Sunday, November 13, 2011

Massachusetts Health Care Reform

For those students who have asked for some details about the Massachusetts health care plan, click here for the wikipedia version.

I also found this article by old friend, Mara Yarow, published back when the bill was passed. In my opinion, Mara's summary is well considered and as good as you will find.

By Mara Yarow (AHPA newsletter, 2nd Q, 2009)
On April 26, 2006, Massachusetts signed into law its
landmark health reform legislation, described as an act
providing access to affordable, quality, accountable
health care. The legislation provided for a three-year
phase-in of health reform. At the time, a study by the
Urban Institute estimated that 12 percent of the state’s
population of approximately 6.4 million was uninsured.
The goal of the law is to provide near-universal
coverage of the Massachusetts population. Components
of the plan include individual mandates, employer
requirements, insurance market reforms, and
preservation of a safety net.

The Act required all adults in Massachusetts (who can
obtain affordable health insurance) to purchase health
insurance by July 1, 2007. Individuals not having
health insurance would receive financial penalties imposed
through their income tax filings and the penalties
increase each year as the law becomes fully implemented.
In 2007, individuals without health insurance
lost their personal income tax exemption ($219).

Second, employers of 11+ full-time equivalent employees
in Massachusetts are required to make a fair
and reasonable contribution toward coverage for fulltime
employees or pay a Fair Share Assessment of up
to $295 annually per employee. They also must offer
both full-time and part-time employees a pre-tax, payroll
deduction plan for their own health insurance premium
payments, or face a surcharge if employees
make excessive use of uncompensated care.

Non-group and small-group health insurance markets
are merged to effectively lower the price and offer
more choices for individuals purchasing unsubsidized
coverage on their own.

To accomplish the goal, several key actions were initiated:
• Expansion of MassHealth (Medicaid);
• Restructuring of the state Uncompensated
Care Pool (UCP) into the Health Safety Net
(HSN); and
• Establishment of a quasi-state agency, the
Commonwealth Health Insurance Connector
Authority (The Connector

The Uncompensated Care Pool was established by
Universal Health Care Legislation in 1988 to reimburse
hospitals for uncompensated care. Subsequently,
the UCP was also charged with reimbursing community
health centers (CHCs). The UCP was administered
by the state’s Division of Health Care Finance
and Policy (DHCFP), one of the goals of which “is to
improve access to health care for the uninsured and
the underinsured residents” of the state. The UCP was
used to pay for medically necessary care and emergency
services not covered by other insurance.

As CHCs became covered by the UCP, attempts were
made to shift hospital outpatient care to CHCs. With
the 2006 legislation, the UCP was converted to a
Health Safety Net Trust Fund that combines the previous
UCP funds with other Medicaid funds including
Disproportionate Share Hospital funds. MassHealth
now screens all applicants for HSN coverage and a
new fee schedule was developed to standardize provider
reimbursements. The intent of the new legislation
is that as more uninsured obtain coverage, uncompensated
care will decrease and the funds will be
shifted to subsidized programs.

Massachusetts was able to extend its waiver with the
Centers for Medicare & Medicaid Services (CMS) for
continued support and funding of the Health Reform
effort that involves a collaboration of nine state agencies
in the purchasing, regulating and monitoring of
health care services to promote improved access, coordinated
reimbursement and coverage.

The Commonwealth Health Insurance Connector Authority
offers two programs that each provide a range
of health plans for legal residents who are not eligible
for other public or employer-sponsored health insurance
in the following consumer categories:
• Completely subsidized, comprehensive health
insurance to adults earning up to 150% of the
federal poverty level;
• Substantial premium subsidies to people earning
between 150% and 300% of the federal
poverty level; and
• Completely subsidized comprehensive coverage
to children of parents earning up to 300%
of the federal poverty level.

Commonwealth Care is a subsidized program for
adults who are not offered employer-sponsored insurance,
do not qualify for Medicare, Medicaid or certain
other special insurance programs, and who earn no
more than 300% of the federal poverty level. Plans
are currently available for between $39 per month and
$116 per month for individuals. There are no monthly
premiums for the children of adults covered by Commonwealth
Care, as the children are covered by Mass-
Health (Medicaid).

Commonwealth Choice is an unsubsidized offering
of six private health plans that were selected through a
competitive bidding process and are available through
the Connector to individuals, families and certain employers
in the state. The six plans are offered directly
through the Health Connector by six Massachusetts based,
non-profit health insurance carriers. Together,
these plans represent about 90% of the commercial,
licensed health insurance market. Each of the plans
offered through the Health Connector by the six carriers
may also be purchased directly from the individual
carriers. The six private plans have received the
Connector’s “Seal of Approval” to offer a range of
benefits options, grouped by level of benefits and
cost-sharing at different levels. There is also a special,
lower priced Young Adults Plan offering from
the same six carriers, exclusively for individuals between
the ages of 18 and 26.

Small employers with 50 or fewer workers are also
able to purchase directly through the Health Connector’s
Contributory Plan.

The cost of Health Reform has not been inexpensive.
In FY 2008, $472 million was budgeted for the Connector
and spending was $628 million due to higher
enrollment in various programs than projected. This
suggests that the original federal estimate of 650,000
uninsured in Massachusetts was more accurate than
the state estimate of 400,000. For FY 2009, $869
million was budgeted and current projections estimate
spending will be approximately $800 million.
Budget (not yet passed) figures for FY 2010 now
range between $750 and $880 million.

Since its passage in 2006, the health reform program
in Massachusetts has been quite successful. A November
2008 study by the state’s the Division of
Health Care Finance and Policy found only 2.6% 2.6% of
the population of 6.5 million remain uninsured.
MassHealth now provides coverage to more than
1,000,000 of the Commonwealth’s residents. The
state’s total Health Safety Net payments dropped as a
result of more residents being insured. From Payment
Fiscal Year (PFY) 2007 to PFY 2008, total payments
dropped from $671 million to $410 million,
hospital payments went down from $620 to $373 million,
and CHC payments decreased from $41 million
to $37 million. Likewise, service and volume have
declined as the insured are able to access preventive
and outpatient health care services not paid for by the
HSN. For Commonwealth Choice, the Connector’s
unsubsidized health plans, the premium increase for
the most recent year was five percent (5%), unlike
the double-digit increases experienced for other plans
in the state.

Like other states, Massachusetts is affected by the
current economic climate, but the state remains committed
to the Health Reform effort and maintaining
existing health care services in the state. The Governor
has committed a portion of the federal stimulus
fund received to health care, which will include $225
million to restore or prevent cuts in eligibility for services
faced with increasing enrollment due economic
circumstances of the population. Use of stimulus
funds will increase the Federal Medicaid Assistance
Percentage for Massachusetts from 50 percent to approximately
60 percent. Some stimulus funds will
also be used to protect the Health Safety Net.

Health reform in Massachusetts has been successful
and is a model that merits consideration and study by
others. Areas that remain to be addressed in Massachusetts
are affordability and cost control.