Monday, July 19, 2010

Mini-ObamaCare: A Report from the Medical Mess in Massachusetts

The Boston Globe's Kay Lazar writes:
The relentlessly rising cost of health insurance is prompting some small Massachusetts companies to drop coverage for their workers and encourage them to sign up for state-subsidized care instead, a trend that, some analysts say, could eventually weigh heavily on the state’s already-stressed budget.

Since April 1, the date many insurance contracts are renewed for small businesses, the owners of about 90 small companies terminated their insurance plans with Braintree-based broker Jeff Rich and indicated in a follow-up survey that they were relying on publicly-funded insurance for their employees.

In Sandwich, business consultant Bill Fields said he has been hired by small businesses to enroll about 400 workers in state-subsidized care since April, because the company owners said they could no longer afford to provide coverage. Fields said that is by far the largest number he has handled in such a short time.

“They are giving up out of frustration,’’ Fields said of the employers. “Most of them are very compassionate but they simply can’t afford health insurance any more.’’...

Many of these companies — restaurants, day-care centers, hair salons, and retail shops — typically pay such low wages that their workers qualify for state-subsidized health insurance when their employers drop their plans.

“Those employers are trying to keep their doors open, and to the extent they can cut expenses, they will cut health insurance because they know their people can go to Commonwealth Care,’’ said Mark Gaunya, president of the Massachusetts Association of Health Underwriters, a trade group representing more than 1,000 brokers and other insurance professionals.
Naturally, the response from the Mass government is to put price controls on the rates insurance companies can charge small businesses. Here's Lazar, again:
The issue is coming to a head as the Patrick administration battles insurers over swiftly escalating rates they have been charging small employers. In February, the governor filed sweeping legislation that proposes to give the Division of Insurance the power to essentially cap health care price increases. That proposal is still pending.
Anyone who understands Economics 101 understands that price controls don't work, never ever. It's the economic equivalent of defying gravity. Price controls simply lead to lines and shortages.

Keep an eye on what is going on in Mass. It's likely to be a pretty good  roadmap as to what happens nationally. Only, on a national scale, the mess will be much greater. With even heavier regulations for employers, insurance companies and patients. The quality of healthcare in the U.S. is going to sink very fast.

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