Massachusetts Health Care Reform

State Characteristics

• 68% of non-elderly residents have employer-based coverage, compared to 61% nationally.
• 10% of the population of the state is uninsured, compared to a 16% national average.ⁱⁱ
• History of health care reform and consumer protection efforts, including previous expansion of MassHealth (the state's Medicaid program) and specific programs aimed at providing coverage for specific populations such as pregnant women.

• In 1985, the legislature created the Uncompensated Care Pool to equitably distribute the costs of care for uninsured patients and established a special commission to develop a plan to provide health insurance to everyone, allowing consumer and labor groups to have the opportunity to participate in the process.
• In 1988, such programs as Healthy Start (for uninsured pregnant women), CommonHealth (for disabled adults and children), and the Medical Security Plan (for uninsured workers) were implemented under the Universal Health Care law which also included an employer mandate that was never implemented.
• In 1996, the legislature passed "Chapter 203" which included many key reforms such as: covering more than 300,000 additional people under MassHealth, creating the Insurance Partnership to assist low wage workers and employers, and creating the Children's Medical Security Plan to cover children whose families earn too much to qualify for MassHealth but who cannot maintain coverage.
• In 2000, the Massachusetts legislature passed the Mental Health Parity Law, which requires most insurance policies issued in Massachusetts to provide equal coverage for mental and physical conditions.

• Individual health insurance mandate: All state residents will be required to carry a minimum level of health insurance, which will be enforced through the loss of state tax benefits. The financial penalty for noncompliance will eventually be 50% of what a person would have paid toward an "affordable" insurance premium.
• Employer responsibilities: Employers with 11+ full-time employees who do not make a "fair and reasonable contribution" to their employees' health insurance will be assessed up to $295 per employee per year. Employers who do not contribute toward or arrange for the purchase of health insurance for their employees will be subject to a "free-rider surcharge" if their employees and their dependents utilize $50,000 or more in aggregate in Free Care Pool resources.
• Commonwealth Health Insurance Connector: This state authority will administer many of the insurance aspects of the reforms, including the new subsidized and affordable policies and the annual setting of a sliding scale for "affordable" coverage. Laws preventing arbitrary limits to mental health treatment will be protected under the purview of the Connector. Those who are eligible to purchase coverage will include people who are self-employed, not working, not eligible for coverage through work, or working at companies that do not offer insurance. Insurance can be purchased with pretax dollars and people can keep their policies even if they change jobs.
• Premium assistance: Persons who earn less than 300% of the federal poverty guidelines and who are ineligible for other public insurance will be eligible for subsidized policies through the Commonwealth Care Health Insurance Program. Premiums will be on a sliding scale based on household income, with no premiums for those who earn less than 100% of the federal poverty guidelines. No plans will have deductibles.
• New insurance products: In July 2007, the individual and small-group insurance markets will be merged and there will be new insurance products for people whose income makes them ineligible for the subsidized plans. These plans may have deductibles, limited networks of physicians and hospitals, and substantial out-of-pocket costs. Young adults will be able to stay on their parent's insurance plans until two years after the loss of their dependent status or until they turn 25 (whichever occurs first). New plans for young adults (19-to-25-year-olds) must include "reasonablycomprehensive coverage of inpatient and outpatient hospital services and physician services for physical and mental illness." The young adult health plans will be permitted to impose "reasonable" co-payments, coinsurance and deductibles and may use tiered provider networks, selective provider contracting and other cost control techniques.
• Medicaid expansion: Eligibility for MassHealth was recently expanded to include children of families who earn up to 300 percent of the federal poverty guidelines. Medicaid providers will receive rate increases.
• Cost and quality measures: Cost and quality data for physicians, hospitals, and specific procedures will be collected and made public. Hospitals will be required to collect and report data on racial and ethnic health disparities. Medicaid rate increases will be tied to achievement of performance goals. ⁱⁱⁱ

• No clear definition of what "affordable" means for insurance plans for those that do not qualify for subsidized premiums. Many residents may be forced to pay a sizeable amount of their income to cover the premium.
• The reform plan's structure will require policymakers to re-evaluate public financing of the system during times of economic hardship-e.g., state tax revenues may decline while the number of people who are on MassHealth or are uninsured will increase.
• Many details remain unclear-types of services covered, out of pocket expenses, and what is necessary for a plan to gain approval from the Commonwealth Health Insurance Connector.
• Despite Massachusetts' history of health care reform efforts, including the passage of the Mental Health Parity Law in 2000, it has been shown that people with mental illness do not receive the same health benefits as those diagnosed with physical ailments.^iv  There is serious concern as to whether Massachusetts' 2006 reform efforts will address this problem.

Lessons to be Learned

• Bipartisan effort, rather than gaining partisan support for health care reform, can lead to an outcome that has widespread support.
• All actors in the health care arena-consumers, hospitals, and providers, need to be included in discussions.

As states search to find ways to reform their health care systems, Massachusetts' innovative plan should be looked to as an example of what is needed to achieve such a change: innovative thinking, bipartisan support, consumer engagement, and many years of persistent effort that helps to create the foundation for future change.

Questions? Please contact Tammy Seltzer at the National Council for CommunityBehavioral Healthcare at tammys@nccbh.org or Laura Galbreath at the National Mental Health Association at lgalbreath@nmha.org.

i Steinbrook, R., Health Care Reform in Massachusetts—A Work in Progress, The New England Journal of Medicine
ii Kaiser Commission on Medicaid and the Uninsured, "Massachusetts Health Care Reform Plan", April 2006.
iii Steinbrook, R.
iv Testimony before the Joint Committee on Mental Health and Substance Abuse, "Massachusetts Mental Health Parity Law", April 3, 2006. (May be viewed online at: http://www.hla-inc.org/public/mental.health.par.4.3testimony.pdf)