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What We Can Learn from Massachusetts

As we showed in this blog post “The Potential for National Health Care Reform,” the new Congress is likely to consider major health care legislation in the near future.

Already, the proposals introduced resemble the universal coverage legislation implemented in Massachusetts in 2006.

In this article, we examine the Massachusetts law in-depth to see what we can learn from this state experiment.

Massachusetts: The Key Components of the Health Care Reform Act

Two years ago, the Massachusetts’ state legislature passed Chapter 58 of the Acts of 2006, “An act providing access to affordable, quality, accountable health care.”

The most important, and controversial, component of the law is a mandate stating that all individuals must purchase health insurance.

The law includes a number of other components to help individuals purchase insurance, and to accomplish the universal coverage goal.

First, the law requires that small businesses with 11 or more employees make a “fair and reasonable” contribution toward health insurance coverage.

  • Businesses that opt out of providing coverage must pay a Fair Share contribution of $295 annually per employee.
  • Employers that choose to offer coverage must allow their workers to purchase “cafeteria plans” with pre-tax dollars. These plans offer low monthly premiums in exchange for higher co-pays and deductibles, and are favored by healthier individuals.

Second, the law called for the creation of the Commonwealth Health Insurance Connector, which serves as an insurance exchange by connecting consumers and businesses with regulated insurance products.

  • The plans offered through the Connector must provide minimum benefits that are defined by the state. Insurance companies are prohibited from denying coverage based on pre-existing conditions.
  • The prices of the plans are also regulated with the intention of making private insurance plans affordable to small businesses and individual consumers.

Despite these efforts, the state acknowledges that some low-income folks will still not be able to afford private insurance premiums.

To assist these individuals, the state offers subsidized coverage that is available based on a sliding-scale. The subsidized component of the law is called Commonwealth Care.

And 2% of individuals are exempt from the purchasing mandate, as their incomes are too high to qualify for public assistance, but too low to be able to afford private insurance.

Massachusetts: Outcomes

In many ways, the legislation has accomplished what proponents hoped it would.

  • Before the legislation was enacted, the state had an estimated 600,000 uninsured individuals.
  • After two years, three-quarters of the uninsured, or 439,000 individuals, now have health insurance.
  • As a result, roughly 97% of the population in Massachusetts is insured.
  • An analysis done by the advocacy group Health Care for All found that Massachusetts is responsible for 23% of a national decline in the uninsured that occurred between 2006 and 2007.
    • In 2007, roughly 45.7 million people lacked insurance, down from 47 million in 2006.

At the same time, opponents argue that the design of the legislation is seriously flawed, as it does not make much effort to reform the insurance industry or control the rising cost of care. The long-term sustainability of the law is in doubt as a result.

Continue to page 2 to see what critics have to say…

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