AHIP Coverage (November/December 2006)
Can the Massachusetts Model Be Replicated?
By Louise Kertesz
When Massachusetts Gov. Mitt Romney announced in April that legislators had achieved a bipartisan plan for universal coverage, praise resounded across the states—on editorial pages and national TV, among policymakers, industry leaders, and consumer advocates.
The new Massachusetts law requires all residents to have health insurance by July 1, 2007. A clearinghouse called the Connector will assist individuals and small businesses in purchasing affordable coverage from approved carriers as of April 1, 2007. The intention is that policies will be portable from job to job. Employers that do not offer policies will be required to pay an assessment of about $295 for each employee.
A low-cost, state-subsidized health insurance program will be available for residents with incomes up to 300 percent of the federal poverty level, on a sliding scale based on income. The state will dissolve its uncompensated care pool, previously paid to hospitals, and redirect the money over time to subsidizing those premiums.
Many observers noted that politics and special interests had finally been put aside to arrive at a realistic plan to cover virtually every citizen in a state. Enthusiastic editorials in California and elsewhere urged state leaders to take a lesson in health care policy from Massachusetts.
But the reality isn’t so simple. California learned from a study by Health Policy Solutions that it would cost the state $9.4 billion to follow the Massachusetts plan to expand health insurance coverage. Other states did some quick calculations and came up with their own scenarios pointing to the difficulty of adopting a plan like the one in Massachusetts, particularly in more conservative states.
However, even skeptical observers concede that the Massachusetts plan has generated more “outside-the-box” debate about increasing health insurance coverage than the country has ever seen—and the debate goes on.
Health plans, some of which disagree with various elements of the Massachusetts law and question its workability, nevertheless recognize value in the comprehensive approach the state has taken in an attempt to solve the problem of the uninsured. Aetna reminded people that it was the first national insurer to advocate an individual mandate as “a common-sense approach to addressing the single greatest strain on the health care system: the uninsured,” said Ronald A. Williams, Aetna’s CEO and president.
He added, “The ultimate success of the new law, which includes such a requirement, will depend on ensuring that those in need receive a fairly devised subsidy, and that all Massachusetts residents can take advantage of options and innovations in health care coverage that are available through a competitive marketplace.”
Exploring the Possibilities
Healthy skepticism remains about the Massachusetts plan’s exportability to other states. Catherine Bresler, vice president of government relations for The Trustmark Companies, says, “There is still no proof that this system is going to work in Massachusetts. The regulations aren’t even out yet. There are no accurate cost estimates. Also, from a financial standpoint—the existing uncompensated care pool and the available Medicaid funds—and a political standpoint, there were a unique set of circumstances in Massachusetts. To think it can just be dropped into other states is unrealistic because the climate is different state by state.”
Clearly, all states are not at the same starting line when it comes to expanding coverage. Massachusetts enjoys a relatively low rate of uninsured—11 percent, versus a national average of 16 percent. Also, about 60 percent of Massachusetts employers already offer coverage, compared with 54 percent of employers nationwide. In addition, Massachusetts already allots more than $600 million to its uncompensated care pool, which would be shifted to subsidize premiums for low-income workers over time.
Despite these differences, at least 20 states indicated they were or would be looking at the Massachusetts approach when crafting 2007 legislation, according to an analysis by America’s Health Insurance Plans. Specifically, Rhode Island passed a law creating a commission to study the Massachusetts law, and task forces in New Jersey are also studying the plan. Washington State Insurance Commissioner Mike Kreidler released a proposal similar to the Massachusetts approach as part of his participation in a commission charged with developing a plan to improve access for all residents.
Edmund F. Haislmaier, a research fellow in the Center for Health Policy Studies at The Heritage Foundation who helped develop a Connector for a proposal in the District of Columbia that predated the Massachusetts law, is working with several states to draft legislation patterned after the Massachusetts law. Haislmaier says that people are asking “what’s different about what Massachusetts did, will it work, could I do it in my state, should I do it in my state?” States need to determine how their environments are different from Massachusetts, he says.
States that are “most likely to do something” similar to Massachusetts are those “that have a crisis they have to deal with and a governor who wants to do something about it,” he observes. But “even in the best state markets there are attractive elements in the Massachusetts law. The single, most attractive feature” is portability. “You can solve 50 percent of the uninsured problem if people stop losing insurance when they change jobs.”
