health care reform in ma

1. Health Care Reform in MA A Case Study in Policy Development

3. Why health reform in MA? Half a million people are uninsured in the Commonwealth. Although it is a high number it is relatively low in comparison to other states.

4. Double digit annual increase in insurance premiums and highest per capita healthcare spending in the nation. Many businesses are dropping health insurance benefits due to rising costs.

5. The cost for the free care pool, which provides emergency care for the uninsured, was $1 billion and growing. Federal pressure to change Medicaid or the state would lose $385 million dollars. The free care pool had to be restructured so that the money went to individuals and not to institutions. Providers underpaid by MassHealth.

6. What does the reform do? Creates Connector. �quasi-independent� agency responsible for implementing most of the reform. 10 members: 3 administration officials, 3 Governor appointees, 3 Attorney General appointees, GIC commissioner. Expands Medicaid (MassHealth) for kids. Mandates fair share assessment on employers with > 10 employees. $295/person/year if employer doesn�t provide �fair and reasonable� insurance.

7. Creates Commonwealth Care. Subsidized health insurance for people below 300% of FPL. Requires an individual mandate. Increasingly severe penalties for individuals who have access to �affordable and adequate� health insurance yet do not buy it. Reforms the insurance market. Merges small group and individual markets. Serves to aggregate risk for insurers. Will hopefully decrease premiums for individual purchasers.

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9. Increases reimbursement rates for providers (hospitals and physicians). Dependent on adherence to cost and quality standards.

10. What was the political process? Key political motivators Risk of losing $385M in Federal Medicaid money. Significant problems associated with rising healthcare costs and decreasing access to care. Stakeholders such as the business community, the state government, and the major provider networks (e.g., hospitals) feel pressure to address these problems.

11. Political Participants Massachusetts State Government Governor Romney Senate President Travaglini House Speaker DiMasi Healthcare Advocates/Coalitions Health Care for All ACT Quasi-Independent think tanks The Blue Cross Blue Shield Foundation of Massachusetts The Urban Institute

12. Political Process and the Formation of Chapter 58 Aforementioned political participants each craft separate reform bills. After months of debate/negotiation, compromise legislation known as Chapter 58 is adopted. Chapter 58 includes specific aspects of each individual plan. The legislation is extremely complicated and wide-ranging as a result. The business community�s acceptance of the Fair Share Contribution is critical to the compromise. Major players such as Governor Romney and Ted Kennedy expend huge amounts of political capital to garner acceptance of Chapter 58 statewide.

13. What does it really mean? For individuals: Health insurance is mandatory. If you are not covered under subsidized Commonwealth Care and you do not obtain coverage through your employer, you must purchase it. Individuals who don�t buy insurance must pay an income tax penalty in year one, and 1/2 of the premium cost in subsequent years.

15. For employers with 10+ employees: �Fair and Reasonable� health insurance must be offered. Must cover 25% of employees (primary test) OR contribute 33% of premium (secondary test) for insurance. $295 Fair Share Contribution if the �25/33� test is not met. a Free Rider Surcharge is imposed on employers that don�t offer a pre-tax plan for part-timers and contractors. For employers with < 10 employees: No obligation to offer coverage or premium contributions.

16. For insurance companies: The 4 Medicaid Managed Care organizations that currently finance Medicaid will exclusively supply Commonwealth Care plans. Other companies will compete for new customers via plans offered through the Connector or on the open market.

17. For providers: Medicaid reimbursement rates are increased significantly.

18. What�s left out? A solid plan for addressing cost and quality. The elephant in the room. Widely acknowledged problem that has yet to be tackled. Bill establishes Health Care Quality and Cost group. Limited goals thus far. Has yet to meet. Undocumented immigrants are not served by the reform. Free care pool is the only option, but this pool is expected to decrease.

19. What are the possible pitfalls? Implementing the individual mandate. Will it prove politically feasible? Will people accept it? Will there be quality, affordable products for those newly required to buy insurance? Outreach and education. Knowledge of the reform is currently severely lacking.

20. Worst case scenarios: Free care pool does not diminish. Affordable, attractive products do not materialize. Subsidized population (100-300% of FPL) is unable to afford premiums. Can we pay for it? Funding depends on shifting free care pool funds. Only new revenue stream is employer Free-Rider Surcharge. Program could be capped or fail totally if unforeseen costs arise.

21. Implementation will be key. Possibilities for failure exist at every stage. Similar proposals have failed in other states, and in MA (Dukakis bill). The individual mandate is genuinely new.