Massachusetts Passes Health Care Reform

It appears that supporters of health care reform finally have momentum on their side. The Senate is nearing a vote on Small Business Health Plans (also known as Associated Health Plans) legislation sometime in May [watch for an important update and a call to action in next week's BTW]; President Bush is touting Health Savings Accounts; and in Massachusetts, on April 12, Republican Gov. Mitt Romney signed a health insurance reform bill that seeks to make health insurance available to every resident of Massachusetts within the next three years.

Massachusetts' landmark legislation may be regional in nature, but as states and the federal government look for solutions to the health care crisis, the new law has grabbed the national spotlight. Overall, the legislation has received mixed editorial reviews from national and local media, but several Massachusetts' booksellers told Bookselling This Week that they were cautiously optimistic about the outcome.

Here is a quick look at some of the key highlights of the legislation:

• The law requires every individual in the state to purchase health insurance by July 1, 2007.
   
• Of the state's approximately 500,000 uninsured, about 100,000 are eligible for Medicaid; another 200,000 making less than 300 percent of the federal poverty level and who are not eligible for Medicaid will receive premium assistance on an income-based sliding scale for policies with no deductibles; and another 200,000 with incomes above 300 percent of the federal poverty level will be able to "purchase lower-cost policies in the private market. Premium assistance will be financed by redirecting a portion of the $1 billion currently spent by state government on the uninsured," according to a press statement issued by Gov. Romney's office.
   
• Beginning on January 1, 2008, failure by individuals to purchase health insurance will result in the loss of their state tax refund equal to 50 percent of an affordable health insurance premium. Penalties will be assessed for each month without creditable coverage.
   
• The law creates the "Commonwealth Care Health Insurance Connector," (the Connector) to connect individuals and small businesses with health insurance products. The Connector will administer "premium assistance" for low-income individuals and facilitate employer contributions for both full-time and part-time workers and those working at more than one company. Eligible to purchase through the Connector are non-working individuals; working individuals at companies that do not offer health insurance; workers not eligible for coverage at their place of business, such as part-timers, contractors, and new employees; small businesses with 50 or fewer employees; and those who are self-employed.
   
• The new legislation merges the non- and small-group markets in July 2007, a provision the bill's authors believe will produce an estimated drop of 24 percent in non-group premium costs. It also enables HMOs to offer coverage plans that are linked to Health Savings Accounts, reducing costs for those who enroll in such plans.
   
• A "Fair Share Contribution" must be paid by employers who do not provide health insurance for their employees and who do not make a fair and reasonable contribution to its cost. The contribution, estimated to be approximately $295 per full-time employee per year, will be calculated to reflect a portion of the cost paid by the state for free care used by workers whose employers do not provide insurance.
  
  The Fair Share Contribution requirement will only apply to employers with 11 or more employees who do not provide health insurance or contribute to it, and will be pro-rated for employers with seasonal or part-time employees. (Gov. Romney vetoed this portion of the bill, but according to press reports, it is expected that the Massachusetts legislature will override his veto. The Governor also vetoed a provision to provide dental benefits to adult Medicaid recipients, explaining that the benefits expansion would be "financially unsustainable.")
   
• A "Health Care Quality and Cost Council" will "promote health care quality improvement and cost containment."
   
• A "Free Rider" surcharge will be imposed on employers who do not provide health insurance and whose employees use free care. Imposition of the surcharge will be triggered when an employee receives free care more than three times, or a company has five or more instances of employees receiving free care in a year. The surcharge will range from 10 percent to 100 percent of the state's costs of services provided to the employees, with the first $50,000 per employer exempted.
   
• "Mandatory Offer of Section 125 Plans" or "cafeteria plans" will allow an employer to offer health insurance and other programs such as day-care funding to employees on a pre-tax basis.

Mixed Media Reviews

The Massachusetts Health Care Access and Affordability conference committee report was passed by a vote of 154 to 2 in the Massachusetts House of Representatives and a 37 to 0 vote in the Senate; however there was no such unanimity of opinion in the press. While many in the news media have hailed the bill as great news, if not without some flaws, others have decried it as a surefire failure that will place too much of the financial burden on the individual.

On April 16, Michigan's Macomb Daily columnist Chad Selweski hailed the legislation and urged Michigan to "take a long look at this approach. No one doubts that health care is one of the biggest, most confounding problems facing our state and nation."

Selweski continued, "The American health care system for decades relied upon private companies to provide private insurance to private sector employees. That system is crumbling. Massachusetts has shown a way to break from the past.

"It provides a free-market approach -- not a government takeover -- that allows the uninsured to shop for a policy. It should keep costs down. And it recognizes that anyone who is uninsured is part of the problem, costing all of us by raising the overall price tag of the health insurance system. The healthy 25-year-old male worker without coverage is not a problem until he breaks his leg skiing, needs surgery, and racks up a $20,000 hospital bill."

However, a Boston Globe editorial, dated April 7, noted, "The state will help those of low and moderate incomes with health insurance costs. But as everyone concedes, the legislation's success hinges both on the size of the subsidies offered and availability of affordable plans.

"For individuals, subsidies end at about $29,000. Premiums have yet to be determined, but yesterday the Globe's Liz Kowalczyk reported that they may average about $325 a month for an individual plan. That translates to $75 a week; even pre-tax, it's a big bite for someone whose gross income is only about $560 a week."

And in a Wall Street Journal op-ed, Arnold Kling, author of Crisis of Abundance: Rethinking How We Pay for Health Care, wrote, "There is no reason to expect firms to rush to offer a policy to uninsured employees. It makes more sense for them to pay their $295 penalty and hand the health-insurance problem back to the individual -- and ultimately to the taxpayers of Massachusetts. Economically, consumers who face deductibles of $0 have no incentive to restrain health care spending. They are only constrained by the time and discomfort involved in obtaining medical care."

In regards to the costs of health insurance under the Connector plan, Felix Browne, a spokesperson for Gov. Romney, told BTW that Romney's "target figure" for comprehensive health insurance for individuals [through the Connector] is in the $200-per-month range. And a spokesperson for Massachusetts' Executive Office of Health and Human Services noted that the goal for comprehensive coverage for families [through Connector] is $500 per month.

If Romney's veto of the $295 fine is not overridden by the legislature, the question remains as to what the impetus is for businesses to buy health insurance for employees if there is no fine for not providing it to employees. But Browne noted the reason is simple: "It's to provide a meaningful benefit to their employees ... since they can purchase [health insurance at lower rates] through the Connector" program.

Health Care Reform a Good First Step

Although Massachusetts booksellers who talked to BTW stressed that they were far from experts on the health care reform bill, most agreed that there is a major health care crisis in the U.S. and anything that leads to more affordable health care must be considered a good thing.

Perhaps Vicky Uminowicz at Titcomb's Bookshop in East Sandwich, Massachusetts, summed up the thoughts of many Massachusetts booksellers when she stressed, "At the moment, I'm happy about it, but I have a lot to learn [about the bill]. I'm just glad something is being tried."

Titcomb's has one full-time employee and about seven part-timers, she said, and the part-time employees are all covered by their spouses. "[The bill] doesn't affect us too much, but health insurance costs so much," Uminowicz said. "For us, I'm most interested in the [Connector]."

Noting that health care is a "major crisis for a lot of people," Dale Szczeblowski of Porter Square Books in Cambridge, Massachusetts, which employees 20 full- and part-time workers, told BTW his feeling about the legislation is "very positive." However, he added, "The details of the program are hard to figure out in terms of how this will affect us. We do offer health care to our full-time employees."

Noting that Andover Bookstore in Andover, Massachusetts, already offers its employees health care, Robert Hugo said, "In a sense, the legislation concerns us but doesn't -- though I think it's a good start. It needs to be tweaked and worked on." Hugo said the reason to offer staff health insurance is simple: "To retain good people ... and you can't without offering that."

"I'm actually in favor of [the bill]," said Ann Nelson of Bunch of Grapes Bookstore in Vineyard Haven, Massachusetts, on Martha's Vineyard. Nelson reported that her store employs 11 full-time people during the off-season, and that number increases to about 24 people ("mostly college students") from Memorial Day through September. "I've provided health insurance, paying 50 percent of the premiums for the [11] full-timers.... I own a bookstore, but I practiced as a RN for a number of years. If we don't shoulder the burden, we'll all pay more in the long run." --David Grogan

Watch for an update on national legislation regarding Small Business Health Plans (also known as Association Health Plans) that is currently workings its way through Congress in next week's BTW.