Haislmaier believes that legislation that incorporates the idea of a Connector will be reintroduced in Maryland, followed by two other bills related to subsidizing individual premiums, depending on the outcome of the November elections. He expects that legislation patterned in some way after Massachusetts will be introduced in five or six states next year.
Legislation mirroring the Massachusetts law was introduced in only one state—New York—before the 2006 legislative recess. SB7676 was sponsored by Republican Sen. Frank Padavan and was not actively debated, says Leslie Moran, senior vice president of the New York Health Plan Association. “The bill was referred to the Senate Health Committee and sat there.” Moran explains that the bill “was put in as a placeholder” to get ideas on the table as legislators continue to debate how to get more people covered, particularly those in the 24–34 age group.
While there is a great deal of interest in the Massachusetts law, it can’t be viewed as a blueprint for New York, says Maura Bluestone, president and CEO of Affinity Health Plan. “The sheer number of stakeholders” is one major difference between the two states. There are dozens of health plans operating in New York State.
“There’s a lot of interest here in watching what Massachusetts does, and more importantly how they do it. How do you get these different stakeholders to agree? How do you get the politics to work? How do you take advantage of this point where there’s a little more political will to change than existed before?” For example, she continues, New York has an uncompensated pool like the one Massachusetts is redirecting to premium subsidies. “How did they get hospitals to agree to shifting the money to premium subsidies?”
One sign of the difficulty of doing that in New York is that Affinity Health Plan is one of three insurers that started pilot programs, authorized by the legislature in 1988, that use some funds from New York’s uncompensated pool to subsidize premiums for low-income individuals. However, Affinity’s is the only remaining pilot, and there hasn’t been a great deal of interest in Albany in expanding such a program, Bluestone notes.
Universal Coverage “Within Reach” in Minnesota
In discussing ways to expand coverage, a coalition of stakeholders in Minnesota is considering a white paper issued by Blue Cross Blue Shield of Minnesota (BCBS-MN) that borrows several ideas from the Massachusetts plan. With Minnesota enjoying the lowest rate of uninsured in the country, health plans, doctors, hospital executives, employers, and agents are brainstorming how the state can take the final steps to universal coverage. The Minnesota Blues plan issued its model because “we think it’s easier if you don’t start with a blank page,” says Cindy Goff, public policy director at BCBS-MN.
“[The Massachusetts plan] is an excellent menu of options that has reinvigorated the conversation in Minnesota about universal coverage,” says Julie Brunner, executive director of the Minnesota Council of Health Plans. “We feel [universal coverage] is within our reach. The Blues’ plan has really brought forward a great context for the discussion. The climate is absolutely ripe for the stakeholders to come together on this. I think there’s going to be a great deal of interest in the legislature and we’re going to see bills” aimed at universal coverage.
Among the advantages Minnesota enjoys over Massachusetts: The Minnesota individual and group markets are working well. Minnesota already has a subsidy in place for lower-paid working individuals at 275 percent of poverty who can’t get coverage through their employers.
“In the past 14 years, we’ve done a lot of things to achieve the lowest number of uninsured in the country. Our goal is to build on what’s been done in the past and take the last few steps to get to universal coverage,” says Goff. The BCBS-MN model includes an individual mandate and a Connector concept called a “coverage advisor mechanism.” Though it was not implemented, an individual mandate was suggested in the 1990s by a state health care commission that created the reforms that gave rise to the state’s healthy market, Goff notes.
The current BCBS-MN model suggests a novel mechanism to make the individual mandate work. “Employers have a close relationship financially with employees, so we’re exploring to see whether employers can help us enforce the mandate, for example by having employers refer employees to the coverage advisor” to purchase coverage, Goff says. “We’re also talking to agents in the state about what role they could play” in a model to achieve universal coverage.
“I think we have an opportunity in this state for stakeholders to work in advance of legislative activity and to find a lot of common ground in terms of what a proposal could be,” Brunner says. “That’s where I think the climate here is unique in that there’s tremendous collaboration between plans, the hospital association, the medical association,” and others.
The biggest hump in considering the new model is that “there’s always some hesitancy on the part of people in the business community” because universal health care tends to be equated with a government-run, single-payer system, says Kathryn Kmit, director of policy and government affairs at the Minnesota Council of Health Plans. But, she adds, the state Chamber of Commerce has been discussing the Massachusetts model. “I give them credit to being open to considering it and trying to understand it instead of outright dismissing it.”
There’s no doubt the Massachusetts plan has Minnesotans and stakeholders across the country thinking outside the box.
Louise Kertesz is a contributing editor for AHIP Coverage.
