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The wisdom of mandates (MS)

FOR ALL THE fiscal problems the Commonwealth now faces, its three-year-old universal health insurance reform cannot be blamed for driving up state government costs uncontrollably. That is the conclusion of a study released last week by the Massachusetts Taxpayers Foundation, the watchdog group that is usually quick to expose state budget-busters. At a time when Congress is weighing its own health reform bill, the study debunks the notion that health reform is just a Big Dig in scrubs.

The study estimates that reform is costing the state an extra $350 million a year. The foundation finds that amount "relatively modest and well within early projections of how much the state would have to spend to implement reform." The recession has hurt the state’s ability to sustain the gains of health reform, just as it has curbed funding for other state programs. But the foundation applauds the achievements of health reform "for so few new public dollars."

One lesson of the study is the importance of the two mandates in the Massachusetts law: the requirement that every resident get insurance, and that every employer with more than 10 workers provide it or pay a penalty. Thanks to this double obligation, the ranks of state residents getting coverage through their workplace have grown by 148,000, without any state subsidies.

That is only slightly less than the 169,000 newly insured under Commonwealth Care, which covers those whose incomes are too high for Medicaid. Like Medicaid, Commonwealth Care gets both state and federal subsidies. Expanding eligibility for Medicaid has added 76,000 to its rolls.

The cost to the state of these subsidized programs has also been kept manageable because the state has been able to draw from the $656 million uncompensated care pool that, before the reform law, helped to cover the health costs of the uninsured.

As a candidate for president, Barack Obama opposed a mandate on individuals to get coverage, which both John Edwards and Hillary Clinton supported. Fortunately, support for a mandate appears strong in Congress. Insurers say they would be willing to insure people with preexisting conditions if there is a mandate, since it would ensure that both the healthy and the sick will seek coverage, evening out the cost.

The foundation’s study demonstrates how crucial the individual mandate is in buttressing employer-based insurance and holding down the cost to government of universal coverage. With the recession causing state revenues to crater, paying for health reform will not be easy, but it would be nearly impossible without support from the twin mandates on individuals and employers.