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To: Greg F
Health Care Reform in Massachusetts — A Work in Progress  [http://content.nejm.org/cgi/content/full/354/20/2095]
Volume 354:2095-2098  May 18, 2006  Number 20
The New England Journal of Medicine

In April 2006, Massachusetts enacted far-reaching health care reforms (see box).1,2 Starting in July 2007, all state residents must carry a minimum level of health insurance, a requirement that will be enforced through the state tax return. Coverage may be through an employer, Medicaid, Medicare, or new programs that will facilitate the purchase of private coverage. In many instances, failure to comply with the new law will lead to financial penalties. By 2009, the proportion of state residents who are insured should markedly increase.

Key Components of the Massachusetts Plan [http://content.nejm.org/cgi/content-nw/full/354/20/2095/T1]

The reforms follow months of intense discussions and have bipartisan support (see the article by Altman and Doonan in this issue). Many of the measures are creative and novel. For example, assistance in the payment of premiums will be provided for low-income persons and families who are not eligible for other public insurance. This assistance will aid in the purchase of insurance by people with incomes under 300 percent of the federal poverty guidelines, which in 2006 are $29,400 for an individual and $60,000 for a family of four living in the contiguous United States. For those who are ineligible for subsidies, the merger of the health insurance markets for small groups and individuals should reduce premiums, perhaps by 25 percent for individuals, according to state officials. A broader ability to purchase insurance on a pretax basis should reduce the net cost of insurance for those who cannot already do so.

Funding includes federal and state spending, as well as assessments on hospitals, insurers, and employers. Supplemental revenue to support the reforms is projected at $201 million in fiscal year 2008 and $173 million in fiscal year 2009, according to legislative analysts. This includes $125 million each year from general state revenues; the rest is from employers. When fully implemented, the reforms should represent a meaningful advance against the problem of the medically uninsured, even though only Massachusetts residents will benefit.3

The overall effect is harder to predict. The requirement is for a minimum level of health insurance, not an optimal level. Improving access to medical care for previously uninsured persons may increase the demand for needed services, such as surgery, thus improving health but increasing costs. The reforms may make little difference in many factors that contribute to spending, including the costs of prescription drugs and health care administration. There will be new roles for the state and federal government, individuals, employers, and health insurers and some new cost-control measures. Nonetheless, the overall structure of private health insurance and the payment and delivery of medical care will remain intact, and costs will relentlessly increase.

In 2004, the health expenditure per capita in the United States was $6,280, or more than $500 a month, and accounted for 16 percent of the gross domestic product. Spending grew by 7.9 percent from the previous year. In 2005, the average monthly cost of coverage through job-based health insurance was $335 for an individual and $907 for a family, according to the annual survey conducted by the Kaiser Family Foundation and the Health Research and Educational Trust. In Massachusetts, the average cost of policies is higher. Massachusetts has a long history of health care reform, including a controversial 1988 universal care law that was enacted but never implemented and that was eventually repealed. In the mid-1990s, the state expanded Medicaid and created a subsidized drug program for seniors.4 As compared with the nation as a whole, Massachusetts has a higher percentage of residents who have health insurance through their employers and a lower percentage of people without insurance (see Figure 1). Massachusetts already spends a considerable sum each year to compensate community health centers and hospitals that treat the uninsured, using state and federal funds, as well as payments from insurers and employers who are self-insured. Some of these existing funds will be redirected to improve insurance coverage. Although such favorable conditions suggest that the reforms have a greater chance of success in Massachusetts than they would elsewhere, officials still have to implement the measures and address the diverse situations of the uninsured (see Figure 2).

Funding includes federal and state spending, as well as assessments on hospitals, insurers, and employers.

Figure 1. Health Insurance Coverage in Massachusetts and the United States. [http://content.nejm.org/cgi/content-nw/full/354/20/2095/F1]

Figure 2. Characteristics of Uninsured Persons in the United States in 2004. [http://content.nejm.org/cgi/content-nw/full/354/20/2095/F2]

When Mitt Romney, the state's Republican governor, signed the health insurance reform bill, he vetoed some provisions, including an annual charge of $295 per employee to businesses with 11 or more full-time employees that do not provide health insurance or contribute to it. By early May, the legislature, which is overwhelmingly Democratic, had overriden this veto. The $295 charge is dwarfed by the annual cost of health insurance, and the anticipated revenues are only about $50 million a year. Although the so-called "fair share contribution" is not a substantial financial incentive for employers to provide insurance, it does symbolize the logic of the reforms — that employers and employees share responsibility for health insurance.

