Massachusetts health care reform

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Chapter 58: An Act Providing Access to Affordable, Quality, Accountable Health Care is a legislative provision from 2006 designed to extend health care coverage to all of the residents of Massachusetts.

Background

As of March, 2006 there were around 500,000 uninsured residents of Massachusetts. Those who are uninsured commonly utilize emergency rooms as a source of primary care because of their lack of insurance coverage.[1] Massachusetts hospitals are required to provide care even if a patient cannot pay for it. As a result, hospitals have been left with unpaid bills and mounting expenses to care for the uninsured.[2]

In Massachusetts, an approximately $600 million fund known as the Uncompensated Care Pool (or "free care pool") is used to partially reimburse hospitals and health centers for these expenses. The fund is raised through an annual assessment on insurance providers and hospitals, plus contributions of state and federal tax revenue. MIT professor Jonathan Gruber studied the state's population and health care needs and determined that there was enough money in the "free care pool" to pay for reform legislation without requiring additional funding or taxes.[3]

In November 2004, political leaders began advocating for major reforms of the Massachusetts health care system to expand coverage. First, the Senate President Robert Travaglini called for a plan to reduce the number of uninsured in half. A few days later, the Governor, Mitt Romney, announced that he would propose a plan to cover virtually all of the uninsured.

At the same time, a broad coalition of health activists introduced a bill that expanded MassHealth (Medicaid) coverage, increased health coverage subsidy programs and required employers to either provide coverage or pay an assessment to the state. The coalition stated they would gather signatures to place their proposal on the ballot in November 2006 if the legislature did not enact comprehensive health access reform. The Blue Cross Blue Shield Foundation also sponsored a study, "Roadmap to Coverage," that set out a number of methods to expand coverage to everyone in the Commonwealth.[4]

The state also faced pressure from the federal government, which insisted that changes be made to the federal waiver that allows Massachusetts to operate an expanded Medicaid program. Under the existing waiver, the state was receving $385 million in federal funds to assist health plans operated for the uninsured by two public hospital systems. The federal authorities directed the state to shift those funds to insurance coverage.

These forces converged in fall 2005 as the House and Senate passed health reform bills that drew on proposals of the Governor, the activist coalition, and legislative initiatives.

The legislature made a number of changes to Governor Romney's original proposal, including expanding MassHealth (Medicaid) coverage to low-income children and restoring funding for public health programs. The most controversial change was adding a provision charging firms with 11 or more workers that do not provide "fair and reasonable" health coverage to their workers. The charge, initially $295 annually per worker, is intended to equalize the free care pool charges imposed on employers who do and do not cover their workers. The legislature also rejected Governor Romney's proposal to permit high-deductible, low benefit health plans.

On April 12, 2006 Governor Mitt Romney signed the health legislation.[5] He vetoed 8 sections of the health care legislation, including the employer assessment.[6] [7] Romney also vetoed provisions providing dental benefits to poor residents on the Medicaid program, and providing health coverage to senior and disabled legal immigrants not eligible for federal Medicaid.[8] [9]

The legislature overrode all of the eight gubernatorial vetoes. On May 1, 2006, the Commonwealth submitted its implementation plan to the federal government. [10]

Legislation

Chapter 58 establishes a system to provide citizens with access to health insurance through a combination of private and public plans.[11] Chapter 58 has several key provisions: the creation of the Commonwealth Health Insurance Connector Authority; the establishment of the subsidized Commonwealth Care Health Insurance Program (C-CHIP); the employer Fair Share Contribution; and a mandate that each individual have insurance.[11] The statute also expands MassHealth (Medicaid and SCHIP) coverage for children and restores MassHealth benefits like dental care and eyeglasses. A merger of the individual (non-group) insurance market into the small group market will allow individuals to get lower group insurance rates. Payment rates are increased to hospitals and physicians, and a new "Quality and Cost Council," will issue quality standards and publicize provider performance. [12] Chapter 58 also sets up a Disparities Council, funds automated prescription ordering in hospitals, and implements changes to the public health council, state insurance laws, mandated benefit requirements, and other health-related programs. The following are the most prominent features.

Commonwealth Health Insurance Connector Authority

The Connector is designed as a clearinghouse for insurance plans and payments. It performs the following functions:

  • It runs the Commonwealth Care program for low-income residents (below 300% of the poverty level) who do not qualify for MassHealth.[13]
  • It offers health insurance plans for individuals who:
    • are not working
    • are employed by a small business (less than 50 employees) that uses the Connector to offer health insurance. These residents will purchase insurance with pre-tax income.[14]
    • are not qualified under their large employer plan
    • are self-employed, part-time workers, or work for multiple employers
  • It sets premium subsidy levels for Commonwealth Care.
  • It defines "affordability" for purposes of the individual mandate

The Connector is run by the Commonwealth Health Insurance Connector Authority, an independent agency with a 10-member board. The Connector will make health insurance portable by allowing employees to keep the same plan even if they leave an employer. The Connector will also allow employees to aggregate the contributions of multiple employers, e.g. if they are part-time workers or work for multiple employers, and apply them to one insurance plan.[13]

Commonwealth Care Health Insurance Program

Commonwealth Care will provide a subsidized private insurance health plan for individuals without health insurance.[12] Commonwealth Care will cover those not qualified for MassHealth below 300% of the federal poverty level. No deductibles may be imposed. For individuals below the poverty line, no premiums will be charged. For those above the poverty level, a sliding scale premium schedule based on income is used to determine the amount of money a person contributes to their policy.[12] Commonwealth Care will be available through the Connector, starting October 1, 2006.

