Mandatory Health Insurance in Massachusetts, Buy It or Pay a Fine
In 2006, the state of Massachusetts mandated health insurance coverage for all adults. Individual uninsured taxpayers would be fined for failure to comply. After one year of implementation, the law is considered a success by some although 5% of all the state’s taxpayers did not purchase health coverage during the year.
The 5% uninsured taxpayers, nearly 100,000 of them, were denied their personal state tax exemption ($219) for failing to purchase insurance even though they could afford to do so. Two percent of the state’s taxpayers, or about 62,000 individuals, were found to earn too little to afford the purchase.
The state collected $9.7 million from the fines, which was added to a trust fund established to cover the cost of the mandatory insurance law. Individuals who can afford it but who refuse to purchase it face monthly penalties expected to reach $912 by December.
Massachusetts Governor Deval Patrick calls the mandate a success, with 95% of the state’s population now covered under health insurance programs. One point of particular pride is the drop from 13% to 7% in the number of uninsured adults in the state, with the biggest drop coming from the state’s poorer individuals.
Residents of the state who earn less than three times the federal level of poverty are covered by state-subsidized health care.
While individuals report spending less for health care, the state may struggle to fund the law. Originally, $725 million was estimated for the first year of operation but Patrick budgeted $869 million. State regulators admit now that costs to the state will rise higher than even that amount. To offset the financing gap, a tax of $1 per pack of cigarettes has been initiated.
The first comprehensive survey of the mandatory insurance law was issued earlier today. Funding for the survey was provided by Blue Cross and Blue Shield of Massachusetts, the Robert Wood Johnson Foundation, and the Commonwealth Fund.
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This is an interesting law that I did not know about. I suspect its costs will rise out of control as the cost of providing health services increase. I applaud the effort, and it appears to be working in the short term. But with too few paying the fine, the State will be left looking for revenue from other sources besides fines and cigarettes. ~ Bill