POLICY: More on Mass, by Eric Novack

Sometimes (perhaps too often!) I agree with Eric Novack. Here’s what he writes about the pay or play version of the new Mass plan:

The recently passed bill in Massachusetts, well reported here at THCB, aims to provide ‘universal health insurance’ to state residents through personal and employer mandates, plus Medicaid expansion. It still has not been signed/ modified by Governor and future GOP Presidential candidate Mitt Romney, but the state legislature is already threatening to override any changes the governor might make.

I want to focus briefly on the employer mandate. The law, if unchanged, states that employers who do not provide health insurance would be assessed $295 per employee per YEAR. That’s right. Employers would pay about $300 per year per employee if coverage is not offered.

Does anyone see the problem? Most small businesses spend close to $300 per MONTH per employee now, for ‘good’ coverage.

Math never looks good in print, so I’ll make this example brief. Small business, ‘Matt’s Place’, has 20 employees. Currently, covering health insurance for those 20 costs 20 x $300 x 12 months = $72,000 per year. (That’s $6000 per month.)

Under the Massachusetts plan, if ‘Matt’s Place’ did not provide coverage, it would cost about 20 x $300= $6000 per year.

Hmmm. $72,000 versus $6000. And the employees would still be covered with insurance. And the company saves $66,000. A small business. Hmmm.

Any idea what is likely to happen?

I do not like predictions (my crystal ball is rather cloudy). But here is one. Within 3 years the number of small businesses offering insurance plummets. The ability of the state to cover expenses in a system that has no utilization controls plummets. And the state is forced to raise some combination of income taxes, sales taxes, property taxes, business taxes or completely revise the system.

But I am not against the experiment. I could be wrong.

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