The Massachusetts health care reform law was enacted in 2006. It requires nearly every resident of Massachusetts to obtain health insurance coverage. Through the law, Massachusetts provides subsidized health care for residents earning up to 100% of the Federal Poverty Level, and partially subsidized health care for those earning up to 300% of the FPL, depending on an income-based sliding scale. The law is credited with covering an additional 439,000 Massachusetts residents as of April 1, 2008. The law established an independent public authority, the Commonwealth Health Insurance Connector Authority, also known as the Health Connector, which offers the subsidized coverage and facilitates the selection and purchase of private insurance plans by individuals and small businesses. Incentives for residents to obtain health insurance coverage include tax penalties for failing to obtain an insurance plan. In 2007, Massachusetts tax filers who failed to enroll in a health insurance plan that was deemed affordable for them lost the $219 personal exemption on their income tax. In 2008, penalties increase by monthly increments, and are based on half of the cost of a health insurance plan.
The reform law was enacted as Chapter 58 of the Acts of 2006 of the Massachusetts Legislature, entitled An Act Providing Access to Affordable, Quality, Accountable Health Care. In October 2006, January 2007, and November 2007, bills were enacted that amended and made technical corrections to the statute (Chapters 324 and 450 of the Acts of 2006, and chapter 205 of the Acts of 2007).
Background
Estimates of the number of Massachusetts residents who were uninsured in 2006 range from 395,000 to 653,000. Due to their lack of health insurance coverage, uninsured residents commonly utilize emergency rooms as a source of primary care. U.S. hospitals are required to provide care even if a patient cannot pay for it, regardless of residency status. As a result, hospitals faced unpaid bills and mounting expenses to care for the uninsured.
In Massachusetts, a fund of approximately $700 million, known as the Uncompensated Care Pool (or "free care pool"), was used to partially reimburse hospitals and health centers for these expenses and the expenses of non-residents. The fund was raised through an annual assessment on insurance providers and hospitals, plus contributions of state and federal tax revenue. By implementing the health reform law, expenses incurred by services to the uninsured would decrease as the number of covered Massachusetts residents increased. In 2006, MIT professor Jonathan Gruber determined that there was enough money in the "free care pool" to pay for reform legislation without requiring additional funding or taxes.
Reform coalitions
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 by 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, the ACT (Affordable Care Today) Coalition introduced a bill that expanded MassHealth (Medicaid) 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 also sponsored a study, "Roadmap to Coverage," to expand coverage to everyone in the Commonwealth.
Attention focused on the House when Speaker 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 Walrath and other House members.
Massachusetts also 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.
Legislation
In fall 2005 as the House and Senate each passed health care reform bills.
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 even higher-deductible, lower benefit health plans.
On April 12 , 2006 Governor Mitt Romney signed the health legislation. He vetoed 8 sections of the health care legislation, including the employer assessment. 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. The legislature promptly overrode six of eight gubernatorial section vetoes, on May 4 , 2006 , and by mid-June 2006 had overridden the remaining two.
Statute
The enacted statute, chapter 58 of the acts of 2006, established a system to require individuals, with a few exceptions, to obtain health insurance. Chapter 58 has 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. The statute also expands MassHealth (Medicaid and SCHIP) coverage for children of low income parents 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. 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.
On October 26, 2006, the Commonwealth enacted chapter 324 of the acts of 2006, legislation making adjustments and technical corrections to chapter 58. The statute contains 82 sections and includes sections amending effective dates for many of the private insurance provisions of chapter 58. Another technical corrections bill, chapter 450 of the acts of 2006, was enacted on January 3, 2007. The statute includes more adjustments to effective dates. A third technical corrections statute was enacted on November 29, 2007, as chapter 205 of the acts of 2007.
Commonwealth Health Insurance Connector Authority
The Health Connector is designed as a clearinghouse for insurance plans and payments. It performs the following functions:
- It administers the Commonwealth Care program for low-income residents (up to 300% of the FPL) who do not qualify for MassHealth and meet certain eligibility guidelines.
- It offers for purchase 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.
- 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 Health Connector is run by the Commonwealth Health Insurance Connector Authority, an independent agency with a 10-member board. The Health Connector will make health insurance portable by allowing employees to keep the same plan even if they leave an employer. The Health 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. The Health Connector is currently managed by former Tufts Associated Health Plans executive Jon Kingsdale, who serves as its executive director.
Commonwealth Care Health Insurance Program
Commonwealth Care is one of t
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