I note that Austin has posted more recently in “This should cover it” and in a comment above (on the initial blog post about the relationship between the individual mandate and the likely success or failure of the Paient Protection and Affordable Care Act) that he does not want to mix up the Massachusetts mandate with any element of Mass healthcare insurance reform other than the “merged market.” His position is that the mandate was a device to reduce adverse selection in about 10% of the Massachusetts healthcare insurance market called the “merged market” (because it let about 40,000 individuals buy insurance for the first time at the same rates as about 600,000 people that had been purchasing insurance through small groups). The other 90% of people in Massachusetts get insurance through an employer or the government. For the luckiest of us, their employer is the government.

In fact the mandate affects all 6,500,000 of us and when Turbotax adds a thousand dollars or more to a resident’s Massachusetts state income tax bill on April 15 if you don’t have a form 1099-HC, the Q and A doesn’t say “could you have bought insurance via the merged market?” As the Massachusetts Senate president famously said “”It is complicated. If you move one little piece, something pops up somewhere else.” The mandate is one of the pieces that interrelate with and cannot be so simply decoupled from the other elements. An oft-quoted source on incidentaleconomist.com, Professor Gruber, explains many of the interrelationships in a presentation made in Washington DC on Thursday January 13 (see http://www.iom.edu/~/media/Files/Activity%20Files/HealthServices/EssentialHealthBenefits/2011-JAN-12/1015%20Gruber.pdf)

Although there is no explicit mention of the merged market on the 1099-HC, one of the things that is included on the form is a checkbox related to “minimum creditable coverage.” I would guess that it is the “minimum creditable coverage” requirement in Massachusetts law that accounts for the differences between Ohio premium rates and Massachusetts premium rates that you saw in your Internet search. Not only are we mandated to buy insurance here in Massachusetts but we are mandated to buy very comprehensive insurance (that is, state decides what should be in each policy as a minimum — e.g., IVR — and calls the result minimum creditable coverage).

To be fair however, the usual litany of other Massachusetts problems such as high income, sales and property taxes, a high concentration of teaching hospitals, more specialists than primary-care physicians, a dependence on oil and natural gas from overseas, etc. also probably makes our rates higher than in other states. One thing that does not contribute is those dastardly for-profit insurance companies that you hear about: almost all of us get our insurance via non-profits that all have had medical-loss ratios around 90% for years (I think the PPACA goal for medical-loss ratios is either 80% or 85%)

As a sidelight, the reason that Professor Gruber was speaking in Washington DC on January 13 was to help the U.S. government decide what should be in everyone in the United State’s “minimum creditable coverage,” called Essential Benefits by the PPACA. So your premium rates will catch up to ours soon.

– Dennis Byron