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 (St@teside Published August, 2007)
(St@teside Published August, 2007)
Implementation Work Continues in Massachusetts
When the individual mandate to obtain health insurance took effect July 1, the Massachusetts health care reform plan reached another important milestone.
Because there is a five-month grace period before the financial penalty applies, Health Insurance Connector Authority Chairwoman Leslie A. Kirwan said that the July 1 deadline is more of “a call to action.”1 Massachusetts residents have until December 31 to find health insurance coverage before financial penalties are imposed. When residents file their state tax returns next year, they must certify that they had creditable coverage as of the end of 2007, or lose the personal exemption on their income tax, worth roughly $219. The tax penalty grows steeper in future years, up to 50 percent of the cost of a health insurance plan.
The real success of the program depends on whether people sign up in the coming months and years, according to officials and healthcare analysts.2
One of the biggest challenges with the insurance mandate is enrolling uninsured individuals who make too much money to receive state subsidies. Roughly 200,000 uninsured residents are above 300 percent of the federal poverty level, making them ineligible for public subsidies.3 Motivating these individuals to buy health insurance coverage is challenging, especially because those with income below 400 percent FPL can currently receive “free care” through the Uncompensated Care Pool.
However, as the uninsured gain health insurance coverage, funds from the existing Uncompensated Care Pool will be diverted away from reimbursing uncompensated care and toward the health insurance subsidy program. To deter Massachusetts residents from utilizing the Uncompensated Care Pool, the Division of Health Care Finance and Policy has proposed regulations that would increase cost-sharing for residents who use the free care pool. By increasing deductibles and copayments for free care services – and making them comparable to the premiums and cost-sharing in the Commonwealth Care program – the state is hoping to make the Uncompensated Care Pool a less attractive option for individuals otherwise eligible for the state's Medicaid program, Commonwealth Care, or employer-sponsored insurance.
The proposed rules are subject to a public hearing, which is scheduled for August 22; the regulations may be revised before they go into effect on October 1, 2007.
How quickly Massachusetts can divert funds from the Uncompensated Care Pool to the health insurance subsidy program remains to be seen. Motivating the uninsured population to obtain health insurance is critical to the program's financing mechanism and the overall success of the health reform effort.
Even before the change in free care pool rules has gone into effect, the state has seen a significant reduction in free care pool usage and costs. The number of people using the Uncompensated Care Pool has dropped 20 percent this year compared to last, mostly because many former pool users were automatically enrolled in Commonwealth Care or signed up voluntarily.4
In an effort to inform the public about the health insurance mandate and to motivate people to obtain health insurance, the Commonwealth Health Insurance Connector Authority began a major advertising campaign on May 28. The Connector is especially interested in educating young, healthy persons about the health insurance mandate.
Young adults have higher uninsurance rates than any other age category. In 2004, 25.4 percent of Massachusetts ' population between 19 and 24 years of age were uninsured.5 Since young people tend to be healthier than other population groups, adding these individuals to the insurance pool would mitigate adverse risk selection, broaden the pool of insured people, and lower the average cost of insurance. Therefore, the Connector is encouraging this age group to buy specially-designed, lower-cost insurance products through Commonwealth Choice.
One strategy for reaching this demographic is teaming with the Boston Red Sox. Throughout the regular season, the Connector will operate an information booth at Fenway Park ; additionally, the Sox are donating advertising spots, a full-page article in its September program about health care reform, and regular interviews with Connector spokespeople on New England Sports Network, the Red Sox cable network.6
Several other organizations are helping to inform the public about the health insurance mandate and coverage options:
- The Massachusetts Health Care Reform Coalition, which includes health care providers and insurers, is running a complementary advertising campaign.
- The Greater Boston Interfaith Organization is informing churches, mosques, and synagogues about health reform. Additionally, members are going door-to-door urging the uninsured to sign up for coverage.
- The Connector co-sponsored educational seminars with the Associated Industries of Massachusetts, the Retailers Association of Massachusetts, the National Federation of Independent Business, Health Care for All, the Massachusetts Business Association, the Massachusetts Hospital Association, local chambers of commerce, health access groups, and state legislators.
- CVS will display window signage in its stores and will offer information about health care reform at pharmacy counters.
- Comcast is donating advertising.
- Shaw's and Star Markets are printing Connector messaging on register receipts and circulars.
- Bank of America will host educational sessions for small businesses.
- The Massachusetts Bay Transportation Authority has donated advertising space in buses and subway cars. 7
State officials hope that the health insurance mandate will encourage all uninsured people to find health insurance coverage. However, as many as 60,000 uninsured individuals (or roughly one to two percent of Massachusetts ' population) are expected to be exempted from the health insurance mandate because they do not meet affordability standards. To help people ascertain if they meet the affordability standards, the Connector offers an interactive calculator .
