Editorial: Web Exclusive: Health-care reform: Learning from Massachusetts's mistakes

August 1, 2009

Massachusetts was the ideal setting to attempt universal coverage, but the influx of newly insured strained the system's ability to provide care and drove up costs. Dr. Lockwood offers his perspective on lessons to be learned from their mistakes.

Best case scenario for reform

In many ways, the Commonwealth of Massachusetts in 2006 was the ideal setting to attempt to achieve near universal coverage through comprehensive state-sponsored health-care reform. First, compared to other states, Massachusetts had one of the lowest uninsured rates in the nation-around 13%. It also had a traditionally strong base of employer-sponsored plans covering about three quarters of the population, and it boasted some of the finest hospital systems and physicians in the world. In addition, the State's politics had long been progressive, and while the state had a Republican Governor, Mitt Romney, who would claim to be a "born again" fiscal conservative 2 years later, in 2006 he was committed to a very progressive platform of expanded health-care access. And so an unlikely coalition of liberal activists, unions, hard-headed businessmen, physicians, and hospital administrators, all led by an ambitious governor, enacted comprehensive health-care reform legislation-"An Act Providing Access to Affordable, Quality, Accountable Heath Care" or Chapter 58.

The heart of the plan is the "Commonwealth Health Insurance Connector Authority" better known as the "Connector."1 This 10-member board of health-care experts, representatives of key stakeholders, and public officials has broad authority to set rules, regulate health plan offerings and standards, and set income and premium thresholds. Chapter 58 mandates that both individuals and employers must participate in the health insurance system. Employers with more than 10 workers must offer Section 125 payroll deduction "cafeteria" plans to facilitate pre-tax health insurance purchases by workers or the company. In addition, companies must make a "fair and reasonable" contribution to their employees' health-care costs (33% to 50% of premium costs for 25% to 50% of employees) or pay the State $295 per worker. Chapter 58 also requires every Massachusetts' resident 18 years or older to purchase health insurance, as long as there is an affordable plan meeting minimal benefit criteria available, or face a progressive income tax penalty. The Connector stipulated that all those making less than 150% of the federal poverty limit (FPL) would be exempt from penalties (and eligible for free care). However, those earning between 150% and 500% of the FPL must purchase insurance as long as there is a qualified health plan with an annual premium priced from 2% to 9% of their yearly earnings (rates increase with income). Above 500% of FPL, everyone must purchase insurance or face an income tax penalty that increases annually. All health insurance plans must include the usual in patient coverage as well as a prescription plan, physician visits, and preventative care, and there are limits to deductibles ($2,000 per individual and $4,000 per family).1

Coverage of the previously uninsured population is accomplished through a mix of expanded Medicaid (MassHealth) coverage; the Commonwealth Care Health Insurance program (Comm Care) that provides income-adjusted subsidies for the purchase of a government health insurance plan; and Comm Choice, an insurance purchasing arrangement arranged through the Connector.1 Thus, children are now eligible for Medicaid up to 300% of the FPL, while Comm Care provides subsidized insurance coverage to uninsured adults up to 300% of FPL. For those with incomes less than 151% of FPL, no Comm Care premiums, co-pays or deductibles are charged. For those between 151% and 300% of FPL, there is an income-based sliding scale of premiums and co-pays, but no deductibles. For those ineligible for Comm Care (e.g., incomes >300% FPL) but who do not have access to employer-sponsored insurance, Comm Choice plans are available. These plans are administered by state-licensed and regulated private insurers and offered through the Comm Connector on an easy-to-use Web site. The plans must meet "minimum creditable coverage standards" to provide a fairly standard set of benefits. However, by providing community rather than individual ratings they are relatively inexpensive. The plans differ from each other principally by trading lower premium costs for higher deductibles.