Massachusetts health care reform
(
Healthcare In Massachusetts
)
The Massachusetts health care reform, commonly referred to as Romneycare, was a healthcare reform law passed in 2006 and signed into law by Governor Mitt Romney with the aim of providing health insurance to nearly all of the residents of the Commonwealth of Massachusetts.
The law mandated that nearly every resident of Massachusetts obtain a minimum level of insurance coverage, provided free and subsidized health care insurance for residents earning less than 150% and 300%, respectively, of the federal poverty level (FPL) and mandated employers with more than 10 full-time employees provide healthcare insurance.
Among its many effects, the law established an independent public authority, the Commonwealth Health Insurance Connector Authority, also known as the Massachusetts Health Connector. The Connector acts as an insurance broker to offer free, highly subsidized and full-price private insurance plans to residents, including through its web site. As such it is one of the models of the Affordable Care Act's health insurance exchanges. The 2006 Massachusetts law successfully covered approximately two-thirds of the state's then-uninsured residents, half via federal-government-paid-for Medicaid expansion (administered by MassHealth) and half via the Connector's free and subsidized network-tiered health care insurance for those not eligible for expanded Medicaid. Relatively few Massachusetts residents used the Connector to buy full-priced insurance.
After implementation of the law, 98% of Massachusetts residents had health coverage. Despite the hopes of legislators, the program did not decrease total spending on healthcare or utilization of emergency medical services for primary care issues. The law was amended significantly in 2008 and twice in 2010 to make it consistent with the federal Affordable Care Act (ACA). Major revisions related to health care industry price controls were passed in August 2012, and the employer mandate was repealed in 2013 in favor of the federal mandate (even though enforcement of the federal mandate was delayed until January 2015).
Background
The movement to reform Massachusetts healthcare insurance regulations and market between 2004 and 2006 was driven by multiple issues, not all of which were clearly an issue or directly related to then and now most critical issues of rising costs:
- A six-year-old federal-government waiver as to how Massachusetts administered its Medicaid program was expiring. Unless the waiver was extended or amended, a large number of people would lose Medicaid coverage as the state reverted to Federal regulations.
- Reforms made in 1997 to the portion of the insurance market that related to the individual purchase of insurance had failed. In 2000, over 100,000 Massachusetts residents (about 1.5% of the population) were covered by individually purchased insurance but the number had dropped to under 50,000 by the time of the reform debate.
- As illustrated in the state report referenced in the previous sentence, the price of insurance that covered about 600,000 people in the small group market (about 10% of the population) was rising faster than the prices for the vast majority of the non-senior-citizen population, most of which were – and still are – covered by self-insured group insurance from large employers (self-insured plans are not subject to state regulation).
- There was a widespread feeling that emergency rooms were misused for non-emergency medical care (the misuse was and is undeniable, not unique to Massachusetts, and continues; the relation to healthcare insurance or lack of it was less clear and apparently did/does not exist).
- The taxes that fed the state's "free care pool", which covered uninsured emergency room visits as well as uninsured hospital admissions (as well as funding community health centers), consistently underfunded the pool and had to be raised almost annually (with differences made up by appropriations from general revenue). The combination of issues four and five was dubbed by Romney and others the free-rider problem although subsequent to the passage of the law, it is argued that the free-rider problem did not really exist. Almost all people who did not have insurance could not afford it, but since they were still using the good it is considered free riding.
- Advocacy groups wanted a long list of non-traditionally covered (e.g., vision care) or under-covered (e.g., mood-altering pharmaceuticals) healthcare procedures and goods mandated.
- Large employers—even large employers that were self-insured—were increasingly dropping health insurance as an employee benefit and/or restricting it to full-time employees such that the "take up rate" of healthcare insurance by employees was dropping. However, the drop in take-up rate actually accelerated after passage of the law although there is no demonstrable relationship between the law's passage and the accelerated drop.
