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Massachusetts Health Reform

Massachusetts Health Reform. Nancy Turnbull Blue Cross Blue Shield of Massachusetts Foundation. The Massachusetts Law: A Landmark. Ambitious goal: Near universal coverage Transcends ideology Combines policy solutions from the right and the left

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Massachusetts Health Reform

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  1. Massachusetts Health Reform Nancy Turnbull Blue Cross Blue Shield of Massachusetts Foundation

  2. The Massachusetts Law:A Landmark • Ambitious goal: Near universal coverage • Transcends ideology • Combines policy solutions from the right and the left • Partnership between federal government and state • Novel approaches • Individual mandate • Employer responsibility • Merger of small group and direct pay insurance markets • Energizing effect on other states

  3. Massachusetts:The Building Blocks for Reform • Relatively low rate of uninsurance • History of health coverage expansions • Broad Medicaid program • 1115 waiver implemented in 1996 • Uncompensated Care Pool • Funded in part by assessment on health plans and hospitals; paid by employers • Strong Safety Net providers • Highly regulated small group and individual health insurance markets

  4. Massachusetts:The Moment for Reform • Increasing number of people without coverage • Medicaid waiver renewal • $385 million per year in federal funds at risk • Leadership by Governor, Senate President and Speaker of House • Affordable Care Today (ACT) Coalition • Health reform ballot initiative (including payroll tax) • Growing concerns about under-funding of Uncompensated Care Pool and Medicaid cost-shifting • BCBSMA Foundation’s Roadmap to Coverage initiative: begun in early 2004

  5. The Starting Point: People were Losing Coverage in Massachusetts Sources: “Health Insurance Status of Massachusetts Residents,” 1998, 2000, 2002, 2004, Massachusetts Division of Health Care Finance and Policy. “Massachusetts Residents Without Health Insurance, 1995,” Blendon, et al, Harvard School of Public Health. Office of Medicaid MassHealth caseload snapshot, 7/31/06.

  6. Roadmap to Coverage:Goals • Provoke thoughtful public debate • Inform debate with rigorous, independent, non-partisan information • Urban Institute • Use Foundation’s neutrality to engage policymakers and leaders • Develop practical, phased-in plan to extend coverage to most, if not all, Massachusetts residents

  7. Roadmap to Coverage:Three Phases • The cost of medical care for the uninsured (November 2004) • Detailed options to achieve near universal coverage (June 2005) • Phased-in implementation plan (October 2005) • All reports available at: www.roadmaptocoverage.org

  8. Deliberate process to build understanding and support • Policy committee of Foundation board • Joint meeting of BCBS and Foundation boards • 3 “Access Summits” • Presentations by Urban, panel discussions • Keynote by major leader: Senate President, Governor, and House Speaker • Pre-summit briefings with legislators, media and other key opinion leaders • Regular meetings with other important stakeholders, including 10-15 key media contacts • Increased grant funding to key advocacy groups

  9. Urban Institute Policy Options Four “building blocks” • Medicaid expansions for children, parents and childless adults • Sliding scale tax credits up to 400% FPL • New voluntary purchasing pool • Publicly funded reinsurance Three options: • Individual Mandate: Building blocks + individual mandate • Broad Employer Mandate: Building blocks + individual mandate + employer pay-or-play for firms with 10 or more employees • Narrow Employer Mandate: Building blocks + individual mandate + employer pay-or-play for firms with 500 or more employees

  10. Comparison of Roadmap to Coverageand Final Health Care Reform Law

  11. Key Elements of the Massachusetts Law • Medicaid Expansions and Restorations • Health Insurance Connector • Commonwealth Care – Premium Subsidy Program • Health Insurance Market Reforms • Individual Mandate for all adults • Employer Responsibilities (for firms > 11 employees) • Medicaid provider rate increases

  12. MA Health Care Reform Law: Key Components: Connector • New public authority (10-member board) • Administers “Commonwealth Care” premium subsidy program • Will offer “affordable” health insurance products to individuals and small businesses (50 or fewer employees) • Premiums can be paid with pre-tax dollars • Mechanism to reach part-time and seasonal workers, individuals with more than one job • Can pool premium contributions from multiple employers

  13. MA Health Care Reform Law:Key Components: Commonwealth Care • Eligibility rules • Household income <300% FPL • Resident of Commonwealth for previous 6 months • Includes “qualified aliens” and documented refugees • Not eligible for MassHealth or Medicare • No employer coverage “available” for past 6 months • Can be waived by Connector – employer’s contribution then goes to offset state premium subsidy costs • Benefits are comparable to, or better than, most employer coverage

  14. Commonwealth Care Premiums Minimum* Monthly Premiums (Percentage of Income) * Premiums could be higher if individual selects a higher cost MCO and/or higher cost product.

  15. Mass Health Care Reform Law Key Components: Market Reforms • Non-group and small-group insurance markets will be merged • Retains regulatory structure of small group law • Guaranteed issue and renewal • Modified community rating by class of business • Must comply with all mandated benefit laws • Young Adult plans for 19-26 year olds • More flexibility in benefit design • Must be rated in same risk pool as individuals and small groups • Age for eligibility for dependent coverage for health insurance raised to 25 years

  16. Mass Health Care Reform Law Key Components: Individual Mandate • Applies to all MA adult residents (July 1, 2007) • As long as “affordable” coverage is available • Standard of affordability to be determined by the Connector (based on household income) • Minimum acceptable benefit package also to be determined by Connector • Enforcement mechanisms • Indicate insurance policy number on state tax return • Loss of state personal income tax exemption for tax year 2007 • Fine for each month without insurance equal to 50% of affordable insurance product cost for tax year 2008

  17. Massachusetts Health Reform:The Financing • Reallocation of existing financing (~2/3 of total) • Federal financing for safety net and uninsured • Portion of Uncompensated Care Pool funds • New funds (~1/3 of total) • Medicaid expansion • New assessments on employers • State general revenues • Premium contributions and cost-sharing by newly insured people

  18. Massachusetts Health Reform:How Do the Pieces Fit Together? Percent of State’s Total Uninsured Targeted by Different Aspects of Law

  19. Connector Employer Responsibility Medicare Employer Coverage Medicaid Individual Mandate Insurance Market Reforms Affordable Products Young Adult Products Medicaid Expansions Commonwealth Care

  20. What’s Been Accomplished Since April? • On July 1st • MassHealth benefits restored to ~575,000 members • 40,000 new adults and children eligible for Medicaid (~20,000 enrolled so far) • As of October 1st • 57,000 with incomes <100% FPL became eligible for Commonwealth Care • No premiums, broad coverage, little cost-sharing • As of January 1st • 155,000 with incomes 101-300% FPL will be eligible to purchase Commonwealth Care

  21. Massachusetts: Challenges Ahead • Outreach and enrollment • Adequacy of benefits and level of cost-sharing of products offered through the Connector • To whom will individual mandate apply? How will “affordability” be defined? • Public opinion abut the individual mandate • Employer response and behavior: how much crowd-out? • Adequacy and sustainability of financing • Keeping a strong safety net for those who will remain uninsured (especially undocumented immigrants) • Moderating health care cost trends

  22. Unexpected Good News: Number of Uninsured Appears to be Falling Sources: “Health Insurance Status of Massachusetts Residents,” 1998, 2000, 2002, 2004 and 2006, Massachusetts Division of Health Care Finance and Policy. “Massachusetts Residents Without Health Insurance, 1995,” Blendon, et al, Harvard School of Public Health. Office of Medicaid MassHealth caseload snapshot, 7/31/06.

  23. Massachusetts: Reasons to be excited about what we’ve done • Sweeping reform – not an incremental approach • Victory for Medicaid • Shared model of responsibility – individuals, employers and government • Shared problem, shared solution • Recognition of need and willingness to invest in reform • Win for public health, too • Health disparities get attention in the law

  24. Massachusetts:Lessons for Others • Political not a policy blueprint • The past as prologue • “Making the moment” • Think big • No reform is possible without strong organizing and advocacy

  25. The National Opportunity Ahead • Critical mass of state coverage expansion efforts • Maine, Illinois, Massachusetts, Vermont • Next year in Congress • Reauthorization of SCHIP program • 2008 Presidential race • Massachusetts law has raised bar for candidates on health care

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