Tag Archives: Richard Nixon

California to Follow Nixon and Six States Down a Failed Health Insurance Path?

“I Am Not A Health Reform” appears in today’s New York Times, an op-ed by two Harvard professors of medicine and members of Physicians for a National Health Program, a group of doctors working for single-payer health care. In it, they explain that the “individual mandate” approach that Speaker Núñez has now caved to is by no means a new or untested idea – that it has failed everywhere it has been tried. And it’s been tried many places:

IN 1971, President Nixon sought to forestall single-payer national health insurance by proposing an alternative. He wanted to combine a mandate, which would require that employers cover their workers, with a Medicaid-like program for poor families, which all Americans would be able to join by paying sliding-scale premiums based on their income….

In 1988, Massachusetts became the first state to pass a version of Nixon’s employer mandate – and it added an individual mandate for students and the self-employed….In 1988, 494,000 people were uninsured in Massachusetts. The number had increased to 657,000 by 2006.

Oregon, in 1989, combined an employer mandate with an expansion of Medicaid and the rationing of expensive care….The number of uninsured Oregonians did not budge.

They go on to describe how Minnesota, Vermont, Tennessee, and Washington all passed various forms of mandated insurance in the early 1990s, only to see the number of uninsured fail to decline and in many cases continue to rise. They then turn to Massachusetts’ reform, which is failing:

As governor, Mitt Romney tweaked the Nixon formula in 2006 when he helped devise a second round of Massachusetts health care reform: employers in the state that do not offer health coverage face only paltry fines, but fines on uninsured individuals will escalate to about $2,000 in 2008….Yet even under threat of fines, only 7 percent of the 244,000 uninsured people in the state who are required to buy unsubsidized coverage had signed up by Dec. 1. Few can afford the sky-high premiums.

Why has this failed?

Each of these reform efforts promised cost savings, but none included real cost controls. As the cost of health care soared, legislators backed off from enforcing the mandates or from financing new coverage for the poor. Just last month, Massachusetts projected that its costs for subsidized coverage may run $147 million over budget.

Hmmm…no cost controls, rising costs of care, and a deficit that limits the availability of subsidized coverage. Sound familiar?

The Núñez-Schwarzenegger plan does not appear to have ANY firm cost controls in place. The 5% out-of-pocket maximum, which previously applied to families up to 300% of FPL, now only applies to 250% of FPL, which for 2007 was $34,225 for a family of two (my fiancee and I make twice that) and $51,625 for a family of four. The California median income as of 2004 was $54,385 – meaning over half the population would have NO statutory protection from crippling out of pocket costs. Their only recourse would be to plead their case to the MRMIB, which would be a daunting and discouraging challenge for most Californians, who have no idea how to go through such a process.

Further, the minimum “creditable” coverage for the mandated plans will NOT be guaranteed in law. As Sal Roselli pointed out, this is a bad approach. Similarly, SEIU’s Jeanine Meyer Rodriguez, quoted by Matt Lockshin, agreed that having MRMIB determine the minimums was bad policy:

As a matter of policy, the bill must be amended to require that a specific and appropriate minimum benefit package, such as a standard HMO package plus prescription drugs, be available to an individual for less than 6.5% of their income in order for them to be mandated to carry coverage.  Allowing MRMIB to define this minimum benefit package rather than specifying it in statute could result in middle income Californians being compelled to buy coverage that they can’t afford to use if the deductibles and out of pocket costs are too high.

So we have a plan without firm cost controls for over half the population, no reliable guarantee of a minimum, useful coverage for these mandated plans (as I read the text of the amended bill, “health insurance plan” is specifically defined to exclude vision and dental). Further, it’s by no means clear that federal courts will uphold the employer mandates, or that if they did, that CA’s fate would be any different than the six states that already tried this. Finally, MA is already running deficits in the funding of their subsidized coverage, which suggests that CA’s $14 billion deficit is even more relevant to this issue than we had previously realized.

The PNHP op-ed’s conclusion about these kinds of plans seems appropriate in our context:

The “mandate model” for reform rests on impeccable political logic: avoid challenging insurance firms’ stranglehold on health care. But it is economic nonsense. The reliance on private insurers makes universal coverage unaffordable.

We’ve seen this train wreck before. This time, maybe we should think about not letting this train even leave the station.