Allegedly because of their lack of health insurance, uninsured Massachusetts residents commonly utilize emergency rooms as a source of primary care. The United States Congress passed the Emergency Medical Treatment and Active Labor Act (EMTALA) in 1986. EMTALA requires hospitals and ambulance services to provide care to anyone needing emergency treatment regardless of citizenship, legal status or ability to pay. EMTALA applies to virtually all hospitals in the U.S. but includes no provisions for reimbursement. EMTALA is therefore considered an "unfunded safety net program" for patients seeking care at the nation's emergency rooms. As a result of the 1986 EMTALA legislation, hospitals across the country faced unpaid bills and mounting expenses to care for the uninsured. Some of these uncompensated care costs are paid by the federal government through Medicare and Medicaid Disproportionate Share Hospital (DSH) funding, though such payments are scheduled to decrease to achieve savings to offset the costs of the Affordable Care Act.
In Massachusetts, a pool of over $1 billion in 2004/2005, funded by a tax on paying hospital customers and insurance premiums, known as the Uncompensated Care Pool (or "free care pool"), was used to partially reimburse hospitals and health centers for these ED expenses. A much larger portion of the pool was used for non-ED hospital care for the uninsured and for other care at Community Health Centers. It was predicted that implementation of the 2006 Massachusetts healthcare insurance reform law would result in almost complete elimination of the need for this fund. In 2006, MIT economics professor Jonathan Gruber predicted that the amount of money in the "free care pool" would be sufficient to pay for reform legislation without requiring additional funding or taxes.
Reform coalitions
At the same time, the ACT (Affordable Care Today) Coalition introduced a bill that expanded MassHealth (Medicaid and SCHIP) coverage and increased health coverage subsidy programs and required employers to either provide coverage or pay an assessment to the state. The coalition began gathering signatures to place their proposal on the ballot in November 2006 if the legislature did not enact comprehensive health care reform, resulting in the collection of over 75,000 signatures on the MassACT ballot proposal. The Blue Cross Blue Shield Foundation sponsored a study, "Roadmap to Coverage," to expand coverage to everyone in the Commonwealth.
Attention focused on the House when then-Massachusetts House Speaker Salvatore DiMasi, speaking at a Blue Cross Blue Shield Foundation Roadmap To Coverage forum in October 2005, pledged to pass a bill through the House by the end of the session. At the forum, the Foundation issued a series of reports on reform options, all of which included an individual mandate. At the end of the month, the Joint Committee on Health Care Financing approved a reform proposal crafted by House Speaker DiMasi, Committee co-chair Patricia Walrath, and other House members. The state faced pressure from the federal government to make changes to the federal waiver that allows the state to operate an expanded Medicaid program. Under the existing waiver, the state was receiving $385 million in federal funds to reimburse hospitals for services provided to the uninsured. The free care pool had to be restructured so that individuals, rather than institutions, received the funding. U.S. Senator Ted Kennedy, a longtime advocate for universal healthcare, and Romney met with outgoing U.S. Health and Human Services Secretary Tommy Thompson on January 14, 2005, Thompson's last day in office. The meeting resulted in Thompson signing a Medicare waiver that would redirect money that previously went to treat uninsured patients at safety net hospitals to near-universal health insurance coverage as proposed by Travaglini.
Legislation
On April 12, 2006, Governor Romney signed the health legislation. He vetoed eight sections of the health care legislation, including the controversial employer assessment. He vetoed provisions providing Dental insurance benefits to poor residents on the Medicaid program, and providing health coverage to legal who have a U.S. sponsor who is financially responsible for them. The legislature promptly overrode six of the eight gubernatorial section vetoes, on May 4, 2006, and by mid-June 2006 had overridden the remaining two.
Statute
Chapter 58 had several key provisions: the creation of the Health Connector; the establishment of the subsidized Commonwealth Care Health Insurance Program; the employer Fair Share Contribution and Free Rider Surcharge; and a requirement that each individual must show evidence of coverage on their income tax return or face a tax penalty, unless coverage was deemed unaffordable by the Health Connector.
