Massachusetts Makes Health Insurance Mandatory

[Dominus Atheos]

National Public Radio

Massachusetts is the first state to require its residents to secure health insurance, a plan designed to get as close as practically possible to statewide universal health care. Presidential hopeful and former Massachusetts governor Mitt Romney originally introduced the idea in 2004.

Effective July 1, 2007, the law, which uses federal and state tax dollars, is aimed at making health insurance affordable to all residents of the Commonwealth of Massachusetts, including low-income populations. Those who fall below the federal poverty line may be eligible for health care at no cost. A Health Disparities Council has been created to monitor and reduce racial and ethnic health disparities.

The law's "Individual Mandate" provision underscores the state's requirement that each resident make it his or her personal responsibility to secure health care. Those who choose not to abide by the law will be subject to penalty. State income tax forms in 2008 will be used to verify insurance coverage.

Employers who do not offer health coverage to their employees will be subject to fees imposed by the state.

The law has its critics. There are questions about how costs will be controlled, considering that the state will not regulate the increase of premiums.

Dr. Judy Ann Bigby, the state's secretary of Health and Human Services, explains the legislation and how it's being enforced.

Health Care Access and Affordability Conference Committee Report

Summary:

This Conference Committee Report contains a comprehensive plan for increasing health insurance coverage for all residents of Massachusetts. This bill is a bridge between principles in the House and Senate bills, H 4479 and S 2282. The bill would redeploy current public funds to more effectively cover currently uninsured low-income populations, and would make quality health coverage more affordablefor all residents of the Commonwealth. The bill promotes individual responsibility by creating a requirement that everyone who can afford health insurance obtain it, while also responding to concerns about barriers to health care access. Provisions in the bill aim at achieving nearly universal health insurance coverage, but also maintain a strong safety net that has historically distinguished the state. Finally, the bill would ensure that the Massachusetts Medicaid program complies with the terms of the new federal waiver, maintaining continued receiptof annual payments from the federal Medicaid program.

A) Commonwealth Health Insurance Connector

The bill creates the Commonwealth Health Insurance Connector, to connect individuals and small businesses with health insurance products. The Connector certifies and offers products of high value and good quality. Individuals who are employed are able to purchase insurance using pre-tax dollars. The Connector allows for portability of insurance as individuals move from job to job, and permits more than one employer to contribute to an employee's health insurance premium. The Connector is to be operated as an authority under the Department of Administration and Finance and overseen by a separate, appointed Board of private and public representatives.

B) Insurance Market Reforms

The bill merges the non- and small-group markets in July 2007, a provision that will produce an estimated drop of 24% in non-group premium costs. An actuarial study of the merging of the two insurance markets will be completed before the merger to assist insurers in planning for the transition. The bill also enables HMOs to offer coverage plans that are linked to Health Savings Accounts, reducing costs for those who enroll in such plans. Young adults will be able to stay on their parents' insurance plans for two years past the loss of their dependent status, or until they turn 25 (whichever occurs first), and 19-26 year-olds will be eligible for lower-cost, specially designed products offered through the Connector. Finally, the bill would impose a moratorium on the creation of new health insurance mandated benefits through 2008.

C) Subsidized Health Insurance

Commonwealth Care Health Insurance

The bill creates a subsidized insurance program called the Commonwealth Care Health Insurance Program. Individuals who earn less than 300% FPL and are ineligible for MassHealth will qualify for coverage. Premiums for the program will be set on a sliding scale based on household income, and no plans offered through this program will have deductibles. The program will be operated through the Connector, and retain any employer contribution to an employee's health insurance premium. The subsidized products must be certified by the Connector as being of high value and good quality.

For individuals who earn less than 100% of the Federal Poverty Level ($9,600/yr), special protections in this bill provide for subsidized insurance products with comprehensive benefits, and waive any premiums. Currently, most childless adults are not eligible for MassHealth at any income level, unless they are disabled or have very little history of employment.

Insurance Partnership Program

The bill expands eligibility for employee participation in the current Insurance Partnership program from 200% to 300% FPL, in order to provide another option for small businesses who want to offer health care to their employees.

D) The Medicaid Waiver

By shifting significant federal resources from supporting individual hospitals to funding health insurance coverage for uninsured individuals, and by living within a lifetime spending ceiling for waiver services, the bill meets the terms set by the Centers for Medicare and Medicaid for renewal of our 1115(a) MassHealth Demonstration Waiver.

