More analysis of the Massachusetts "universal healthcare" bill

Here's another analysis of the recently passed Massachussets bill and why it won't work. I've edited it down for this post. You can read the full text of the article on the In These Times website by clicking on the headline.

Massachusetts’ ‘Universal Coverage’ Bill is No Such Thing
By Kip Sullivan

... Romney’s expectations of the law are going to be dashed, and his obituary for single-payer will prove to be premature. The fundamental flaw of the Massachusetts law is that it does little to reduce health care cost inflation. The bill attempts to improve coverage by funneling money through the bloated insurance industry. Insurance companies allocate roughly 20 percent of their revenue to cover their administrative costs (which include marketing, telling doctors how to practice medicine, providing dividends, and financing high management salaries). That is 10 times the overhead of Medicare, which allocates only 2 percent of its expenditures to overhead, and about 20 times that of Canada’s single-payer system, which allocates 1 percent. Moreover, a system of multiple insurers drives up the administrative costs of clinics and hospitals. This is especially true if all or most of the insurers practice managed care. ...

The failure of the Massachusetts law to cut health care costs will be aggravated by its method of reducing the number of uninsured: It requires all Massachusetts residents to buy health insurance. Health insurance, in other words, will be treated like car insurance—you have to have it or you’ll be in violation of state law and subject to a fine. ...

To meet their obligations under the mandate, most employed Massachusetts residents will continue to buy health insurance from their employer. But because the law does little to reduce premium inflation, employer flight from the health insurance market will continue, forcing more and more employees to purchase insurance on their own. In Massachusetts today, it costs employers about $4,000 per year to insure an employee without dependents and $11,000 a year to insure an employee with dependents.

So, how will the state’s uninsured be able to afford such a big-ticket item? ... Unfortunately, it is impossible from reading the law to know what the minimum level of coverage will be, how much insurance companies will charge for it, and how much the subsidy will be for any given income level. The law merely tells us that a state board with the odd name “board of the connector” will determine what constitutes “minimum creditable coverage,” and that this board will determine how big the subsidies have to be to make the coverage “affordable” to residents. ...

What will probably infuriate residents most will be the enforcement of this bill. The bill requires employers, providers, and residents to make reports to the government about who has insurance, and it punishes the uninsured with fines enforceable by the Department of Revenue. ...

The spectacle of hundreds of thousands of Massachusetts residents having to buy insurance with awful coverage that they cannot afford, and many refusing to buy insurance and taking steps to avoid paying their fines (such as not filing income taxes) will come into focus in the latter half of 2007 and the first half of 2008—that is, in the year leading up to the 2008 Republican national convention. The media, in short, will have plenty of time to unearth horror stories about Romney’s “model” legislation. Odds are good that Romney will rue the day he took credit for this bill.