The statute expanded MassHealth (Medicaid and SCHIP) coverage for children of low income parents and restores MassHealth benefits like dental care and eyeglasses. The legislation included a merger of the individual (non-group) insurance market into the small group market to allow individuals to get lower group insurance rates. The process of merging the two markets also froze the market for such insurance for a short period in April–May 2010 as the current government tried to keep the leading non-profit insurers, which insure over 90% of the residents, in the state from raising premiums for small businesses and individuals. Eventually the state's non-partisan insurance board ruled that the government did not have the actuarial data or right to freeze the premiums. Five of the non-profit insurers then settled for slightly lower premium increases than they had initially requested rather than litigate further. The sixth litigated and won the right to implement all its original increases retroactively. Payment rates were supposed to be increased to hospitals and physicians under the statute but that has not happened. The statute also formed a Health Care Quality and Cost Council to issue quality standards and publicize provider performance.Report from Massachusetts Secretary of Health and Human Services, Timothy Murphy, to the Massachusetts General Court, "Chapter 58 Implementation Update" (June 12, 2006).
The Division of Health Care Finance and Policy defined by regulation what contribution level meets the "fair and reasonable" test in the statute. The regulation imposes two tests. First, employers are deemed to have offered "fair and reasonable" coverage if at least 25% of their full-time workers are enrolled in the firm's health plan. Alternatively, a company meets the standard if it offers to pay at least 33% of the premium cost of an individual health plan. For employers with 50 or more FTEs, both standards must be met, or 75% of full-time workers must be enrolled in the firm's health plan. Regulatory and analytic information is available on the Division's website.
There was an additional Free Rider Surcharge assessible to the employer.2006 Mass. Acts Chp. 58, sec. 44 This surcharge is different from the fair share contribution. The surcharge is applied when an employer does not arrange for a pre-tax payroll deduction system for health insurance (a Section 125 plan, or a "cafeteria plan"), and has employees who receive care that is paid from the uncompensated care pool, renamed in October 2007 as the Health Safety Net.
Starting in 2014, Commonwealth Care insurance (and Commonwealth Choice insurance for those not receiving subsidies) has been replaced by insurance compatible with the federal Patient Protection and Affordable Care Act. Among other differences, consistent with PPACA, the out of pocket spending limits and deductibles are higher under similarly priced (after a PPACA tax credit) PPACA-consistent insurance than the superseded Massachusetts insurance law. To try to compensate for these higher limits and deductibles, the Commonwealth funded an additional insurance program called Connectorcare, by which residents who previously would have qualified for Commonwealth Care can get very similar benefits for about the same price.
Also effective in 2006, the Connector Board set premium levels and for the state subsidized Commonwealth Care plans. Premiums will vary from $18 per month, for individuals with incomes 100–150% of the poverty line, to $106 per month for individuals with incomes 250–300% of poverty. The Connector approved two copayment schemes for plans for people 200–300% of poverty. One plan will have higher premiums and lower copayments, while a second choice will have lower premiums and higher copayments. Four managed care plans began offering Commonwealth Care on November 1, 2006. Coverage for people above 100% of poverty up to 300% of poverty began on February 1, 2007. As of December 1, 2007, around 158,000 people had been enrolled in Commonwealth Care plans. Initial bids received by the Connector showed a likely cost for the minimum insurance plan of about $380 per month. The Connector rejected those bids, and asked insurers to propose less expensive plans. New bids were announced on March 3, 2007. The Governor announced that "the average uninsured Massachusetts resident will be able to purchase health insurance for $175 per month." But plan costs will vary greatly depending on the plan selected, age and geographic location, ranging from just over $100 per month for plans for young adults with high copayments and deductibles to nearly $900 per month for comprehensive plans for older adults with low deductibles and copayments. Copayments, deductibles and out-of-pocket contributions may vary among plans. The proposed minimum creditable coverage plan would have a deductible no higher than $2,000 per individual, $4,000 per family, and would limit out-of-pocket expenses to a $5,000 maximum for an individual and $7,500 for a family. Before the deductible applies, the proposed plan includes preventive office visits with higher copayments, but would not include emergency room visits if the person was not admitted.
The new plan covered abortions (both elective and medically necessary) in the heavily Catholic state.
