Health Care Reform in Massachusetts

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Health Care Reform in Massachusetts

• (August 8, 2005)
• Amy Lischko

2
A vision for health care

• Everyone should be able to obtain quality health
  care
• For those who cannot afford insurance, government
  should help, but only to the extent needed, not
  as an entitlement
• Private insurance is better, cheaper, and more
  efficient than government run health care
• State government has an important role to play to
  bring insurance coverage to all of our citizens

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Roadmap to coverage and cost containment
Insure the uninsured
CommonwealthCare
Safety NetCare
Medicaid
Health CareReform
Contain healthcare costs
MedicalMalpractice
Health-fareReform
E-Health
Transparency
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The Uninsured in Massachusetts

• Total Commonwealth Population

6,400,000

• Currently insured (93)
• Employer, individual, Medicare or Medicaid

5,940,000

• Currently uninsured (7)

460,000

106,000
Medicaid Eligible but unenrolled

• 100-300 FPL

150,000
Safety Net Care

• 300 FPL

204,000
Commonwealth Care
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Medicaid enrollment has increased by more than
70,000 people in less than 2 years
Medicaid enrollment (FY03-FY05)
April 05 986K
1,000K
MassHealth Basicsuspended under previous
administration
975
Initial Gatewayroll-out
950
Gateway up and runningat BMC and Cambridge
925
MassHealth Essential created
900
Jan '03
Jan '04
Jan '05
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Premium increases are hurting small businesses
and may lead some to drop insurance
Annual premium growth small group family plans
20
17
14
15
11
9
10
5
0
2001
2002
2003
2004
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Commonwealth Care eases the health care crisis
for small businesses and individuals

• Permits private insurers to offer new, affordable
  policies to small businesses and individuals
• Further reduces cost through pre-tax treatment of
  premium
• Makes it easier for businesses to offer insurance
  to their contractors and part-time workers
• Levels the playing field for small businesses and
  individuals who dont work for large companies
• Enables individuals to purchase portable health
  insurance
• Attracts younger, healthier people into the risk
  pool

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Commonwealth Care is comprehensive, not
bare-bones
Standard Small Group
Commonwealth Care
Primary care
Yes
Yes
Hospitalization
Yes
Yes
Mental Health
Yes
Yes
Prescription Drugs
Yes
Yes
Provider network
Open Access
Defined
Annual deductible
First Dollar Coverage
250-1,000
Co-pays
Low (0,10,20)
Moderate (0,20,40)
Exclusions permitted w/ board approval
Mandated benefits
Included
Monthly premium
350
Less than 200
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The Exchange makes it work
Insurance Exchange
MMCOs
Blue CrossBlue Shield
Tufts
NHP
Harvard Pilgrim
New Entrants
Fallon

• Enables tax deductibility for working individuals
• Reaches part-time workers and individuals with
  multiple jobs
• Eliminates minimum contribution and minimum
  participation rules that make it difficult for
  small businesses to offer insurance
• Ensures insurance portability from job to job

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The Safety Net Care population

• Does not qualify for Medicaid
• Cant afford current insurance products
• Cant afford Commonwealth Care
• Unless subsidized by employers, typically goes
  uninsured and receive free health care
• Receives care, in large part, that is paid for by
  the people who are insured and by taxpayers
• The annual cost of this care is approximately 1B

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The Safety Net Care population is insurable

• Substantially younger than the average
  population
• Predominantly male and single
• Representative of statewide mix of race and
  ethnicity
• 82 are high school graduates, of which 15 have
  college degrees
• 78 are working, with the majority working
  full-time
• Like others, these individuals could respond very
  well to insurance-like features

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Safety Net Care Proposal

• Private health insurance with the same benefits
  as Commonwealth Care, but with lower co-pays and
  no deductibles
• Monthly premiums set according to a sliding scale
  based on individual income, as with SCHIP
• Federal Waiver requires that a Safety Net Care
  program begin by July 1, 2006

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Safety Net Care example
WeeklyPremium
of Income
Single PersonIncome
Weekly StateSubsidy
FPL
2.30
1.3
9,570
66.93
150
6.92
2.5
14,355
62.31
200
11.54
3.2
19,140
57.69
250
18.46
4.0
23,925
50.77
300
32.31
5.8
28,710
36.92
All numbers pre-tax Assumes no employer
contribution
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Provisions will be made for transition to the
Safety Net Care program

• All Medicaid MCOs will be given a two year
  exclusivity period to enroll Safety Net Care
  lives in their insurance products
• Familiarity with this population
• A transitional provider assistance fund will
  support providers as the state adopts Safety Net
  Care
• A reinsurance fund will back up actuarial levels
  during the initial roll-out

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Safety Net Care can be funded with existing
resources currently used to pay for the uninsured
Safety Net Care Sources and Uses Year 1
Other
1,000M
922M
922M
Reinsurance Fund
800
Transitional Provider
Safety Net Care
Assistance Fund
Waiver
600
400
Premium Assistance
Free Care Pool
200
0
Existing Funds
Safety Net Care
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Employers will not drop coverage for their
employees

• Existing ERISA provisions for non-discrimination
• Existing and new state provisions for
  non-discrimination
• Prohibition of indirect measures that circumvent
  the purpose of the law
• Competition for workers
• Most employees working for small firms earn
  300 FPL
• Design of package and subsidies considered the
  issue of crowd-out

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The Personal Responsibility Principle

• Given Medicaid, Safety Net Care and Commonwealth
  Care, all citizens will have access to health
  insurance they can afford
• In this new environment, people who remain
  uninsured would be unnecessarily and unfairly
  passing their health care costs to everyone else
• Personal responsibility means that everyone
  should be insured or have the means to pay for
  their own health care

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Personal Responsibility Principle Provisions

• A minimum level of insurance or proof of
  financial means will be required
• For those who do not comply
• Loss of personal tax exemption
• Withholding of a portion or all of income tax
  refund for deposit in a state personal health
  care expenditure account
• For those without coverage that use medical
  services
• Self-pay will be required
• If unable to pay, provider may request payment
  from the state personal health care expenditure
  account
• If the bill exceeds the account balance, an
  appropriate wage withholding plan will be
  established

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Health Care Reform Proposal

• Makes it possible for everyone to be covered by
  health insurance
• Provides for a medical home and better health
  care for hundreds of thousands of people
• Provides savings to the taxpayers and to those
  who have to pay for health insurance
• Allows for the elimination of cost-shifting
• Allows for the payment of fairer Medicaid rates
  once cost-shifting is eliminated