E) Medicaid Expansions, Restorations, Enhancements

The bill expands Medicaid coverage of the uninsured by providing $3M for comprehensive community-based outreach programs to reach people who are eligible for Medicaid but not yet enrolled, and by expanding eligibility for children. Currently, children in families who earn up to 200% of the Federal Poverty Level (FPL) are eligible for MassHealth. The bill increases eligibility to children in families earning up to 300% FPL ($38,500/yr for a family of 2).

The bill also restores all MassHealth benefits that were cut in 2002, including dental and vision services, and creates a 2-year pilot program for smoking cessation treatment for MassHealth enrollees.

In response to concern that Medicaid has underpaid many of its providers in recent years, the bill includes $90 million in rate relief for Fiscal Years 2007, 2008 and 2009. It does this while keeping within the budget neutrality limits of federal financing under the Medicaid waiver. The bill also establishes, for the first time, a process of tying rate increases to specific performance goals related to quality, efficiency, the reduction of racial and ethnic disparities, and improved outcomes for patients.

F) Individual Responsibility for Health Care

The bill requires that, as of July 1, 2007, all residents of the Commonwealth must obtain health insurance coverage. Individuals for whom there are not affordable products available will not be penalized for not having insurance coverage. A sliding "affordability scale" will be set annually by the Board of the Connector.

The purpose of this "Individual Mandate" is to strengthen and stabilize the functioning of health insurance risk pools by making sure they include healthy people (who, if not offered employer-sponsored and -paid insurance, are more likely to take the risk of not having insurance) as well as people who know they need regular health care services (and therefore are more likely to go to great lengths, and expense, to obtain insurance.) The financing of the bill is based on redirecting some of the public funds we currently spend on "free care" provided through hospitals, to provide subsidized health insurance to the uninsured. The mandate is another way to make sure people do not rely on "free care" for their health care, but that they get comprehensive insurance.

Beginning in July 2007, Massachusetts residents will be required to have health insurance. Residents will confirm that they have health insurance coverage on their state income tax forms filed in 2008. Coverage will be verified through a database of insurance coverage for all individuals. The Department of Revenue will enforce this provision with financial penalties beginning with a loss of them personal exemption for tax year 2007 and then increasing to a portion of what an individual would have paid toward an affordable premium for subsequent years.

G) Employer Responsibility for Health Care

Fair Share Contribution

The bill creates a "Fair Share Contribution" that will be paid by employers who do not provide health insurance for their employees and make a fair and reasonable contribution to its cost. The contribution, estimated to be approximately $295 per full time employee (FTE) per year, will be calculated to reflect a portion of the cost paid by the state for free care used by workers whose employers do not provide insurance. Currently, a portion of the payments made by employers who do provide health coverage go towards free care costs, and this new contribution will help level the playing field. The Fair Share Contribution requirement will only apply to employers with 11 or more employees who do not provide health insurance or contribute to it, as defined by the Division of Health Care Financeand Policy, and will be pro-rated for employers with seasonal or part-time employees.

Free Rider Surcharge

The Free Rider surcharge will be imposed on employers who do not provide health insurance and whose employees use free care. Imposition of the surcharge will be triggered when an employee receives free care more than three times, or a company has five or more instances of employees receiving free care in a year. The surcharge will range from 10% to 100% of the state's costs of services provided to the employees, with the first $50,000 per employer exempted. Revenue gained from the surcharge will be deposited in the Commonwealth Care Trust Fund.

Mandatory Offer of Section 125 plans

Section 125 plans or "cafeteria plans" allow an employer to offer health insurance and other programs such as day care funding to employees on a pre-tax basis. Because of the significant savings which result from pre-tax insurance purchase, employers with more than 10 employees will be required to offer this pre-tax benefit to employees.

H) Reduction of Racial and Ethnic Health Disparities

The bill aims to reduce racial and ethnic health disparities by requiring hospitals to collect and report on health care data related to race, ethnicity and language. Medicaid rate increases in the bill are made contingent upon providers meeting performance benchmarks, including in the area of reducing racial and ethnic disparities. The bill creates a study of a sustainable Community Health Outreach Worker Program to target vulnerable populations in an effort to eliminate health disparities and remove linguistic barriers to health access. Finally, the bill creates a Health Disparities Council, to continue the work of the Special Commission on Racial and Ethic Health Disparities by recommending appropriate Legislative steps to reduce health disparities.

H) Health Safety Net Office and Fund

Many recommendations of the Inspector General's Office regarding the management of the Uncompensated Care Pool are included in the bill. Effective October 1, 2007, the current Uncompensated Care Pool is eliminated, replaced by the Health Safety Net Fund. The Fund will be administered by a newly-created Health Safety Net Office located within the Office of Medicaid. The HSN Office will develop a new standard fee schedule for hospital reimbursements, replacing the current charges-based payment system. The plan anticipates the transfer of funds to the Commonwealth Care Health Insurance Program as free care use declines.

