Experimenting with insurance

It’s amazing what people can accomplish when you sit everyone around a table and threaten them with the loss of $385 million.

OK, that’s not exactly what happened, but it’s nothing short of remarkable that the interested parties in Massachusetts – Republicans and Democrats, business leaders and advocates for the poor, insurers and hospitals – agreed on a bill to make sure nearly everyone in the state has health insurance. The nation will be watching this bold experiment, as Massachusetts becomes the first state to require all its residents to purchase health insurance if the bill becomes law.

The plan came together largely because the state was working under the threat of losing federal money if it didn’t cut the number of uninsured.

If successful, the plan could be a watershed moment in health care. But success of the Massachusetts experiment is by no means guaranteed.

The law would require anyone who can afford health insurance to buy it, and those who don’t would pay a penalty on their state income taxes. Individuals and small businesses would be able to buy insurance tax-free, and incentives would be offered to insurers to offer low-cost plans. In addition, subsidies would be available to low-income people and more children would get free coverage through Medicaid.

Proponents claim the plan will require $125 million in new money over three years. Gov. Mitt Romney says the plan wouldn’t cause taxes to be raised, partly because the remainder of the $1.2 billion price tag would be paid for with state and federal money.

Which brings up what critics say are the weak points:

The plan relies heavily on existing federal and state money, but in these days, federal dollars are far from being a reliable resource.

The program might not be able to operate on only that money, with little hope of finding other funding.

Subsidies for the poor might not be sufficient to entice them to buy health insurance.

Many people are worried about a law that would take away the right of people to make decisions about their health care, including whether to carry insurance.

Still, Massachusetts is doing Americans a favor by tackling a nationwide issue in an innovative manner. If states are bold enough to try new ideas, sooner or later one may come up with a way to make health care affordable for all.

Whether this grand plan succeeds or fails, other states will learn valuable lessons from the hard legislative work being done in Boston.