Mass. Weighs Requiring Residents to Purchase Health Insurance

While some parties still cling to hope the state will reform its mandatory auto insurance, Massachusetts’ political leaders have themselves been focused on making health insurance mandatory in the Commonwealth.

Republican Gov. Mitt Romney and top Democrats hope to reduce the number of residents without health insurance, a number estimated to be about 500,000. While they have not reached any final agreement, there is general support for making health insurance mandatory much like car insurance.

Depending upon which proposals are accepted, individuals and businesses would both be under increased pressure to buy health insurance.

In April, Romney unveiled legislation that would allow health insurers to create more affordable, low-cost products. These policies would bypass some of the state’s mandatory benefits.

The next phase of Romney’s plan is to pressure all residents who can afford it into purchasing at least the low-cost health policy, either through their employer or on their own. People who do not buy health insurance would face the penalty of losing their personal exemption on their state income tax return.

The state would help those who can’t afford to pay full premiums. Romney has recommended converting the approximately $1 billion annually spent on the uninsured into premium assistance for the purchase of private health insurance. The amount of premium assistance would be based on an income sliding scale. As an individual’s income goes up, so would his or her monthly premium.

“This personal responsibility principle means that individuals should not expect society to pay for their medical costs if they forego affordable health insurance options,” according to Romney.

With premium assistance from the state available, it is fair to ask all residents to purchase health insurance or have the means to pay for their own care, Romney maintains.

Romney’s plan does not include any tax increase.

Democrats have gone along with the individual mandate idea but have not yet bought into Romney’s low cost policy.

The Democrats are also seeking to increase the pressure on employers to offer coverage to their employees by making companies that do not offer benefits pay into the system and rewarding the companies that do provide coverage.

Businesses that provide coverage currently pay a surcharge to help the state cover the cost of care for the uninsured, while employers that do not offer insurance pay nothing. Under the House plan, employers that offer coverage could deduct the cost of their premiums from whatever surcharge they would pay, which could in many cases wipe out the surcharge.

The Democrats would also tax companies with fewer than 100 employees at 5 percent of their payroll if they fail to offer coverage. Those with more than 100 or more workers would be taxed at 7 percent. The monies would be used for the premium subsidies for low income insureds.

Under the Democrats’ plan, employees would be required to join their company’s health plan. The state would help if they couldn’t afford it. Those residents not offered insurance by employers would also be required to purchase and be entitled to state assistance if needed.