Last week, the Massachusetts legislature passed a landmark bill. By votes of 154-2 in the House and 37-0 in the Senate, the state will require all Massachusetts residents to purchase health insurance, or pay a special tax for the privilege of going uncovered. And Governor Mitt Romney has stated his intent to sign it.
I’m not quite clear on the details, but here are a few of the things I’ve picked up. The bill requires all businesses with ten or more employees to offer insurance to their employees. Those that don’t will have to pay $295 per employee per year. And individuals that don’t buy insurance will have to pay a penalty — in the first year, losing their personal state income-tax deduction ($150); after that, tax penalties will rise to equal half the cost of the cheapest insurance plan.
This is exactly why I created a category called “Mass. Insanity.”
I describe myself politically as a “militant moderate, with libertarian and contrarian leanings.” This is one of the cases where my libertarian tendencies rise to the forefront, and Thomas Paine’s quote that “that government is best which governs least” seems especially applicable here.
It’s a tenet of libertarian belief that any time the government does, it does in the most inefficient and expensive way, and it’s one I tend to share. And this insurance fiasco is utterly exemplary of that principle. The goal of the bill is laudable, but I sincerely doubt this would achieve them.
Let’s look at some of these measures. Any employer with more than ten employees will HAVE to contribute towards their workers’ insurance. With that threshold, how many businesses will find it extremely difficult to justify expanding beyond that ninth employee, triggering a huge per-worker expense? The growth of small businesses will be severely crippled.
Next, what about small businesses that are just over that threshold? The temptation to cut back to duck under the wire will be tremendous.
Then, there are those businesses that hire a lot of part-time, unskilled employees. For them, the idea of cutting down on the total number of employees by increasing their hours might make a lot of economic sense.
Finally, in that last category, we have the subset of those with a very small profit margin. Wal-Mart, as I understand it, doesn’t make very much on items they sell — it’s the price of keeping their prices so low. They balance that out by hiring large numbers of unskilled workers, keeping their labor costs low, and sheer volume. A radical increase in their labor costs would slash hard into their profits, perhaps even wiping them out altogether. If they can’t make any money, why the hell would they keep their stores open and all those people on their payroll?
I really think that this measure is going to be a disaster for Massachusetts. It’s going to hit hardest those it is intended to help most.
Finally, I have to challenge the basic philosophical basis of the bill. Having insurance is a good thing. Having a major medical condition, and having had it both with and without insurance, I can safely say that it is vastly better to have the coverage. But that’s why I chose a job that offers decent insurance, and partly why I stay with my job — I have had my share of problems with them, and I’ve watched over the past couple of years as my premiums rise while the actual coverage decreases, but it beats the hell out of the alternative.
There are people who, for whatever reason, don’t want insurance. And there are companies that cannot financially justify offering insurance. Most do, as it helps them attract good workers, but some don’t. I don’t think that it is the mandate of government to override those decisions by individuals and companies and force a cumbersome, expensive, inefficient, and ultimately destructive “solution” down their throats.
On the plus side, though, I’m willing to bet at least some of those companies that get chased out of Massachusetts end up hopping over the northern border and setting up shop here in New Hampshire, especially in the southern tier of the state, so this could be another case of their loss is our gain. I just don’t like that option, though — I prefer that we in New Hampshire succeed because we’re doing things right, not just because Massachusetts once again does something wrong.
But we’ll take what we can get.