I) Funding

The plan leverages federal dollars to enhance and match state spending, and uses revenue generated by employer contributions to fund health insurance coverage.

[Molyneux]

So, if someone cannot afford health insurance...the bill will hit them with financial penalties, so they have even less money?

[Vampiress_Miyu]

So, if someone cannot afford health insurance...the bill will hit them with financial penalties, so they have even less money?

Yeah, that's what I started wondering after reading that... Some clarification would be helpful, if you please?

[Aaron]

So, if someone cannot afford health insurance...the bill will hit them with financial penalties, so they have even less money?

From Section F:

F) Individual Responsibility for Health Care

The bill requires that, as of July 1, 2007, all residents of the Commonwealth must obtain health insurance coverage. Individuals for whom there are not affordable products available will not be penalized for not having insurance coverage. A sliding "affordability scale" will be set annually by the Board of the Connector.

Yet later in the section they state this:

Beginning in July 2007, Massachusetts residents will be required to have health insurance. Residents will confirm that they have health insurance coverage on their state income tax forms filed in 2008. Coverage will be verified through a database of insurance coverage for all individuals.The Department of Revenue will enforce this provision with financial penalties beginning with a loss of them personal exemption for tax year 2007 and then increasing to a portion of what an individual would have paid toward an affordable premium for subsequent years.

According to my Sister-in-law who lives in Boston, the plan is to have a scale where the people with the lowest income will have virtually free health care, heavily subsidised by the State and they contribute (for arguments sake) 5$ a month. The payments then go up the more you make. While I don't think this is a perfect system, it's better than what they've got, which is nothing. If I was dirt poor I'd make it a priority to find that money for my health insurance, as your saving money in the long run.

I'm a little confused as to the penalizing portion. I assume they mean if you have no insurance but can afford it they will fine you but if you don't but can't afford it, they won't fine you. As they flat out state in the plan that they can't penalize you if that's the case.

[Johonebesus]

So, if someone cannot afford health insurance...the bill will hit them with financial penalties, so they have even less money?

Yeah, that's what I started wondering after reading that... Some clarification would be helpful, if you please?

Individuals for whom there are not affordable products available will not be penalized for not having insurance coverage. A sliding "affordability scale" will be set annually by the Board of the Connector.

Presumably people who can't afford it won't be punished, but there are a lot of people who might technically be able to afford health insurance on paper but will find this a real burden. It seems to me an ass-backwards way of trying to help people. Maybe they are trying to get folks riled up enough to support real socialized medicine.

[Vampiress_Miyu]

Ah. That makes much more sense, thanks.

Wonder how much this'll change things over the next few years... -is glad she lives in Mass, so she'll possibly be able to see for herself-

[Glocksman]

One potential problem is that an employer who offered insurance to their employees prior to this could just decide to drop it and pay the penalties assessed for not offering insurance, if the penalties are cheaper than the costs of offering insurance.
Of course that can be addressed by making the penalties higher than the cost of providing coverage.

Speaking as someone who supports a national health insurance scheme, I'm wondering whether or not this could be a model for reform on a nationwide scale.

[Spyder]

I think people working to pay off debt, student loans, mortgages, old healthcare bills ect are going to run into problems, having a reasonable income doesn't mean you don't have a tight budget. Would a typical middle class worker avoid health insurance for reasons other then budget constraints? Because if not then fining them for not getting health insurance probably isn't going to help.

This bill strikes me as incredibly half-arsed.

[Alex Moon]

Similar systems have been proposed by economists and conservatives for a while. The belief is that it will provide better care than a single payer system, since citizens will have the ability to shop around for good providers.the best provider.

For most people, this probably won't change much. They already get health care through their employers or can afford plans. For the uninsured, those who can't afford healthcare will be subsidized by the state, while those who can but don't will be forced to buy insurance.

[Spyder]

What's the criteria for "can afford health insurance", $income > x?
Is the state going to go through an individual's debts and take them into account?

[Patrick Degan]

The only thing this is going to accomplish is a big fat bonanza for the insurance companies and cash-strapped people getting the minimal coverage simply to comply with the new law while trying to preserve something of a monthly budget.

This will all end in tears.

[LadyTevar]

If I didn't have health insurance through my work, there's no way in hell I could afford it and still buy groceries.

[Eulogy]

The only thing this is going to accomplish is a big fat bonanza for the insurance companies and cash-strapped people getting the minimal coverage simply to comply with the new law while trying to preserve something of a monthly budget.

This will all end in tears.

Unless the mandatory insurance is assively subsidied and made so the poor gets the most benefit, of course.

Given the boondoggle that is the American health system, I predict a sudden incrase in crime and poverty.

[Flagg]

The only thing this is going to accomplish is a big fat bonanza for the insurance companies and cash-strapped people getting the minimal coverage simply to comply with the new law while trying to preserve something of a monthly budget.

This will all end in tears.

That's my thought on this. It's essentially forcing people to purchase a product to the benefit of the sellers of that product and no one else. If they capped rates and heavily restricted what the insurance companies can deny then I could see this working. As-is it just looks like the insurance cartels will be making a shitload of money while still being able to deny benefits on a whim.

I'd rather see them tax the everloving shit out of the insurance companies to pay for poor and working class state funded healthcare.

[Flagg]

If I didn't have health insurance through my work, there's no way in hell I could afford it and still buy groceries.

I wouldn't even count on most employer provided healthcare. Back in 2005 when I was hospitalized for 6 weeks I was told repeatedly that I'd have had more options if I were uninsured, because some douchebag sitting at a desk 1,200 miles away whose sole job was to deny as much coverage as possible was arguing with my doctors about what treatment I should recieve.

[Spyder]

Just socialise the fucking thing and get it over with. Numerous other countries have and the sky did not fall.

[Patrick Degan]

Just socialise the fucking thing and get it over with. Numerous other countries have and the sky did not fall.

Why, we just can't have socialised medicine in 'Murrika. It would lead to Communism, or promote tooth decay, or accelerate rust, or... It's just BAD. OK...?

[Flagg]

Just socialise the fucking thing and get it over with. Numerous other countries have and the sky did not fall.

Other countries? Oh, you mean the commielesbortionuntermenchjizzporium.

[Sea Skimmer]

I'm a little confused as to the penalizing portion. I assume they mean if you have no insurance but can afford it they will fine you but if you don't but can't afford it, they won't fine you. As they flat out state in the plan that they can't penalize you if that's the case.

It’s an administrative and legislative convenience, as this way they can force everyone to pay into the system without calling it a tax. While I can’t say I like the idea of penalties one bit, it is logical. Personally I much prefer a system which is directly funded through taxation so everyone can look and see exactly what it costs in total each year.

[Dominus Atheos]

It's important to note that Massachusetts already has socialized health-care for children and senior citizens. This is for working-age adults.

Another interesting fact from their website:

Beginning July 1, 2007, the State will require all commercial health insurance plans (plans that don't offer the Medicaid or Commonwealth Care products) to offer a new, affordable insurance product to both small businesses and individuals.

[Uraniun235]

Just socialise the fucking thing and get it over with. Numerous other countries have and the sky did not fall.

But, but, but... it would destroy the healthcare industry! That's a multi-billion dollar a year industry! You're going to destroy the livelihoods of countless upper-management executives!

[Spyder]

Just socialise the fucking thing and get it over with. Numerous other countries have and the sky did not fall.

But, but, but... it would destroy the healthcare industry! That's a multi-billion dollar a year industry! You're going to destroy the livelihoods of countless upper-management executives!

And bring post natal care standards up to and possibly even surpassing that of Latvia.

[Spin Echo]

The only thing this is going to accomplish is a big fat bonanza for the insurance companies and cash-strapped people getting the minimal coverage simply to comply with the new law while trying to preserve something of a monthly budget.

This will all end in tears.

That's my thought on this. It's essentially forcing people to purchase a product to the benefit of the sellers of that product and no one else. If they capped rates and heavily restricted what the insurance companies can deny then I could see this working. As-is it just looks like the insurance cartels will be making a shitload of money while still being able to deny benefits on a whim.

It sort of reminds me the situation you get in New Zealand with the foreign students. We're required to buy health insurance to get a visa as we're not covered by the social health service. However, because the insurance companies know we *have* to buy the insurance, they can get away with selling us plans that don't cover all sorts of medical problems.

[Col. Crackpot]

It's important to note that Massachusetts already has socialized health-care for children and senior citizens. This is for working-age adults.

Another interesting fact from their website:

Beginning July 1, 2007, the State will require all commercial health insurance plans (plans that don't offer the Medicaid or Commonwealth Care products) to offer a new, affordable insurance product to both small businesses and individuals.

As do most of the Yankee pinko blue states. In Rhode Island (where i live) pregnant women and children under 18 get free healthcare through the RIte Care program. With the RIte Share program a family of 4 can make up to $45,000 and qualify for some pretty hefty subsidies. Mostly in the form of premium sharing and the like. Lower income families get the full package.