In the early years of the implementation of the law, approximately 2% of those eligible were determined not to have had access to affordable insurance, and a small number opted for a religious exemption to the mandate. Approximately 1% of taxpayers were determined by the Commonwealth to have had access to affordable insurance during tax year 2009 and had to pay an income tax penalty instead.
Comparing the first half of 2007 to the first half of 2009, spending from the state's Health Safety Net Fund dropped 38–40% as more people became insured, before increasing in later years. The Fund—which replaced the Uncompensated Care Pool or Free Care—pays for medically necessary health care for those who do not have health insurance. According to the DHCFP in a report dated September 2011, "Total Health Safety Net (HSN) payments increased by 7% in the first six months of Health Safety Net fiscal year 2011 (HSN11) compared to the same period in the prior year while demand increased by 10%. Demand represents the amount that providers would have been paid in the absence of a funding shortfall. Because HSN11 demand is expected to exceed HSN11 funding, hospital providers experienced a $38 million shortfall during the first six months of HSN11." Versus the same period two years earlier, HSN spending plus demand has increased 20%
The reduced state Health Safety Net payments anticipated (but not realized) that by reducing the number of uninsured people, Commonwealth Care would reduce the amount of charity care provided by hospitals. In a subsequent story that same month, The Boston Globe reported that Commonwealth Care faced a short-term funding gap of $100 million and the need to obtain a new three-year funding commitment from the federal government of $1.5 billion. By June 2011, enrollment was projected to grow to 342,000 people at an annual expense of $1.35 billion. The original projections were for the program to ultimately cover approximately 215,000 people at a cost of $725 million.
According to the DHCFP, 89,000 people bought healthcare insurance directly as of June 2009, up from 40,000 in June 2006. The number of people with group insurance in Massachusetts held steady at around 4,400,000 since passage of the health care reform law, according to the DHCFP. One outcome has been the unavailability of coverage by many insurers previously doing business in Massachusetts.
A study published in The American Journal of Medicine, "Medical Bankruptcy in Massachusetts: Has Health Reform Made a Difference?", compared bankruptcy filers from 2007, before reforms were implemented, to those filing in the post-reform 2009 environment to see what role medical costs played. The study found that: 1) From 2007 to 2009, the total number of medical bankruptcies (defined as due to unpaid medical bills or to loss of income due to illness, with no distinction between those causes) in Massachusetts increased by more than one third, from 7,504 to 10,093; and 2) Illness and medical costs contributed to 59.3% of bankruptcies in 2007 and 52.9% in 2009. The researchers note that the 2008 financial crisis likely contributed to the increased number of bankruptcies, and Massachusetts' increase in medical bankruptcies over the 2007–2009 period was nevertheless below the national average rate of increase. Still, the researchers explain that health costs continued to go up over the period in question, and their overall findings are "incompatible with claims that health reform has cut medical bankruptcy filings significantly." A 2015 study found that the law had "modest effects" on costs of outpatient care for people who were already insured. According to a 2016 study in the American Economic Journal, the reform "reduced the amount of debt that was past due, improved credit scores, reduced personal bankruptcies and reduced third-party collections." The authors note that the "results show that health care reform has implications that extend well beyond the health of those who gain insurance coverage."
In 2010, The Boston Globe reported that more than a thousand people in Massachusetts had "gamed" the mandate/penalty provision of the law since implementation by choosing to be insured only a few months a year, typically when in need of a specific medical procedure. On the average, the Globe reported, these part-time enrollees were paying $1,200–$1,600 in premiums over a few months and receiving $10,000 or more in healthcare services before again dropping coverage.