While the Commonwealth's health care reform effort is still in its infancy, the state has already enrolled more than 90,000 previously uninsured in Commonwealth Care. In addition, initial estimates from commercial insurers indicate that over 15,000 new members were added to the commercial insurance rolls during the May and June open enrollment period, as health insurers across the state engaged in a marketing blitz to attract new members.
(St@teside Published April 17, 2007)
Massachusetts
The issue of affordability has been the cornerstone of all discussions related to the Massachusetts health reform . Recently, SCI highlighted the Health Insurance Connector board's approval of new Commonwealth Choice plans which will be available starting May 1. On April 12, the board approved what appears to be one of the last policy determinations needed to implement the unprecedented reform—new affordability standards that will guide the determination of which individuals will be exempted from the individual mandate.
The newly approved standards eliminate premiums in the Commonwealth Care program for an estimated 29,000 low-income residents. The new standards also reduce premiums for another 23,000 residents.
- The income threshold for an individual who can receive a full subsidy and not have to pay monthly premiums for the Commonwealth Care health insurance program will increase from 100 percent FPL ($10,210) to 150 percent FPL ($15,315).
- For those earning between 151 and 200 percent FPL ($20,420), the monthly premiums for Commonwealth Care will be reduced from $40 to $35.
Next steps for the board include developing draft regulations and conducting hearings. The final regulations should be completed in June in time for the health reform law to go into effect on July 1.
(St@teside Published March 21, 2007)
Massachusetts:
With the approaching July 1 deadline for individuals to purchase coverage, Massachusetts is one step closer to providing affordable options. Earlier this month, the board for the Health Insurance Connector approved Commonwealth Choice plans which will be available to all residents, but specifically geared to those above 300 percent FPL. There was unanimous support for the new bids submitted by seven carriers in the state after previous bids coming in at approximately $380 per month spurred concern regarding the state's ability to meet the affordability criteria that the state had envisioned for individuals and small businesses in the state. The lowest priced plan will cost approximately $175 per month (for ages 35-39) in the eastern region of the state. The same plan will cost nearly $20 less in other parts of the state.
The Commonwealth Choice plans will be structured into three tiers with varying premiums, co-payments, deductibles and out-of-pocket contributions. The three plan levels will all offer comprehensive coverage, including inpatient and outpatient medical care, emergency care, mental health and substance abuse services, rehabilitation services, hospice and vision care.
While the new plans are meeting the affordability test, the high-deductible components, which have helped in reducing the premiums, still raise some concerns. Of the seven approved plans, one does not have a deductible, one has a $1000 deductible, another has a $1,500 deductible, and the remaining four have deductibles of $2,000. While some have raised the issue that the higher deductibles could create an obstacle for individuals to get care they need, it is important to note that all of the plans cover preventive care visits and most cover all primary care visits prior to the deductible. Nancy Turnbull, president of the Blue Cross Blue Shield of Massachusetts Foundation, was quoted in the Boston Globe on the complexity of this issue. “The state is going to have to make some difficult trade-offs between comprehensiveness of benefits and affordability of coverage, at least in the short-run,” said Turnbull. “High deductibles are a blunt and crude way to make coverage affordable. In the future, I hope we can find other ways."
(St@teside Published October 20, 2006)
Massachusetts:
On October 2, 2006, the Commonwealth of Massachusetts began the first phase of implementation of its new health care reforms. Adults who earn up to 100 percent of the federal poverty level (FPL) and are uninsured are now eligible for a new insurance product, the Commonwealth Care Health Insurance Program (Commonwealth Care), which is administered by the Commonwealth Health Insurance Connector Authority (the Connector).
Phase one of Commonwealth Care targets non-MassHealth (the state's Medicaid program) eligible adults who currently receive free care from the Uncompensated Care Pool. Individuals deemed eligible will receive an enrollment packet and the member will be able to select one of four health plans. If the individual does not select a health plan after fourteen days, the Connector will auto-enroll the member in a health plan. Members will then have up to sixty days after they have been enrolled to switch health plans.
Benefits in the Commonwealth Care product include inpatient hospital services, outpatient and preventative services, inpatient and outpatient mental health and substance abuse services, dental and vision care, and prescription drugs. At this income bracket, there are no monthly premiums but members are responsible for co-payments for generic and brand-name drugs ($1 and $3 respectively) and emergency room use that does not result in an inpatient admission ($3). There is an annual member out-of-pocket maximum for prescription drugs of $200.
