lack of understanding and the plans that have emerged to “fix” health care.

The democratic debate for the final two candidates comes down to whether you believe in an “individual mandate,” i.e., requiring individuals to purchase health insurance if they don’t have it through their employer, or if they’re self employed. Clinton’s plan calls for one; Obama’s doesn’t.

In our Massachusetts system, I’ve had a problem with the “individual mandate” in health reform since the legislature dropped a “business mandate” (i.e., requiring businesses to provide health insurance) provision before passing the law. This, combined with the state adopting a methodology for determining insurance rates that punishes you as you get older, can result in the state enforcing a rule that will cause bankruptcy or severe financial hardship for many residents.

My earlier blog entry detailed the effect of this rule on a 58 year old female working as a nurse’s aide in an organization that doesn’t provide health insurance. According to the law, the company employing her, in a worst case scenario, is fined $295. The nurse’s aide is forced to buy health insurance from the Connector, which would cost between 14% and 35% of her income, provided she doesn’t need to actually use the health care system, in which case it will cost more. If she requires hospitalization, it is likely she will have to declare bankruptcy if she chose the plan that costs 14% of her income, because she will be required to pay 20% of the hospitalization cost. If she chose the plan that cost 35% of her income, her remaining wages couldn’t possibly sustain her in Massachusetts.

We know that overwhelmingly the people who choose to purchase health insurance through Commonwealth Choice (the plan for those who do not qualify for subsidy, like the nurse’s aide), choose the cheaper plans. But many more have chosen to not buy into Commonwealth Choice. Chapter 58 anticipated this, and created fines to prompt people to buy into the system.

Everyone who reads the Commonhealth blog knows that this year, a person who refuses to participate will be fined $912 (3% of the nurse’s aide’s income). Perversely, the nurse’s aide will pay this fine, pay state taxes to support the health reform system, and not be eligible for reimbursed medical care.

For those in Commonwealth Care, which insures those who qualify for subsidized health insurance, the problem happens when the insured person either fails to pay a premium (in the case of those who have to pay something), or fails to re-enroll in the system when it “churns” them out (see Christina Severin’s blog on churning). Failure to pay or re-enroll will result in you getting tossed out of health insurance. In the case of the roughly 50,000 people who were put into Commonwealth Care last year without having to fill out forms (users of the Free Care Pool), they are being presented with the requirement to fill out forms they’ve never filled out before. If they don’t fill them out, they lose health insurance. All these people, like the people who don’t pay to join Commonwealth Choice, do not get covered in the event that they use medical services. (Please note: the previous free care system covered people up to 400% of poverty and paid for services retroactively, i.e., they could fill out forms after seeing a medical provider in a hospital or health center and have the service reimbursed, and it did this at a lower cost to the state.)

What happens to these people? They wind up paying out of pocket for basic services, going bankrupt if they need more extensive services, and services provided to them turn into bad debt in places like health centers.

At Codman Square, we’re seeing a rise in the numbers of patients covered by Commonwealth Care, and a rise in uninsured patients producing bad debt. It’s too early to say whether this will continue, or in fact what it means, but if it continues, we’re looking at the possibility of a cash loss of up to a million dollars in this fiscal year. Our mission at Codman Square Health Center, and the law for health centers receiving federal funding, is to provide services to everyone, regardless of ability to pay. I’m hoping that somehow things will work out, but I’m not optimistic.

Bill Walczak
CEO, Codman Square Health Center