MASSACHUSETTS: Legislature Passes Bill to Require Health Coverage

April 5, 2006

MASSACHUSETTS: Legislature Passes Bill To Require Health Coverage

Massachusetts lawmakers on Tuesday approved legislation aimed at expanding health coverage for the state's uninsured residents by requiring all residents to buy insurance, the Washington Post reports. The Senate voted 37-0, and the House voted 154-2 to approve the bill after "two years of politicking and several months of backroom negotiations," according to the Post (Fahrenthold, Washington Post, 4/5). With the bill, legislators hope to cover 90% to 95% of the state's 500,000 to 600,000 uninsured residents over three years (Helman, Boston Globe, 4/4). The legislation calls for uninsured residents by July 1, 2007, to purchase new, low-cost health insurance plans or forfeit their personal state tax exemption -- worth about $150 -- in the first year. Individuals who do not buy plans in the second year would have to pay a fine equal to half of the monthly premium of an affordable plan, which could amount to $1,200 annually (Hechinger/Armstrong, Wall Street Journal, 4/5). The bill would require all residents to provide details about their health insurance policies on their state income tax returns in 2008, and those who cannot find an affordable plan could obtain a waiver, the Post reports. According to state officials, hospitals will continue to treat uninsured patients and will not enforce the coverage requirement (Washington Post, 4/5).

New Coverage Options Uninsured residents with incomes up to 300% of the federal poverty level -- $28,700 for a single person -- would be eligible for Commonwealth Care, a new state-subsidized program (Ring, Springfield Republican, 4/4). Through the program, uninsured residents with incomes lower than 100% of the federal poverty level would be able to purchase subsidized policies without premiums. The policies would require "very small" copayments for emergency department visits and other care, according to the Post. Residents with annual incomes between 100% and 300% of the federal poverty level would be able to purchase subsidized policies that have premiums on a sliding scale. The legislation does not specify how much low- income residents will pay for the new, low-cost policies. A new state agency that will "serve as a liaison between the government, policyholders and private insurers" in part will determine that amount, the Post reports (Washington Post, 4/5). Legislators hope to cover an additional 207,500 residents through the low-cost plans (Boston Globe, 4/4). In addition, the plan would provide incentives for insurers to offer low-cost plans with limited benefits to people ages 19 to 26 (Belluck, New York Times, 4/5). The legislation also aims to provide coverage for 92,500 uninsured residents under MassHealth, the state's Medicaid program, by expanding eligibility requirements for children and enrolling more eligible adults who have not yet signed up, according to the Globe (Boston Globe, 4/4).

Other Provisions The legislation also would require employers with 11 or more workers to provide health care coverage or pay an annual fee of $295 per employee. In addition, the measure would require employers whose uninsured workers repeatedly use EDs to pay between 10% and 100% of the portion of medical bills exceeding $50,000, the Wall Street Journal reports (Wall Street Journal, 4/5). Legislators said the employer fees would go toward the fund that would subsidize low-cost policies, the Post reports (Washington Post, 4/5). The fees are designed to raise about $45 million per year (Boston Globe, 4/4). The plan would also allow individuals and businesses with 50 or fewer employees to purchase insurance with pretax dollars (New York Times, 4/5).

Pay-for-Performance The bill outlines hundreds of millions of dollars in Medicaid payments under a pay-for-performance system in which health care providers must show they are meeting certain quality standards in order to receive the additional dollars. In addition, hospitals and doctors must show they are reducing racial and ethnic disparities and health care delivery and outcomes. The quality requirements go into effect in July 2007, and hospitals and doctors will receive an additional $90 million in fiscal year 2007, $180 million in FY 2008 and $270 million in FY 2009. The Executive Office of Health and Human Services and two advisory groups will specify the performance measures, cost control criteria and the amount of Medicaid payments at risk over the next year, the Globe reports (Kowalczyk, Boston Globe, 4/5).

Funding According to the Journal, the bill, which is estimated to cost more than $1 billion annually, would be funded through $125 million in new state spending, money from existing programs and fees from businesses, and individuals who do not meet the measure's requirements (Wall Street Journal, 4/5). The cost also would be funded through $650 million a year in federal Medicaid payments (Springfield Republican, 4/4). However the "question remains ... whether the state has moved quickly enough to satisfy federal officials who had threatened to end $385 million in annual federal Medicaid funding," the

of 2 Globe reports. The state "needed to demonstrate substantial progress in reducing the number of uninsured to continue getting the money, and federal officials had urged the state to have a plan in place by January," according to the Globe (Boston Globe, 4/4).

Comments From Governor, Lawmakers Gov. Mitt Romney (R), who is expected to sign the bill, said the bill is "95% of what I proposed." He continued "This is really a landmark for our state because this proves at this stage that we can get health insurance for all our citizens without raising taxes and without a government takeover. The old singer- payer canard is gone" (New York Times, 4/5). He added that he likely would "adjus[t]" the employer-fee provision through use of a line-item veto (Washington Post, 4/4). However, the New York Times reports that Romney "did not seem that worried about it, saying he had been most concerned that the fee not be a payroll tax, as had been originally proposed." Senate President Robert Travaglini (D) said that if Romney vetoes the fee, the Legislature would override it (New York Times, 4/5). House Speaker Salvatore DiMasi (D) said, "This is a very historic moment in Massachusetts. We will be able to in three years, hopefully virtually insure every man, woman and child in this commonwealth." U.S. Sen. Edward Kennedy (D-Mass.) said, "I think a lot of people in the health community understood that this was a special moment, and we shouldn't lose it or miss it. I found that at the end of the day, when it really counted, (legislative leaders) were inspired to do the right thing" (Boston Globe, 4/4).

Additional Reaction Bob Baker, president of the Smaller Business Association of New England, said the association's members seemed to accept the employer-fee provision, adding, "The notion of the level playing field, I think from an element of fairness and equity, people are OK with it, unless it impinges on their ability to pay for it. There hasn't been a hue and cry among our members." James Roosevelt, president and CEO of Tufts Health Plan, said, "I think that [insuring more people] will help both improve the quality of health care and lower the cost," adding, "We would have liked more flexibility in the design of health plans to permit lower premiums that are affordable for all people" (New York Times, 4/5). Paul Ginsburg, an economist with the Center for Studying Health System Change, said by requiring individuals who can afford to purchase insurance to do so, "[t]hat is where they are really pioneers" (Appleby, USA Today, 4/5).