Wednesday, April 05, 2006

Mandatory Health Insurance?

Massachusetts lawmakers overwhelmingly approved an ambitious health-care bill on Tuesday that would make it the first U.S. state to require nearly all residents to be insured or face penalties.

The bill, which comes as traditional employer-based coverage is shrinking nationwide, will provide health care to about 95 percent of the state's half million uninsured residents by 2009, state officials said.

The Massachusetts policy holds both businesses and employees responsible for health care coverage. Businesses with more than 10 employees that do not provide coverage for all staff must pay a $295 fee annually per uninsured worker.

Under the legislation, which is expected to be approved by Massachusetts Governor Mitt Romney, insurance agencies would expand health care coverage by offering state-subsidized, low-cost insurance plans with scaled-back benefits.

Romney, a Republican who may run for president in 2008, has indicated he would sign the bill into law.

"Some 500,000 citizens who go without insurance today will be taken care of," House Speaker Salvatore DiMasi, a Democrat, told the state Legislature to loud applause.

The plan comes at a time when about 46 million Americans are uninsured and there is growing concern across the country over the diminishing number of people who can afford the soaring cost of insurance premiums.

U.S. President George W. Bush, in his annual State of the Union speech in January, urged the expansion of health savings accounts, or HSAs, which allow people to set aside money tax-free for routine medical costs.

But the 145-page Massachusetts legislation -- passed by the Democrat-controlled House in a 155-2 vote and unanimously approved by the state Senate -- underscores how states are exploring their own ways of fixing the problem.

The Massachusetts policy provides insurance to the lowest-earning residents by offering low- or no-cost plans, with premiums and co-payments paid entirely by the state.

Residents who can afford insurance but do not choose a plan by July 1, 2007, will face tax penalties that year, as incentive to take out insurance in an attempt to reduce health-care costs statewide.

State health officials say the uninsured rely more on emergency room care and drive up insurance costs for everyone.

If they continue to choose not to enroll in subsequent years, they must pay the state half the cost of the lowest-priced insurance plan each year.

"This is a tremendous victory for the uninsured," said Brian Rosman, policy director of Health Care For All, a Boston-based advocacy group.

The incentive for businesses to provide coverage and on individuals to seek coverage was "a fair trade," Rosman said.