Massachusetts Health Care Reform Is a Pioneer Effort, but Complications Remain

On 12 April 2006, Massachusetts introduced health care reform legislation to provide access to affordable, quality, accountable health care that became law in a bipartisan vote of 154 to 2 in the House of Representatives and 37 to 0 in the Senate. When then-governor Mitt Romney (R) signed the groundbreaking legislation, Chapter 58 of the Acts of 2006, he declared that an achievement like this comes around once in a generation, and it proves that government can work when people of both parties reach across the aisle for the common good. Over the course of the next year, policymakers, stakeholders, and the newly formed Commonwealth Health Insurance Connector Authority addressed difficult issues pertinent to the law while new governor, Deval Patrick (D), who took office in January 2007, provided continued gubernatorial backing. The state's new health care reform law aimed to extend affordable, high-quality coverage in a sustainable way to all residents and reduce the state's estimated 400000 to 600000 uninsured persons to nearly 0 over the course of the first 3 years (see Appendix for additional U.S. Census data). Policymakers planned to achieve near-universal health care by moving uninsured people from uncompensated care to insured care by expanding on employer-sponsored health insurance as the primary source of coverage for state residents; creating new, lower-cost plans for individuals and small businesses, with improved portability and flexibility for part-time and seasonal workers; and funding public programs for people without access to employer-sponsored health insurance. It also created standards of adequacy and affordability for new, state-endorsed insurance plans while encouraging pretax treatment of health insurance premiums for employees. The law carried a first-ever individual mandate requiring residents to buy health insurance if they do not already have it and imposed financial penalties for nonparticipation. Meanwhile, it also maintained a modified health care safety net fund to cover the cost of care for people who remained uninsured because they could not afford or were ineligible for health insurance, such as undocumented immigrants. The law was built on the concept of shared responsibility, relying on cooperation from citizens, businesses, insurers, hospitals, and advocacy groups. The effort, estimated to cost $1.3 billion in 2008, was financed mainly through a redistribution of existing monies spent on the uninsured and underinsured and through new funding streams, including a general fund appropriation of $125 million per year, employer fair-share and free-rider assessments, and federal matching funds on Medicaid spending. A key factor aiding the state's effort was its free-care pool, initially set up to compensate community health clinics and hospitals that treat the uninsured. Legislators drew on these funds to help pay for the reform. Massachusetts had other advantages that helped the state achieve its health care coverage goals. Compared with the nation as a whole, a higher percentage of residents had health insurance through their employersnearly two thirds of employers already offered health insurance to their employees, compared with the national average of 56%. Massachusetts also had a lower percentage of people without insuranceapproximately 10% compared with the national average of 16%. This program was not the state's first attempt at health care reform. In 1988, it enacted a controversial universal health care law that was never implemented and was eventually repealed. That law was followed by a successful bid in the mid-1990s to expand Medicaid and to subsidize drugs for seniors. This latest health care reform law took effect over the course of 1 year and was fully in place by 1 July 2007. As of 1 January 2008, approximately 300000 people had already signed up for new coverage. So far, approximately 200000 of those have enrolled for free or low-cost coverage in either MassHealth or Commonwealth Care. The remaining 100000 are paying private insurance premiums, either through their workplaces, insurers, or the state. State officials expect that the number of newly insured residents will continue to increase as penalties for noncoverage become more significant in 2008. All residents older than 18 years of age are now required to carry minimum health insurance. Those who could not show proof of health insurance by 31 December 2007 lost their personal income tax exemption when they filed their 2007 income taxes, which is $219 for an individual. In 2008, failure to meet the requirement results in a fine equal to 50% of the least costly insurance premium that meets the standard for creditable coverage for each month the individual does not have coverage. The fine becomes a more sizeable penalty ranging from $672 to $912 for residents who earn an income of at least 3 times the federal poverty level. Residents younger than age 27 years who do not qualify for subsidized coverage (because they earn at least 3 times the federal poverty level) and are uninsured for all of 2008 pay $672. Residents age 27 years or older who do not qualify for subsidized coverage and are uninsured pay a fine of $912. Married residents who are uninsured must pay fines individually. For details, see the Mandated Coverage section below. These penalties, which were only vaguely specified in the legislation, are central to effective health care reform, according to Jonathan Gruber, PhD, a professor of economics at the Massachusetts Institute of Technology. Otherwise, the mandate has no teeth, he says. Since Massachusetts officially took on the difficult job of health care reform, the rest of the nation has been watching to see whether it succeeds, and if so, just how the reform works. Many people have lauded the hard work and risk involved in tackling the complicated taskothers have complained that the effort is misguided, inadequate, or doomed to failure. Leaders of the effort recognize the importance of keeping costs under control so that coverage remains affordable and the reform remains sustainable, while widespread cooperation on the health care mandate and maintenance of an adequate supply of primary care physicians to ensure accessible and high-quality health care are achieved. Key Components of the Reform Affordability Massachusetts has financed health care reform by redistributing existing monies spent on the uninsured and approximately $400 million in additional new funding. Not everyone in Massachusetts likes the funding plan. In particular, 250 physicians in the state have signed a letter asserting that the plan seriously compromises the state's safety net by shifting money from previously funded free care for the poor to subsidized insurance companies that require co-payments the poor cannot afford and payment for medications that were once free. In effect, public funds for care of the poor that previously flowed directly to hospitals and clinics now flow through insurers with their higher administrative costs, according to a letter written by Rachel Nardin, MD, an assistant professor of neurology at Harvard Medical School and practicing neurologist at Beth Israel Deaconess Medical Center. Nardin says about a third of the signatories on the letter belong to the Massachusetts chapter of Physicians for a National Health Program, a single-payer advocacy group, of which she is chair. In addition to these changes in subsidized health care, Nardin claims that premiums for even the lowest-cost nongroup plan available are unaffordable for many people who do not qualify for subsidies. B. Dale Magee, MD, MS, president of the Massachusetts Medical Society (MMS), said that affordability is a matter of perspective and, Certainly, not everyone values health care the same. He acknowledged that the difference between the cost of a policy and the median amount that a person spends on health care in a year is substantial, noting that a health insurance policy may cost $4000 or more for an individual while most people spend under $1000 annually for health care. So among people who are healthy, there is a pretty good chance that they may not find $4000 or more an affordable expense, he said. Jon Kingsdale, PhD, executive director of the Commonwealth Health Insurance Connector Authority (CHICA), said that despite complaints, more people who need nongroup coverage are able to afford it now than in the past (for more information about the role of the CHICA in the reform, see Box). By pooling enrollees, the agency was able to negotiate rates that reduced the price of nongroup insurance by half while doubling the benefits. That doesn't mean that everyone will consider it [the reduced price] affordable, but many people are benefiting, he said. He also noted that people who once relied on free-care clinics and who are newly enrolled in free and subsidized insurance plans are more likely to benefit from improved access to comprehensive and preventive care than in the past. Without question, financial pressures are a considerable concern, and the ability to keep costs down is crucial to the future of the reform effort. The irony of this affordability issue, some people noted, is that insured persons are typically seen as the primary barrier to universal health care access because they do not consider health care coverage for others a prioritybut in Massachusetts, policymakers are hearing the loudest objections from those who are uninsured and do not consider health insurance a priority for themselves. Mandated Coverage The state will continue to confirm and enforce coverage through the state tax return. The number of residents facing penalties for being uninsured in 2007 is not yet known; it will be determined once 2007 tax returns are filed, regulators say. The CHICA estimates that by 1 January 2008, between half and three quarters of the state's uninsured residents had enrolled in health coverage since the law took effect. Altho