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Pros & Cons of Massachusetts' Mandatory Health Insurance Program

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In April 2006, Massachusetts Governor Mitt Romney signed into law a broad new program requiring all citizens to obtain health insurance. The Massachusetts House and Senate both strongly approved this ground-breaking legislation on a bipartisan basis. The program's aim is to cover 95% of the state's 500,000 uninsured within three years.

Massachusetts' Mandatory Health Insurance program, which becomes effective on July 1, 2007, is touted as a national model to address the needs of the more than 45 million Americans without health insurance.

This landmark program is also a political victory for Governor Romney as he ponders running for the 2008 Republican nomination for the presidency.

But the Massachusetts Mandatory Health Insurance program has both avid supporters and passionate detractors which, surprisingly, are not merely driven by political party affiliation.

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A key feature of the Massachusetts Mandatory Health Insurance program was a charge of $295 per month per employee for all businesses in the state that refuse to provide health insurance options for their workers.

Purposes of this feature are:

-- to encourage employers to provide health insurance program options for their employees

-- to generate state revenue to partially pay for state-subsidized health insurance for those employees

When signing this legislation into law in April 2006, Governor Romney, a Republican, used his line-item veto power to nullify this plan feature, primarily due to pressure from business lobbies and special interests.

Another concern is that $295 is not a high enough monthly per-employee charge to encourage employers to participate in this state program....because a state charge of $295 might be cheaper than the per-employee cost of health insurance to businesses.

The New York Times predicted, in an April 15, 2006 editorial, that Romney "is almost certain to be overridden by the overwhelmingly Democratic legislature" in reinstating the $295 (or higher) charge to the program.

Background

Massachusetts Mandatory Health Insurance program will provide health coverage as follows for the state's 500,000 uninsured:

-- 100,000 poverty-level residents qualify, but have not yet signed up, for Medicaid. They will be legally required to sign-up. Price Tag: $225 million a year, half to be repaid by the federal government.

-- The incomes of 200,000 resident families are too low to afford health insurance, but they don't qualify for Medicaid. Nationwide, this group comprises about 70% of the 45 million Americans.

Massachusetts plans to partially or fully subsidize health insurance premiums for this group. Those earning between 100% and 300% will pay part of their premiums, calculated on a sliding scale. Those earning 100% of less of the federal poverty level will have their premiums paid by the state.

Price Tag: $720 million a year, initially to be funded by a $1 billion fund already set-aside for uninsured care.

-- The remaining 200,000 uninsured are deemed to be able to afford health insurance, and will be required to do so by 2008 or be assessed substantial annual tax penalties and/or wage garnishments.

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