Massachusetts health care reform


The Massachusetts health care reform, commonly referred to as Romneycare, was a healthcare reform law passed in 2006 and signed into law by Governor Mitt Romney with the aim of providing health insurance to nearly all of the residents of the Commonwealth of Massachusetts.
The law mandated that nearly every resident of Massachusetts obtain a minimum level of insurance coverage, provided free and subsidized health care insurance for residents earning less than 150% and 300%, respectively, of the federal poverty level and mandated employers with more than 10 full-time employees provide healthcare insurance.
Among its many effects, the law established an independent public authority, the Commonwealth Health Insurance Connector Authority, also known as the Massachusetts Health Connector. The Connector acts as an insurance broker to offer free, highly subsidized and full-price private insurance plans to residents, including through its web site. As such, it is one of the models of the Affordable Care Act's health insurance exchanges. The 2006 Massachusetts law successfully covered approximately two-thirds of the state's then-uninsured residents, half via federal-government-paid-for Medicaid expansion and half via the Connector's free and subsidized network-tiered health care insurance for those not eligible for expanded Medicaid. Relatively few Massachusetts residents used the Connector to buy full-priced insurance.
After implementation of the law, 98% of Massachusetts residents had health coverage. Despite the hopes of legislators, the program did not decrease total spending on healthcare or utilization of emergency medical services for primary care issues. The law was amended significantly in 2008 and twice in 2010 to make it consistent with the federal Affordable Care Act. Major revisions related to health care industry price controls were passed in August 2012, and the employer mandate was repealed in 2013 in favor of the federal mandate.

Background

The healthcare insurance reform law was enacted as Chapter 58 of the Acts of 2006 of the Massachusetts General Court; its long form title is 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.
The movement to reform Massachusetts healthcare insurance regulations and market between 2004 and 2006 was driven by multiple issues, not all of which were clearly an issue or directly related to then and now most critical issues of rising costs:
  1. A six-year-old federal-government waiver as to how Massachusetts administered its Medicaid program was expiring. Unless the waiver was extended or amended, a large number of people would lose Medicaid coverage as the state reverted to Federal regulations.
  2. Reforms made in 1997 to the portion of the insurance market that related to the individual purchase of insurance had failed. In 2000, over 100,000 Massachusetts residents were covered by individually purchased insurance but the number had dropped to under 50,000 by the time of the reform debate.
  3. As illustrated in the state report referenced in the previous sentence, the price of insurance that covered about 600,000 people in the small group market was rising faster than the prices for the vast majority of the non-senior-citizen population, most of which were – and still are – covered by self-insured group insurance from large employers.
  4. There was a widespread feeling that emergency rooms were misused for non-emergency medical care.
  5. The taxes that fed the state's "free care pool", which covered uninsured emergency room visits as well as uninsured hospital admissions, consistently underfunded the pool and had to be raised almost annually. The combination of issues four and five was dubbed by Romney and others the free-rider problem although subsequent to the passage of the law, it is argued that the free-rider problem did not really exist. Almost all people who did not have insurance could not afford it, but since they were still using the good it is considered free riding.
  6. Advocacy groups wanted a long list of non-traditionally covered or under-covered healthcare procedures and goods mandated.
  7. Large employers—even large employers that were self-insured—were increasingly dropping health insurance as an employee benefit and/or restricting it to full-time employees such that the "take up rate" of healthcare insurance by employees was dropping. However, the drop in take-up rate actually accelerated after passage of the law although there is no demonstrable relationship between the law's passage and the accelerated drop.
Allegedly because of their lack of health insurance, uninsured Massachusetts residents commonly utilize emergency rooms as a source of primary care. The United States Congress passed the Emergency Medical Treatment and Active Labor Act in 1986. EMTALA requires hospitals and ambulance services to provide care to anyone needing emergency treatment regardless of citizenship, legal status or ability to pay. EMTALA applies to virtually all hospitals in the U.S. but includes no provisions for reimbursement. EMTALA is therefore considered an "unfunded safety net program" for patients seeking care at the nation's emergency rooms. As a result of the 1986 EMTALA legislation, hospitals across the country faced unpaid bills and mounting expenses to care for the uninsured. Some of these uncompensated care costs are paid by the federal government through Medicare and Medicaid Disproportionate Share Hospital funding, though such payments are scheduled to decrease to achieve savings to offset the costs of the Affordable Care Act.
In Massachusetts, a pool of over $1 billion in 2004/2005, funded by a tax on paying hospital customers and insurance premiums, known as the Uncompensated Care Pool, was used to partially reimburse hospitals and health centers for these ED expenses. A much larger portion of the pool was used for non-ED hospital care for the uninsured and for other care at Community Health Centers. It was predicted that implementation of the 2006 Massachusetts healthcare insurance reform law would result in almost complete elimination of the need for this fund. In 2006, MIT economics professor Jonathan Gruber predicted that the amount of money in the "free care pool" would be sufficient to pay for reform legislation without requiring additional funding or taxes.

Reform coalitions

In November 2004, political leaders began advocating major reforms of the Massachusetts health care insurance 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, Governor Mitt Romney announced that he would propose a plan to cover virtually all the uninsured.
At the same time, the ACT Coalition introduced a bill that expanded MassHealth 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 sponsored a study, "Roadmap to Coverage," to expand coverage to everyone in the Commonwealth.
Attention focused on the House when then-Massachusetts House Speaker Salvatore 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 Patricia Walrath, and other House members. The state 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. U.S. Senator Ted Kennedy, a longtime advocate for universal healthcare, and Romney met with outgoing U.S. Health and Human Services Secretary Tommy Thompson on January 14, 2005, Thompson's last day in office. The meeting resulted in Thompson signing a Medicare waiver that would redirect money that previously went to treat uninsured patients at safety net hospitals to near-universal health insurance coverage as proposed by Travaglini.

Legislation

In Fall 2005, the House and Senate each passed health care insurance reform bills. The legislature made a number of changes to Governor Romney's original proposal, including expanding MassHealth coverage to low-income children and restoring funding for public health programs. The most controversial change was the addition of a provision which requires firms with 11 or more workers that do not provide "fair and reasonable" health coverage to their workers to pay an annual penalty. This contribution, 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.
On April 12, 2006, Governor Romney signed the health legislation. He vetoed eight sections of the health care legislation, including the controversial employer assessment. He vetoed provisions providing dental benefits to poor residents on the Medicaid program, and providing health coverage to legal immigrants who have a U.S. sponsor who is financially responsible for them. The legislature promptly overrode six of the eight gubernatorial section vetoes, on May 4, 2006, and by mid-June 2006 had overridden the remaining two.