Kay Lazar writes in the Boston Globe today about an aspect of the Massachusetts universal health care law that has been developing recently. Under that law, an employer pays a penalty to the state if it choose not to offer health insurance. The lead:
The relentlessly rising cost of health insurance is prompting some small Massachusetts companies to drop coverage for their workers and encourage them to sign up for state-subsidized care instead, a trend that, some analysts say, could eventually weigh heavily on the state’s already-stressed budget.
The article notes:
The state’s landmark 2006 health insurance overhaul included regulations designed to discourage low-wage employees from opting for state health insurance over their companies’ often more pricey coverage. It denied eligibility to any one whose employer had offered him or her coverage in the past six months and paid at least 33 percent toward the individual’s plan.
Most health care advocates and brokers had widely interpreted that to include even workers whose companies had dropped coverage. But recently, some companies that have terminated their group plans have tested those waters and found that their employees were accepted for state-subsidized coverage.
Additionally, company owners say, it has become far cheaper to pay the state penalty for not covering their workers — roughly $295 annually per employee — than to pay thousands more in premiums.
I well remember Jon Kingsdale, the first director of the Health Connector, the agency in charge of all these issues, discussing the delicate balance needed between the penalty to be set, the design of state-subsidized products, and other aspects of the health care market. Too high a penalty, and it is overly punitive to businesses. Too low, and employers would accept the fee to avoid the cost of health benefits and make a run to the state's plans.
The balance seemed about right for the first few years. Now -- if this article is to be believed -- things may have shifted. Politically, it would be very difficult during a recession to start to impose higher penalties on businesses. Likewise, it is would be difficult to make the state plans a less attractive option.
On the other hand, most employers still have an interest in offering an attractive benefit to recruit and retain staff. So maybe the reporter is picking up something happening at the margins that does not have tremendous significance. It is difficult to know, and will bear watching -- both for Massachusetts and for the country, as a similar national plan goes into effect.It's always about balance. I've written on this blog that the recently passed National Health Reform Bill was a compromise public/private measure designed to preserve, not eliminate, checks and balances in our system. Paul's post above points out the importance of balance and that the cost of being out of balance can have possibly harmful effects on the overall system, throwing incentives haphazardly off in unintended directions. Look for "balance" to be the watchword of our health care delivery and financing system for the next ten years.