The Connector will implement phase two of Commonwealth Care in January 2007. The next phase will provide health insurance benefits to people who earn between 100.1 percent FPL and 300 percent FPL. Connector premiums will vary by income level and by health plan. The state has set a sliding scale subsidy and member premiums will range from a low of $18 for individuals with annual income between 100.1% FPL and 150% FPL, to a high of $106 for individuals with annual income between 250% FPL and 300% FPL.
The benefits package for this group of eligible individuals includes co-payments for most services, with out-of-pocket maximums ranging from $500 to $750, depending on the plan selected and the income category of the individual.
Children of parents eligible for Commonwealth Care are covered through a separate Medicaid program administered by MassHealth.
The Commonwealth Health Insurance Connector Authority website contains extensive resources on the implementation and regulatory guidance.
(St@teside Published April 18, 2006)
Commonwealth of Massachusetts
In 2006, the Commonwealth of Massachusetts passed landmark legislation with the goal of covering 95 percent of its residents within three years. This new health care reform bill represents a culmination of more than a year of negotiations and compromise between lawmakers and Governor Mitt Romney (R). It includes provisions to increase access to health insurance, contain health care costs, and improve quality.
- Individual Mandate
- Requires all individuals to obtain health insurance by July 1, 2007.
- Individuals who cannot afford insurance, as determined by the Connector (see below), will not be penalized.
- Starting in 2007 income tax forms will require disclosure of insurance status for the tax year.
- The penalties for not having insurance, in the 2007 tax year, will include loss of the personal exemption.
- In subsequent tax years, the penalty will include a fine of 50 percent of the monthly cost of health insurance for each month without insurance.
- Employer Requirements
- Employers with 11 or more employees:
- who do not make a “fair and reasonable” contribution towards their employees' health insurance coverage will be required to make a per-worker contribution, estimated to be approximately $295 per full-time employee (employers with seasonal or part-time employees would pay a pro-rated amount).
- must adopt a Section 125 “cafeteria plan” as defined in federal law, which permits workers to purchase health care with pre-tax dollars by January 1, 2007.
- who do not “offer to contribute toward, or arrange for the purchase of health insurance” may be assessed a “free rider” surcharge if their employees access free care a total of five times per year in the aggregate or one employee accesses free care more than three times. The surcharge will exempt the first $50,000 of free care that the employees use. After that the employer will be charged between 10 - 100 percent of the cost to the state as determined by the Division of Health Care Finance and Policy.
- Commonwealth Health Insurance Connector Authority
- Helps individuals and small businesses find affordable health coverage.
- Allows individuals to purchase health insurance using pre-tax dollars which will reduce the cost of premiums by up to 25 percent.
- Part-time and seasonal workers are allowed to combine employer contributions.
- Allows individuals to keep their policy if they switch employers.
- Insurance Market Reforms
- Starting in July 2007, the non- and small-group markets will be merged.
- The merger will reduce premiums for people currently purchasing in the individual market by nearly a quarter of their current cost.
- Will allow HMOs to offer coverage plans that are linked to health savings accounts.
- Will allow young adults may remain on their parents' policy for two years past the loss of their dependent status, or until they turn 25, whichever occurs first.
- Subsidies
- Establishes the Commonwealth Care Health Insurance Program, which will provide sliding scale subsidies to individuals with incomes below 300 percent of the federal poverty level (FPL).
- No premiums will be imposed on those individuals with incomes below 100 percent FPL.
- The Insurance Partnership will raise eligibility for employee participation from 200 to 300 percent FPL.
Additional Information
Reactions to Massachusetts's Health Care Reform Bill
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1 Monahan J. “No one expecting an insurance rush.” Worcester Telegram and Gazette. June 27, 2007. 2 Huang, C. “The uninsured let a deadline pass.” Christian Science Monitor. July 2, 2007.
3 Lischko, A. “What are connectors and how do they work?” Presentation at SCI Small Group Consultation Meeting, Austin, Texas, June 19, 2007.
4 Dembner, A. “Free care may come at a cost to poor,” Boston Globe. July 13, 2007.
5 Amy Lischko. What are connectors and how do they work? June 19, 2007 presentation at SCI Small Group Consultation Meeting, Austin, Texas, June 19, 2007.
6 www.mass.gov/?pageID=hicutilities&L=1&sid=Qhic&U=Qhic_welcome, Accessed 7/23/07.
7 www.mass.gov/?pageID=hicutilities&L=1&sid=Qhic&U=Qhic_welcome. Accessed 7/23/07. |
