Rally 'round the ... employer assessment?

THERE WAS AN ALMOST mischievous glint in John McDonough's eyes when he spoke recently about efforts in Massachusetts and elsewhere to turn the heat up on employers that fail to provide health coverage. McDonough, who heads the advocacy group Health Care for All, was stage-managing an all-day conference in Westborough last month, as a major healthcare bill was mired in State House negotiations. As he paused for a midmorning break, he talked about a law enacted earlier this year in Maryland that took aim at Wal-Mart because it does not offer health insurance to all its workers. At least 30 other states are looking at similar laws, he told me. ''This issue of employer responsibility is percolating in a very interesting way," McDonough said.

McDonough, a former state legislator from Boston who has been immersed in healthcare politics for years, has worked to keep it percolating here, too. In the many months the healthcare reforms were moving and morphing through the Legislature, he frequently debated business-group leaders and asked pointed questions about the public costs incurred when companies such as Wal-Mart skimp on health benefits. Health Care for All, along with a wide coalition of Massachusetts labor unions and community groups, supported a new payroll tax on employers that don't cover their workers.

The healthcare legislation that finally emerged on Beacon Hill this week contains a concession to the employer-responsibility advocates-though it's kinder and gentler than a payroll tax. Companies with 11 or more employees and no health-insurance plan will be required to pay the state a ''fair share employer contribution" of up to $295 per worker. Massachusetts passed an even steeper levy on employers as part of the 1988 Dukakis health plan, but that tax never went into effect. If this assessment becomes law as expected, Massachusetts will be the only state in the nation with a broad-based charge on employers that don't offer health coverage.

The new employer assessment is just one part of a broad bill, and is not as dramatic as the requirement (also a national first) that all state residents have health insurance by July 2007. But for the ''individual mandate" to succeed, ''employer responsibility" must be made meaningful, too. Without keeping healthcare widely available through the workplace, it is unlikely the state can move toward universal coverage.

Many liberal activists who would prefer to be talking about a government-run, single-payer system see the irony in this approach: Having long argued that the employer-based health insurance system is unraveling, they are now confronted with an effort to shore that system up-or, as Governor Mitt Romney put it last week, to prove that ''the old single-payer canard is gone."

Business leaders are quick to point out that most people do get health insurance through their employers. Of the almost 3 million employees in Massachusetts, only about 12 percent are in workplaces without a health plan, according to figures compiled by the Urban Institute. Still, that's about 346,000 workers. Add in the ranks of the unemployed, the part-time, and those who choose not to purchase health insurance, and there are more than 530,000 people without coverage, according to state estimates.

The public's stake in all this was dramatized by a state report issued in February. The document listed more than 400 employers in the state with 50 or more employees whose healthcare costs were picked up by taxpayers-either because low-income workers were on Medicaid or had their hospital expenses paid by the state's uncompensated care fund. That report tallied $212 million in public expenses. No one is sure what the total cost is, but if the expenses of all employed people using public care were compiled, it would be much more than that.

The legislation approved by the House and Senate this week attempts to recoup at least some of this cost, in part through the ''Fair Share" assessment. And yet, if medical costs continue to rise, there's nothing in current law to prevent more employers from discontinuing coverage, or from shifting more of the cost of premiums to employees. A report published last year by the Washington-based Economic Policy Institute found that while 62.5 percent of private sector workers in Massachusetts got employer-provided health insurance in 2000, that number was down to 56.9 percent in 2004.

That's another irony of the employer-responsibility campaign-at the end of the day, there isn't much state governments can do to make the employer-based system more expansive. Thanks to a 1974 federal law known as ERISA, the Employee Retirement Income Security Act, states are prohibited from requiring employers to provide health insurance. (Hawaii enacted an employer mandate in 1974, which survived due to a subsequent act of Congress. That mandate remains unique.) Consequently, states are left taking the ''play or pay" route-as Massachusetts did in 1988 by attempting to tax those employers who weren't in the health-coverage game. In assessment schemes such as the one passed this week, companies will pay far less than they would by covering workers.

Such is the nature of the voluntary employer-based insurance system, critics say, and it's the reason some who favor government-provided insurance see the Massachusetts reform effort as doomed. ''If you don't fundamentally change the system," says Marcia Angell, former editor of the New England Journal of Medicine, ''you run into the following dilemma: Anything you do to increase access and coverage inevitably increases cost. And anything you do to contain costs inevitably reduces access and coverage."

Angell, who is now a lecturer at the Harvard Medical School, says working within the current system doesn't allow costs to be controlled, which carries the risk that state funding will be unavailable in the next downturn. ''I see it going the way of the Dukakis plan," she said. ''It'll peter out."

Some in the business community are likewise leery of having so much ride on employer-provided insurance. Alan MacDonald, chair of the Massachusetts Business Roundtable, was part of the group of business leaders that helped break the legislative logjam last month by signing on to the idea of an extended employer assessment (employers who provide coverage were already paying an assessment of $62 per worker). Yet when you get him talking about healthcare, he raises doubts about whether the system of employer benefits that was put in place after World War II can last much longer with today's changed economic realities. ''Everything has changed except the public expectation that since I once upon a time got first-dollar coverage from my employer I should still get it," MacDonald said.

''It's just a public policy that was designed 60 years ago," he went on. ''And you have to look at the circumstances 60 years later and say, are they the same?"

Business leaders and conservatives dream of seeing more ''individual responsibility" in a healthcare system based more on free-market principles. Activists on the left dream of a system that takes employers and private insurers out of the equation.

John McDonough has little patience with either approach. He says he is ''agnostic" on whether a single-payer system is the ultimate goal. But he ticks off a list of countries that have guaranteed universal access with employer-based systems: Germany, Switzerland, France, Italy, Japan. ''So this notion that you need single-payer to get to universal coverage is a total myth," he said.

For the foreseeable future, almost all health experts believe, we are stuck with a hybrid system in which government and business share the responsibility for moving us toward universal coverage. McDonough believes Massachusetts has taken a significant step forward.

''We're going to learn a lot of important stuff over the course of this process that's going to help us and help people in a host of other states to try to figure out promising directions," McDonough said. ''Let's not be afraid to experiment and try new things! It's so much better than constantly engaging in the stupid ideological back-and-forth. Let's embrace a real genuine bona fide amalgam of right and left approaches and learn from them. It's exciting, it's thrilling, it's great!"

Dave Denison, former editor of CommonWealth magazine, is a freelance writer living in Arlington.