Fair Share Contribution

Employers with more than ten employees must offer provide a "fair and reasonable contribution" to the premium of health insurance for employees.[15] Employers who do not will be assessed an annual fair share contribution that will not exceed $295 per employee per year.[15] The fair share contribution will be paid into the Commonwealth Care Trust Fund to fund Commonwealth Care.[12] The Division of Health Care Finance and Policy will define what contribution level meets the "fair and reasonable" test in the statute. There is an additional Free Rider Surcharge that can be assessed to the employer.[16] This surcharge is different from the fair share contribution. The surcharge is applied when an employer does not arrange for health insurance, such as by setting up a payroll deduction system, and has employees who receive care that is paid from the uncompensated care pool.[13] If an employee receives free care more than three times or all of an employer's employees use free care a total of five times, then the employer must pay a portion of the health care costs.[13]

Individual Insurance Requirement

Residents of Massachusetts must have health insurance coverage under Chapter 58.[17] Residents must indicate on their tax forms for the 2007 tax year if they have insurance, have a waiver for religious reasons, or have a waiver from the Connector. The Connector waiver can be obtained if the resident demonstrates that there is no Connector plan that is affordable.[12] If a resident does not have coverage and does not have a waiver, the Department of Revenue will enforce the insurance requirement. In 2007, the penalty will be the loss of the personal exemption. In future tax years the individual must pay for half the cost of the lowest available yearly premium.[18]

Implementation

The implementation of chapter 58 began in June, 2006, with the appointment of members of the Connector board, and the naming of Jon Kingsdale, a Tufts Health Plan official, as executive director of the Connector. The Board started meeting biweekly. On July 1, MassHealth began covering dental care and other benefits, and began enrolling children between 200% and 300% of the poverty level.

The federal CMS approved the state's waiver application on July 26, 2006, allowing the state to begin enrolling 10,500 from the waitlist for the MassHealth Essential program, which provides Medicaid coverage to long-term unemployed adults below the poverty line.[19]

Also in July, 2006, the Division of Health Care Finance and Policy proposed draft regulations defining "fair and reasonable" for the fair share assessment.

See also

References

  1. ^ http://www.businessweek.com/investor/content/apr2006/pi20060404_152510.htm
  2. ^ http://www.npr.org/templates/story/story.php?storyId=5330854
  3. ^ http://www.opinionjournal.com/editorial/feature.html?id=110008213
  4. ^ http://www.roadmaptocoverage.org
  5. ^ http://news.yahoo.com/s/ap/massachusetts_health;_ylt=AkMg0NHWbbPPMpo5ese19mKs0NUE;_ylu=X3oDMTA2Z2szazkxBHNlYwN0bQ--
  6. ^ http://www.boston.com/news/local/massachusetts/articles/2005/11/04/house_approves_healthcare_overhaul/
  7. ^ http://today.reuters.co.uk/news/newsArticle.aspx?type=healthNews&storyID=2006-04-12T222644Z_01_N12342304_RTRIDST_0_HEALTH-MASSACHUSETTS-DC.XML&archived=False
  8. ^ http://www.thetranscript.com/headlines/ci_3706699
  9. ^ http://news.bostonherald.com/localPolitics/view.bg?articleid=134877
  10. ^ http://www.mass.gov/?pageID=pressreleases&agId=Eeohhs2&prModName=eohhspressrelease&prFile=pr_06_5_02_cms_waiver.xml
  11. ^ a b 2006 Mass. Acts Chp. 58
  12. ^ a b c d e Report from Massachusetts Secretary of Health and Human Services Timothy Murphy, to the Massachusetts General Court, "Chapter 58 Implementation Update" (June 12, 2006).
  13. ^ a b c d Massachusetts General Court, Committee on Health Care Financing, "Health Care FAQ" (April 4, 2006) PDF
  14. ^ Mitt Romney, "Health Care for Everyone?" Wall Street Journal (April 11, 2006)
  15. ^ a b 2006 Mass. Act Chp. 58, sec. 47
  16. ^ 2006 Mass. Acts Chp. 58, sec. 44
  17. ^ 2006 Mass. Acts Chp. 58, sec. 12
  18. ^ Health Care for All "Massachusetts's Health Care Reform Law Fact Sheet" PDF
  19. ^ Press Release on waiver approval, July 28, 2006
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