Massachusetts Health Care Reform, At a Glance

The Massachusetts health care reform law, enacted in April 2006, has attracted national attention for its ambitious goal of near-universal coverage, its hybrid, public-private approach, and the impetus it has given to other reform efforts.

The Baseline of Uninsured Residents
Estimates of the number of Massachusetts residents who were uninsured in 2006 range from 395,000 (state agency survey) to 571,000 (The Urban Institute), or from 6.3% to 9.2% of the state's 6.2 million residents.

Progress to Date (Decemberr 2007)
Massachusetts health care reform is half-way through the second year of what is expected to be a three to five year implementation process, and there has been substantial progress to date.

• Approximately 293,000 adults and children have been newly insured: 70,000 in MassHealth, the state's Medicaid program, 160,000 through the new Commonwealth Care program, which offers publicly subsidized private insurance coverage to individuals and families earning up to 300 percent of the federal poverty level; 63,000 enrolled in private insurance through the Health Connector or private carriers.
• Implementation proceeded smoothly through a change of Administrations from Republican Governor Mitt Romney to Democratic Governor Deval Patrick, and major targets have been met.
• The coalition of stakeholders – politicians, consumer advocacy groups, business associations, medical providers and organizations – that helped pass the law held together through a series of complex implementation issues.  Support for reform among the general public has remained strong: “Two-thirds of state residents who know about the initiative said they support the effort to insure nearly all adults, largely because it ‘is the right thing to do.’” (Boston Globe, June 27, 2007)

The Basics of the Law

• The law provides new and expanded public programs that offer subsidized coverage to the state's low-income residents through private health plans.
• Low-income uninsured residents who have been getting very expensive, government- and employer-funded “uncompensated care” are being enrolled in private health plans that offer more effective and efficient care.  A “safety net fund” remains in place for residents who cannot afford insurance.
• The Connector, an independent public authority governed by a 10-member board, which includes government officials, health care experts, and leaders from labor and business, was created to implement the major provisions of the law and to create a market that combines non-group and small-group insurance rules with the goal of making coverage more accessible, affordable and portable.
• All residents are required to obtain health insurance coverage that is deemed by the state to be adequate and affordable, or face financial penalties.
• Employers with 11 or more employees are encouraged to offer their employees access to pre-tax treatment of health insurance premiums (IRS Section 125 plans) and may be subject to a “free rider surcharge” for uncompensated care if they do not.
• Employers with 11 or more employees that do not make a “fair and reasonable” contribution to employee coverage are required to help pay the cost of uncompensated care.

Revenue Sources, State Fiscal Year 2008 (7/1/07 – 6/30/08)

•   $980 million: Federal Funds
•   $338 million: State General Fund
•   $320 million: Safety Net assessments on providers and payers/employers (former   Uncompensated Care Pool)
•   $24 million: Fair Share assessments on “non-contributing” employers
•   $63 million: Other sources

The total price tag for health insurance in Massachusetts also includes an estimated $11 billion in employer spending on health coverage for employees and another $3 billion in consumer spending on premiums, co-payments and deductibles.

What to Look For in 2008 and Beyond

• A high level of participation in the individual mandate provisions, which are just taking effect, is essential to further reduce the number of uninsured, spread the insurance risk of expanded coverage among the healthy and sick, and allow for the continued movement of funds from uncompensated care to subsidized insurance. An important test will come in 2008 and beyond, when individuals will face a financial penalty for every month they are uninsured (up to half the premium of the lowest-cost, available plan).
• The health care reform budget relies on estimates of health care inflation trends and the number and demographics of the uninsured. If health care costs rise too fast or if the number of low-income uninsured needing subsidies is higher than expected, program costs will rise faster than anticipated.
• Health care reform requires a continued funding commitment from the federal government and a state economy that is strong enough to keep employment at a high level and produce needed tax revenues.
• An essential element of reform is a federal Medicaid waiver that allows Massachusetts to use hundreds of millions of dollars in federal matching funds to expand access and coverage in new and creative ways. The current waiver will be up for renewal in mid-2008, at the height of the presidential campaign.

Lessons for State and National Reform Efforts
Massachusetts health care reform emerged from a landscape that included a federal Medicaid waiver allowing the state to be creative in its use of federal matching funds; an Uncompensated Care Pool funded with public and private dollars; insurance laws that prevent insurers from denying coverage to, or imposing excessive premiums on, people who are sick; a relatively low rate of uninsured residents; a high rate of employer coverage; and a long tradition of political, employer, consumer and provider activism on health care issues.

The Massachusetts law has elements that appeal to those who believe in comprehensive, federal health care reform as well as to those who advocate a state-by-state approach, and it has influenced the reform proposals of presidential candidates and governors alike.

While not a one-size-fits-all solution, Massachusetts has taken the lead in trying to address some of the most vexing questions in the current health care reform debate:

• How many of the uninsured is it realistic to cover?
• How much revenue is needed and where will it come from?
• Can quality improvement and cost management be built in to reform?
• Should low income individuals be given subsidies or tax breaks to help them buy coverage?
• What are the best ways to spread the risk of covering the newly insured?
• Should there be restrictions against insurers denying coverage and/or limits on how much more they can charge the sick vs. the healthy?
• Should employers be required to contribute financially toward private and/or public coverage?
• Is there political common ground that allows for shared responsibility among the stakeholders?

Visit these sites for more information on Massachusetts Health Care Reform: