Massachusetts Health Massachusetts Health ReformReform

Nancy TurnbullBlue Cross Blue Shield of Massachusetts

Foundation

The Massachusetts Law:The Massachusetts Law:A LandmarkA Landmark

Ambitious goal: Near universal Ambitious goal: Near universal coveragecoverage

Transcends ideologyTranscends ideology Combines policy solutions from the right Combines policy solutions from the right

and the leftand the left Partnership between federal government Partnership between federal government

and stateand state Novel approachesNovel approaches

Individual mandateIndividual mandate Employer responsibilityEmployer responsibility Merger of small group and direct pay Merger of small group and direct pay

insurance marketsinsurance markets Energizing effect on other statesEnergizing effect on other states

Massachusetts:Massachusetts:The Building Blocks for The Building Blocks for

ReformReform• 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

Massachusetts:The Moment for Reform

• Increasing number of people without coverageIncreasing number of people without coverage• Medicaid waiver renewalMedicaid waiver renewal

•$385 million per year in federal funds at risk$385 million per year in federal funds at risk

• Leadership by Governor, Senate President and Leadership by Governor, Senate President and Speaker of HouseSpeaker of House

• Affordable Care Today (ACT) Coalition Affordable Care Today (ACT) Coalition •Health reform ballot initiative (including payroll tax)Health reform ballot initiative (including payroll tax)

• Growing concerns about under-funding of Growing concerns about under-funding of Uncompensated Care Pool and Medicaid cost-Uncompensated Care Pool and Medicaid cost-shiftingshifting

• BCBSMA Foundation’sBCBSMA Foundation’s Roadmap to Coverage Roadmap to Coverage initiative: begun in early 2004initiative: begun in early 2004

The Starting Point: People were The Starting Point: People were Losing Coverage in MassachusettsLosing Coverage in Massachusetts

496,000

671,000627,000

549,000

365,000418,000 460,000439,000

683,000

644,000682,000

748,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

1995 1998 2000 2002 2003 2004

State estimateCPS estimate

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.

Roadmap to Coverage:Roadmap to Coverage:GoalsGoals

Provoke thoughtful public debateProvoke thoughtful public debate

Inform debate with rigorous, Inform debate with rigorous, independent, non-partisan informationindependent, non-partisan information

Urban InstituteUrban Institute

Use Foundation’s neutrality to engage Use Foundation’s neutrality to engage policymakers and leaderspolicymakers and leaders

Develop Develop practicalpractical, phased-in plan to , phased-in plan to extend coverage to most, if not all, extend coverage to most, if not all, Massachusetts residentsMassachusetts residents

Roadmap to Coverage:Roadmap to Coverage:Three PhasesThree Phases

The cost of medical care for the The cost of medical care for the uninsured (November 2004)uninsured (November 2004)

Detailed options to achieve near Detailed options to achieve near universal coverage (June 2005)universal coverage (June 2005)

Phased-in implementation planPhased-in implementation plan (October 2005) (October 2005)

All reports available at: All reports available at: www.roadmaptocoverage.orgwww.roadmaptocoverage.org

Deliberate process to Deliberate process to build understanding and build understanding and

supportsupport Policy committee of Foundation boardPolicy committee of Foundation board Joint meeting of BCBS and Foundation Joint meeting of BCBS and Foundation

boardsboards 3 “Access Summits”3 “Access Summits”

Presentations by Urban, panel discussionsPresentations by Urban, panel discussionsKeynote by major leader: Senate President, Keynote by major leader: Senate President,

Governor, and House SpeakerGovernor, and House Speaker Pre-summit briefings with legislators, media Pre-summit briefings with legislators, media

and other key opinion leadersand other key opinion leaders Regular meetings with other important Regular meetings with other important

stakeholders, including 10-15 key media stakeholders, including 10-15 key media contactscontacts

Increased grant funding to key advocacy Increased grant funding to key advocacy groupsgroups

Urban Institute Policy OptionsUrban Institute Policy OptionsFour “building blocks”Four “building blocks”

Medicaid expansions for children, Medicaid expansions for children, parents and childless adultsparents and childless adults

Sliding scale tax credits up to 400% FPLSliding scale tax credits up to 400% FPL New voluntary purchasing poolNew voluntary purchasing pool Publicly funded reinsurancePublicly funded reinsurance

Three options:Three options: Individual MandateIndividual Mandate: Building blocks + : Building blocks +

individual mandateindividual mandate Broad Employer MandateBroad Employer Mandate: Building blocks : Building blocks

+ individual mandate + employer pay-or-+ individual mandate + employer pay-or-play for firms with play for firms with 10 or more10 or more employees employees

Narrow Employer MandateNarrow Employer Mandate: Building blocks : Building blocks + individual mandate + employer pay-or-+ individual mandate + employer pay-or-play for firms with play for firms with 500 or more500 or more employees employees

Comparison of Comparison of Roadmap to Roadmap to CoverageCoverage

and Final Health Care and Final Health Care Reform LawReform LawRoadmap to Roadmap to

CoverageCoverageFinal Health Final Health Care Reform Care Reform

LawLaw

MassHealth MassHealth ExpansionsExpansions

√√ √√

SubsidiesSubsidies √√ √√

Purchasing Purchasing PoolPool

√√ √√

ReinsurancReinsurancee

√√

Individual Individual MandateMandate

√√ √√

Employer Employer ResponsibilResponsibilitiesities

√√ √√

Key Elements of the Massachusetts Law

Medicaid Expansions and Medicaid Expansions and RestorationsRestorations

Health Insurance Health Insurance ConnectorConnector Commonwealth CareCommonwealth Care – Premium – Premium

Subsidy ProgramSubsidy Program Health Insurance Market ReformsHealth Insurance Market Reforms Individual Mandate for all adultsIndividual Mandate for all adults Employer Responsibilities (for Employer Responsibilities (for

firms firms >> 11 employees) 11 employees) Medicaid provider rate increasesMedicaid provider rate increases

MA Health Care Reform MA Health Care Reform Law: Law:

Key Components: Key Components: ConnectorConnector 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 dollarsMechanism to reach part-time and

seasonal workers, individuals with more than one job

Can pool premium contributions from multiple employers

MA Health Care Reform Law:MA Health Care Reform Law:Key Components: Key Components:

Commonwealth CareCommonwealth 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

Commonwealth Care Commonwealth Care PremiumsPremiums

FPLFPL IndividualIndividual Couple (2 Couple (2 adults)adults)

Couple with 3 Couple with 3 childrenchildren

<100%<100% $0 (0%)$0 (0%) $0 (0%)$0 (0%) $0 (0%)$0 (0%)

100.1 – 100.1 – 150%150%

$18 (1.5-$18 (1.5-2.2%)2.2%)

$36 (2.2-$36 (2.2-3.3%)3.3%)

$36-$48 (2.3-$36-$48 (2.3-2.6%)2.6%)

150.1 - 150.1 - 200%200%

$40 (2.5-$40 (2.5-3.3%)3.3%)

$80 (3.6-$80 (3.6-4.9%)4.9%)

$116 (3.3-$116 (3.3-4.4%)4.4%)

200.1 – 200.1 – 250%250%

$70 (3.4-$70 (3.4-4.3%)4.3%)

$140 (5.1-$140 (5.1-6.4%)6.4%)

$200 (4.6-$200 (4.6-5.8%)5.8%)

250.1 – 250.1 – 300%300%

$106 (4.3-$106 (4.3-5.2%)5.2%)

$212 (6.4-$212 (6.4-7.7%)7.7%)

$296 (5.8-$296 (5.8-6.9%)6.9%)

Minimum* Monthly Premiums (Percentage of Income)

* Premiums could be higher if individual selects a higher costMCO and/or higher cost product.

Mass Health Care Reform Mass Health Care Reform Law Law

Key Components: Key Components: Market Market ReformsReforms• Non-group and small-group insurance Non-group and small-group insurance

markets will be mergedmarkets will be merged•Retains regulatory structure of small group lawRetains regulatory structure of small group law•Guaranteed issue and renewalGuaranteed issue and renewal•Modified community rating by class of businessModified community rating by class of business•Must comply with all mandated benefit lawsMust comply with all mandated benefit laws

• Young Adult plans for 19-26 year olds Young Adult plans for 19-26 year olds •More flexibility in benefit designMore flexibility in benefit design•Must be rated in same risk pool as individuals Must be rated in same risk pool as individuals

and small groupsand small groups• Age for eligibility for dependent coverage Age for eligibility for dependent coverage

for health insurance raised to 25 yearsfor health insurance raised to 25 years

Mass Health Care Reform Mass Health Care Reform Law Law

Key Components: Key Components: Individual Individual MandateMandate• 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

Massachusetts Health Massachusetts Health Reform:Reform:

The FinancingThe Financing Reallocation of existing financing Reallocation of existing financing

(~2/3 of total)(~2/3 of total)Federal financing for safety net and Federal financing for safety net and

uninsured uninsured Portion of Uncompensated Care Pool Portion of Uncompensated Care Pool

fundsfunds New funds (~1/3 of total)New funds (~1/3 of total)

Medicaid expansionMedicaid expansionNew assessments on employersNew assessments on employersState general revenuesState general revenuesPremium contributions and cost-Premium contributions and cost-

sharing by newly insured peoplesharing by newly insured people

Massachusetts Health Reform:

How Do the Pieces Fit Together?

17%

40%

29%

14%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

MassHealthexpansions

Commonwealth Care Affordable Products(for those with

incomes 300-599%FPL)

Individual Mandate(those with incomes

>600% FPL)

Percent of State’s Total Uninsured Targeted by Different Aspects of Law

Medicare

Medicaid

Employer Coverage

IndividualIndividualMandateMandate

MedicaidExpansions

EmployerResponsibility

InsuranceMarket

Reforms

AffordableProducts

Young Adult

Products

Connector

CommonwealthCare

What’s Been Accomplished What’s Been Accomplished Since April?Since April?

On July 1On July 1stst

MassHealth benefits restored to ~575,000 MassHealth benefits restored to ~575,000 membersmembers

40,000 new adults and children eligible for 40,000 new adults and children eligible for Medicaid (~20,000 enrolled so far)Medicaid (~20,000 enrolled so far)

As of October 1As of October 1stst

57,000 with incomes <100% FPL became 57,000 with incomes <100% FPL became eligible for Commonwealth Careeligible for Commonwealth Care

No premiums, broad coverage, little cost-No premiums, broad coverage, little cost-sharingsharing

As of January 1As of January 1stst 155,000 with incomes 101-300% FPL will be 155,000 with incomes 101-300% FPL will be

eligible to purchase Commonwealth Careeligible to purchase Commonwealth Care

Massachusetts: Challenges Massachusetts: Challenges AheadAhead

• Outreach and enrollmentOutreach and enrollment

• Adequacy of benefits and level of cost-sharing of Adequacy of benefits and level of cost-sharing of products offered through the Connectorproducts offered through the Connector

• To whom will individual mandate apply? How will To whom will individual mandate apply? How will “affordability” be defined?“affordability” be defined?

• Public opinion abut the individual mandatePublic opinion abut the individual mandate

• Employer response and behavior: how much crowd-Employer response and behavior: how much crowd-out? out?

• Adequacy and sustainability of financingAdequacy and sustainability of financing

• Keeping a strong safety net for those who will Keeping a strong safety net for those who will remain uninsured (especially undocumented remain uninsured (especially undocumented immigrants)immigrants)

• Moderating health care cost trendsModerating health care cost trends

Unexpected Good News: Unexpected Good News: Number of Uninsured Number of Uninsured Appears to be FallingAppears to be Falling

496,000

365,000418,000 372,000

941,0001,033,000

618,000

460,000439,000

683,000

857,000

996,000

928,000921,000

680,000748,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1995 1998 2000 2002 2003 2004 2005

UninsuredMassHealthCPS

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.

Massachusetts: Reasons Massachusetts: Reasons to be excited about what to be excited about what

we’ve donewe’ve done Sweeping reform – not an incremental Sweeping reform – not an incremental

approachapproach Victory for MedicaidVictory for Medicaid Shared model of responsibility – Shared model of responsibility –

individuals, employers and governmentindividuals, employers and government Shared problem, shared solution Shared problem, shared solution

Recognition of need and willingness to Recognition of need and willingness to invest in reforminvest in reform

Win for public health, tooWin for public health, too Health disparities get attention in the lawHealth disparities get attention in the law

Massachusetts:Massachusetts:Lessons for OthersLessons for Others

Political not a policy blueprintPolitical not a policy blueprint The past as prologueThe past as prologue ““Making the moment”Making the moment” Think bigThink big No reform is possible without No reform is possible without

strong organizing and advocacystrong organizing and advocacy

The National The National Opportunity AheadOpportunity Ahead

Critical mass of state coverage Critical mass of state coverage expansion effortsexpansion efforts Maine, Illinois, Massachusetts, VermontMaine, Illinois, Massachusetts, Vermont

Next year in CongressNext year in Congress Reauthorization of SCHIP programReauthorization of SCHIP program

2008 Presidential race2008 Presidential race Massachusetts law has raised bar for Massachusetts law has raised bar for

candidates on health carecandidates on health care