Monday, October 12, 2009

Paying the Health Tax in Massachusetts
Be warned: Even people with good insurance will risk fines if mandatory insurance becomes the national law.
By Wendy Williams, Cape Cod, Mass.

My husband retired from IBM about a decade ago, and as we aren't old enough for Medicare we still buy our health insurance through the company. But IBM, with its typical courtesy, informed us recently that we will be fined by the state.

Why? Because Massachusetts requires every resident to have health insurance, and this year, without informing us directly, the state had changed the rules in a way that made our bare-bones policy no longer acceptable. Unless we ponied up for a pricier policy we neither need nor want—or enrolled in a government-sponsored insurance plan—we would have to pay $1,000 each year to the state.

My husband's response was muted; I was shaking mad. We hadn't imposed our health-care costs on anyone else, yet we were being fined ("taxed" was the word the letter used).

We've spent much of our lives putting away what money we could for retirement. We always intended to be self-sufficient. We've paid off the mortgage on our home, don't carry credit-card debt, and have savings in case of an emergency. We also have a regular monthly income of about $3,000, which includes an IBM pension. My husband, 61, earns a little money on the side, sometimes working as an electronics consultant on renewable energy projects. I'm 58 and make some money writing science books. We are not wealthy, but we aren't a risk of becoming a burden on society either. How did we become outlaws?

The turning point was three years ago, when then-Republican Gov. Mitt Romney pushed through the state legislature a health-care plan that he promised would provide universal coverage while lifting from the middle-class the burden of having to pay for those who do not have insurance. His argument was that the uninsured drove up the cost of health care for everyone by seeking care at emergency rooms and then skipping out on their medical bills. Hospitals make up for those unpaid bills by charging everyone else more than they otherwise would.

The central plank of the Romney plan was a mandate that required everyone to buy health insurance or pay a fine for posing a risk to society by walking around without coverage. There would be subsidies for those who couldn't afford insurance, and residents would be required to buy a minimum amount of health insurance, on the grounds that they might buy a policy that doesn't cover the cost of their care and end up skipping out on their medical bills. "We insist that everybody who drives a car has insurance, and cars are a lot less expensive than people," Mr. Romney told the Boston Globe in 2006.

Mr. Romney and Sen. Ted Kennedy publicly promised that the middle class—that is, people like us—would not be taxed and that our health-care costs would actually decrease if the plan became law.

My husband and I weren't convinced. It all seemed inane, but we are neither politically or socially conservative and figured the plan wouldn't affect us much. Besides, who could be against a plan that covers more people for less money?

For the first two years of the mandate, our IBM health insurance was seen as acceptable in the eyes of the state. This year the rules changed. The state requires that health plans cap out-of-pocket expenses for individuals (not including monthly premiums) at $2,000 a year. Our plan's cap is $2,500.

Ten years ago, we had excellent coverage through a more gold-plated plan. But we found that it was no longer worth paying the premiums and scaled back to a more modest policy. Today, we pay about $300 a month for catastrophic care. If we went with the next step up in plans offered to us by IBM, our monthly premium would increase to $800. We simply don't need to pay that kind of money for the amount of health care we actually consume.

Nonetheless, we now owe the state an extra $1,000. Ironically, that's about the extra amount we would pay out-of-pocket under our current plan if both of us actually fell ill in the same year.

We could choose a state-sponsored plan. It would mean paying more than what we pay now, but less than what IBM's next step up would cost. But we don't want to.

IBM seems like a rock of stability compared to the state of Massachusetts. It's apparent that state health-care policies can change at the whim of politicians in Boston, and we might not be able to adjust to the new rules. The way we figure it, if we sign up for a state-subsidized plan we will be at the mercy of the state.

So we are sticking with our plan and paying the tax. But what bothers me most is that a similar health-care mandate is being proposed in Washington, and some of the same promises that were made here are being made again—such as that the mandate will never hit middle-class folks with a new tax. When asked about the mandate, Maine Republican Sen. Olympia Snowe said recently, according to the New York Times, "It surprises me that we would have these high-level penalties on average Americans."

Well, I don't find it surprising. The mandate in Massachusetts was sold as something that wouldn't penalize people like my husband and me. But those political promises were only good for as long as it took to get the mandate enacted into law.

Mrs. Williams is co-author of "Cape Wind: Money, Celebrity, Class, Politics and the Battle for Our Energy Future" (PublicAffairs, 2007).