Massachusetts: How's that Mandate Working?


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Even though Massachusetts' health insurance mandate has had success in reducing the number of uninsured, there continues to be a significant number of people who have not purchased coverage. Eighty-six thousand people, or 2.5% of Massachusetts' 3.34 million on-time tax-filers indicated they chose not to buy insurance and therefore did not receive the $219 personal exemption in 2007. Sixty-two thousand tax payers were deemed too poor to afford health insurance and were not penalized, while 200,000 others filed for extensions.

The mandate requires that all state residents who can afford to buy health insurance purchase an insurance policy and provide documentation with their tax returns or face tax penalties. Those who cannot afford one (classified as anyone making less than 300% of the federal poverty line) are given subsidies to buy their own plan. Employers must either provide their employees with a choice of plans, make a "fair and reasonable" contribution to their coverage, or face a fine of up to $295 per worker.

The tax penalty is slated to rise dramatically. On this year's tax returns, residents who choose to go all year without health insurance coverage will be required to pay up to $912. This increased penalty may compel the few remaining Bay Staters who can afford health coverage to buy it.

According to an analysis in Health Affairs, the mandate has so far reduced the uninsurance rate from 13% to 7% of state residents. An estimated 355,000 people gained insurance coverage in the state over the past year. But, as others have pointed out, providing health insurance is not the same thing as providing health care, and there are some questions about how useful the newly obtained insurance will be.

The cost of the mandate has turned out much higher than estimated as enrollment has exploded. The actual cost of the mandate has turned out much higher than estimated as enrollment has exploded. The state has budgeted about $869 million for the program this year, but actual costs are likely to be much higher. Given that Massachusetts now faces a budget deficit of $1.2 billion over the next fiscal year, it may need to go beyond the anticipated corporate income tax reforms to meet all of the unanticipated costs of the health insurance mandate.

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