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For Immediate Release: October 31, 2000

Contact: Frank Conte, Communications 617-573-8050; 8750 fconte@beaconhill.org

Proposed Health-Care Reform Would Leave Massachusetts Ailing

A proposal to enact “comprehensive, high quality health-care coverage for all Massachusetts residents” would inflict substantial costs on the state economy, destroying as many as 305,133 jobs and forcing the state to more than double the personal income tax. This is the finding of a new analysis by the Beacon Hill Institute at Suffolk University.

The proposal, which appears as Question 5 on the November 7 Massachusetts ballot, is unclear about just how it is to be implemented. BHI has identified the options available to policy makers and estimated the costs associated with each:

• A single-payer system. This would impose the heaviest burden, raising the state income tax to 13.76% in 2002 from its then current level of 5.75%. This huge increase would, in turn, destroy 305,133 jobs and reduce payrolls by $11.405 billion.
• A 50% subsidy for insurance policies for all who are currently uninsured. This would require an increase in the income tax to 6.30%, destroy 57,310 jobs and reduce payrolls by $4.189 billion.
• An employer mandate, sometimes referred to as a “pay or play” system. This would destroy 33,883 jobs and reduce payrolls by $3.407 billion. Labor costs would rise by .345%, and the state income tax would rise to 5.97%.
• The least expensive option would be for the Commonwealth to provide insurance for the high-risk pool of those who are uninsurable, that small segment of the population (about 0.5%) that cannot get health insurance at any price. The $285.1 million cost to the state would require an increase in the income tax to 5.95%, which in turn would destroy 20,437 jobs and reduce payrolls by $1.494 billion.
• BHI found that the Patients Bill of Rights provided for by Question 5 would, in addition and when combined with the Employer Mandate option, raise premium costs by at least 4.8% and in the process destroy 31,301 jobs and reduce payrolls by $2.883 billion annually.

Said David Tuerck, BHI Executive Director, “Massachusetts could provide health care for the hardest to insure by creating a high-risk pool, an option that imposes manageably small costs on the state economy. Unfortunately, considering the vagueness with which it is worded, Question 5 leaves open the possibility – indeed the likelihood – that a far more comprehensive and costly option would be enacted.”

The Beacon Hill Institute at Suffolk University is a nonprofit, nonpartisan economic research organization.

Go to FaxSheet: Proposals for Universal Health Care in Massachusetts: Do they Exceed the Recommended Dosage?
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Posted: 11/03/00
Revised format: 09-Feb-2007 5:33 PM
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e-mail: fconte@beaconhill.org

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