A study conducted by the Urban Institute and released in December 2010 by the Massachusetts Division of Health Care Finance and Policy stated that as of June 2010, 98.1 percent of state residents had coverage. This compared to 97.3 percent having coverage in the state in 2009 and 83.3 percent having coverage nationwide. Among children and seniors the 2010 coverage rate was even higher, at 99.8 percent and 99.6 percent respectively. The breakdown of insurance coverage consisted of that 65.1 percent of state residents being covered by employers, 16.4 percent by Medicare, and 16.6 percent via public plans such as Commonwealth Care. The state's Secretary of Health and Human Services, JudyAnn Bigby, said, "Massachusetts' achievements in health care reform have been nothing short of extraordinary. With employers, government and individuals all sharing the responsibility of reform, we continue to have the highest insurance rate in the nation." In June 2011, a Boston Globe review concluded that the healthcare overhaul "has, after five years, worked as well as or better than expected."Brian C. Mooney ‘RomneyCare’ – a revolution that basically worked The Boston Globe June 26, 2011 A study by the fiscally conservative Beacon Hill Institute was of the view that the reform was "responsible for a dramatic increase in health care spending," however. BHI Study: Massachusetts Health Care Reform drives up insurance costs both public and private ''Beacon Hill Institute July 2011
In 2012, the Blue Cross Foundation of Massachusetts funded and released research that showed that the 2006 law and its subsequent amendments – simply in terms of measuring the state-budget effect on the uncompensated care pool and funding subsidized insurance had cost approximately $2 billion in fiscal year 2011 versus approximately $1 billion in fiscal year 2006. Some of this doubling in cost was funded by temporary grants and waivers from the United States federal government. The Blue Cross funded research did not address the increased costs in premiums for employers and individuals or other market dynamics – such as increased providers' costs and increased co-pays/deductibles – necessary to meet minimum creditable coverage standards that were introduced in Massachusetts by other parts of the 2006 legislature and its resulting regulations. Separate research on Premiums and Expenditures found that fully adjusted premiums per member per month (PPMPM) for Massachusetts residents covered by comprehensive private insurance policies (approximately two thirds of the state population) increased approximately 9% in both 2009 and 2010 for subscribers in the "merged market", 7% in the midsized group market, and 5.4% in the large group market. These premium increase do not reflect actual resident experience particularly in the merged market because Massachusetts regulations allow age and other rating factors (e.g., even if premiums were held flat for 55-year-olds living on Cape Cod in construction work from year to year, the 55-year-old in 2009 would pay 10% more in 2010 for the same policy, possibly with lesser benefits).
During the years before the changes in the state law related to the enactment of the federal PPACA, the state still used the free care pool—renamed the Health Safety Net—both as originally intended and to fund the subsidies for free (under 150% of FPL) and almost free (151–300% of FPL) networked health care insurance. In addition the state spent a substantial amount of general revenue on the insurance reform. Based on the combination of the increased Health Safety Net tax, general revenue (state income and sales taxes were increased 20%) and smaller additional taxes, the cost of the reform reached about 2% of the state's annual budget in fiscal year 2013, which ended June 30, 2013, up from 1.5% in fiscal 2011.
Data following enactment of mandatory insurance showed total emergency visits and spending continued to increase, and low-severity emergency visits decreased less than 2%; researchers concluded, "To the extent that policymakers expected a substantial decrease in overall and low-severity ED visits, this study does not support those expectations." Other analysis concluded that preventable ED visits were reduced 5-8% for non-urgent or primary care ED visits relative to other states. A more complete report released in January 2012 found between 2006 and 2010 emergency department visits and non-urgent visits had dropped 1.9 and 3.8% respectively. A 2014 study found that the law was associated with "a small but consistent increase" in ED use in the state. A 2014 study found that the reform was associated with "significant reductions in all-cause mortality and deaths from causes amenable to health care."
At the start of the Affordable Care act open enrollment at the end of 2013, there was a major technical failure, and the MA Health Connector Software did not work at all.
To handle this problem, a special temporary Medicaid was set up, and given to over 320,000 people at no immediate cost to them, who would have under normal ACA procedures gotten either a traditional Medicaid, an ACA expanded Medicaid, or an ACA on-exchange plan.
The MA Health Connector was functional starting at open enrollment for 2015, though problems were still widely reported.
In 2022, the following carriers offer plans through the Massachusetts Health Connector insurance marketplace:
Commonwealth Health Insurance Connector Authority
Employer taxes
Individual taxes
Young adult coverage
Changes to the law
Implementation
Outcomes prior to ACA
Transition to ACA
Outcomes following transition to ACA
Fountas v. Dormitzer
Transition from fee-for-service to accountable care
See also
Further reading
External links
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