Implementation depends on new regulations and insurance plans, as well as on the accuracy of many assumptions. One assumption is that the Centers for Medicare and Medicaid Services will approve the aspects that require its assent. These include the use of Medicaid funds to provide assistance to lower-income persons and families in the payment of premiums, expansion of Medicaid to include children of families whose income is up to 300 percent of the federal poverty guidelines, and continued support to Boston Medical Center and the Cambridge Health Alliance to care for people who remain uninsured. The waiver agreement under section 1115 of the Social Security Act allows the state to operate part of its Medicaid program under rules that are different from those that usually apply. Although approval is expected this summer, the federal government has not signaled its intentions. In any event, the waiver will expire in 2008 and will have to be renegotiated.

The estimated number of people without health insurance in Massachusetts ranges from 550,000, which is based on an annual state survey, to 715,000, which is the number provided by the Census Bureau for 2003–2004; state officials consider the higher number less reliable. The Massachusetts plan assumes that about 515,000 residents would gain coverage, leaving perhaps 35,000 without insurance. However, there is no certainty about the number who will gain coverage. In addition, if the actual number is considerably higher, the funding will fall short.

A new state authority, the Commonwealth Health Insurance Connector, will administer many of the insurance aspects of the reform and will have to approve the new policies before they can be sold. The target price of policies for low-income persons — before premium-payment assistance is applied — is $300 a month, which would be paid mostly by the state. These policies will have Medicaid-like benefits. They will not have deductibles, and there will be no premiums for persons who earn less than 100 percent of the federal poverty guidelines, or $9,800 a year. Otherwise, such items as the actual cost of insurance, the premiums after assistance is applied, out-of-pocket payments, and the extent of coverage will not be known until policies become available later this year.

A related assumption involves the availability of "affordable" insurance for people with incomes that make them ineligible for subsidized premiums. The individual mandate to have insurance is contingent on the availability of affordable plans. Although the term has yet to be defined, an "affordability scale" is to be set annually, by the connector. It is uncertain, however, whether the policies will truly be "affordable."

The insurance products are expected to offer coverage that is similar to the subsidized policies but may have important differences, such as deductibles, high-deductible plans tied to health savings accounts, substantial out-of-pocket payments, or more limited choices of doctors and hospitals. Although the Romney administration has set a target price of $200 a month for "comprehensive insurance" for an individual, state legislative leaders contend that the actual price will be about $320 a month. The features and prices will not be known until policies become available in 2007.

The Massachusetts health care reforms are ambitious and complex. State officials anticipate that adjustments will be needed along the way. Perhaps their most important assumption, however, is that the costs and economic burden will be acceptable in the long term. When the economy slows, state tax revenues decline. Simultaneously, Medicaid spending accelerates and the number of people who are either enrolled in Medicaid or uninsured increases.5 For the reforms to succeed, Massachusetts will have to sustain them through the economic hard times, when they will be needed most.


Source Information

Dr. Steinbrook (rsteinbrook@attglobal.net) is a national correspondent for the Journal.

References

  1. The 184th General Court of the Commonwealth of Massachusetts. Chapter 58 of the Acts of 2006, an act providing access to affordable, quality, accountable health care. (Accessed May 2, 2006, at http://www.mass.gov/legis/laws/seslaw06/sl060058.htm.) 
  2. Idem. Health care access and affordability conference committee report. May 2, 2006. (Accessed April 24, 2006, at http://www.mass.gov/legis/summary.pdf.)
  3. Schroeder SA. The medically uninsured -- will they always be with us? N Engl J Med 1996;334:1130-1133. [Free Full Text]
  4. McDonough JE, Hager CL, Rosman B. Health care reform stages a comeback in Massachusetts. N Engl J Med 1997;336:148-151. [CrossRef][Medline]
  5. Kaiser Commission on Medicaid and the Uninsured. State fiscal conditions and Medicaid. November 16, 2005. (Accessed May 2, 2006, at http://www.kff.org/medicaid/4087-04.cfm.)

 

10 posted on 04/05/2008 7:57:39 AM PDT by K-oneTexas (I'm not a judge and there ain't enough of me to be a jury. (Zell Miller, A National Party No More))
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To: K-oneTexas

In the intervening two years since that article costs have gone up radically from what was estimated for Romney care and we have stories of health care rationing by inability to get service (as the story for this thread shows). It is not a surprise that universal insurance has led to inability to get care . . . that’s the function of a market . . . to make supply and demand equal through the mechanisms of price. When you remove that and require insurance, you get these results. Rationing of service through lack of supply (since demand has no cost — insurance is required regardless of whether you use the service or not) and higher costs for the socialist government who pays for the care since more people demand more care regardless of actual price of the care.


13 posted on 04/05/2008 8:05:57 AM PDT by Greg F (Do you want a guy named Hussein to fix your soul? Michelle Obama thinks you do.)
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