HEALTH ACCESS UPDATE
Friday, April 7, 2006
MASSACHUSETTS PASSES MAJOR HEALTH REFORM; CALIFORNIA LESSONS
- Expands Public Programs, Reforms Insurance Market, Requires Employer Contributions
- Limited Individual Mandate Controversial; “Affordable” Definition Future Fight to Watch
- California Comparison: Governor Schwarzenegger Vetoed Two Components Last Year: Universal Children’s Coverage and Dependent Coverage Expansion
- Will Breakthrough States Provide Momentum for Additional Reforms in CA and U.S.?
In a move that has gotten national attention and re-ignited the debate about universal health coverage, the Massachusetts legislature passed a comprehensive health reform package earlier this week designed to cover 90-95% of the state.
DEAL REACHED: This was the result of lengthy negotiations by a legislative conference committee considering multiple pending proposals: not just one by the Democratic House, another by the Democratic Senate, but also a third by Republican Governor Mitt Romney, and a fourth that was pending in a ballot measure for which signatures were already collected by a coalition of health care and consumer advocates. Additional urgency was provided by the expiration of the state’s 1115 Medicaid waiver, and this plan was viewed as a way to preserve $770 million in federal funds.
The Governor is expected to sign the bill, which got near unanimous votes in the legislature. While he has suggested he might use his line-item veto power for some elements of it, the legislative leaders has been clear that they will override any such changes.
THE COMPONENTS: The full text of the bill, summaries of its many components, a catalog of media coverage, and even a blog giving some political context, is available at the Affordable Coverage Today (ACT!) webpage of Health Care for All, a Massachusetts consumer advocacy group that was a key supporter of the measure:
The measure is made up of many different building blocks toward universal coverage, many of which have been considered individually or as part of proposals here in California . Supporters of the Massachusetts measure are clear that the bill leaves many details to be worked out in implementation, and that other reforms and efforts will be needed to ensure the program works, and to actually reach full universal coverage.
This is a rough sketch of most of the key components, with some California context:
COVERAGE EXPANSIONS: Of the various elements, the most familiar to Californian health policy advocates is the creation and expansion of public insurance programs, which account for 300,000 of the potentially 515,000 additional covered lives that are estimated to be covered by 2009.
- CHILD COVERAGE EXPANSION: The bill expands children’s coverage through the MassHealth/Medicaid program to cover kids up to 300% of the federal poverty level ($60,000 for a family of four). This is an increase from the current level of 200%FPL and is similar to the current California efforts to cover all children, such as AB774 (Chan) that was vetoed by Governor Schwarzenegger last year, and the currently pending SB437 (Escutia).
- SUBSIDIZED HEALTH INSURANCE: The bill creates the Commonwealth Care Health Insurance Program, where adults (with or without children) under 300% of the federal poverty level can get subsidized private health insurance with no deductibles. Those under 100% of the poverty level would not pay any premium, and those up to 300% would face a sliding scale of premium payments based on affordability.
- MEDICAID ENROLLMENT: The bill also reverse cuts made to Medicaid during the recent budget crisis in 2002, such as lifting enrollment caps on specific programs, and restoring vision and dental services. It would put some funding into outreach for eligible but unenrolled citizens, and also increases provider payments, on a pay-for-performance basis, including on an emphasis on reducing racial and ethnic disparities.
INSURANCE MARKET REFORMS: Massachusetts already has significant insurance market reforms that California doesn’t, including a form of “community rating” for some parts of the insurance market, which means that a patient cannot be turned down or charged more for non-group insurance because he or she has a “pre-existing medical condition,” such as diabetes, asthma, or a heart problem. The state also has existing regulations of deductibles and co-payments. Supporters hope that these reforms would assist another 200,000 residents to get coverage.
- NEW AUTHORITY: The bill creates a new Commonwealth Health Insurance Connector, which would certify and offer new products. Importantly, all current mandated benefits are protected, including mental health. It would also allow multiple employers to contribute to the health care of a worker (such as a seasonal and part-time workers).
- MARKET REFORM: The bill merges the non- and small-group markets for health insurance products. Supporters say this would stabilize the individual insurance market, and lower rates for individuals by 24%.
- DEPENDENT COVERAGE EXPANSION: Young adults will be able to stay on the parents’ insurance plans for two years past the loss of their dependent status or until age 25. This is similar to a bill last year AB1698(Nunez), that was vetoed by Governor Schwarzenegger.
FUNDING AND REQUIREMENTS: Massachusetts lawmakers were pushed into this effort by the potential loss of the Medicaid waiver, worth hundreds of millions of dollars, and that continues to be the backbone of funding. In addition, Massachusetts has an existing uncompensated care pool to fund care for the uninsured who use hospital emergency rooms, which is paid for by an existing fee on insurers and employers who buy coverage. On top of these existing sources, and some money from the state’s general fund, are the requirements on individuals and employers, which are the most controversial parts of the bill. One potential funding source, a tobacco tax that was in the proposed initiative, was not included in the final bill:
- EMPLOYER CONTRIBUTIONS: Employers of 10 or more that do not provide health coverage will pay $295/year for each uninsured worker, which goes to pay for the subsidized insurance plans. This follows a similar principle to SB 2 (Burton) and Prop 72 in California a few years ago, which was passed and repealed, which would have required employers to provide coverage or pay a fee into a program that would otherwise cover their workers. (Gov. Romney is accepting this as an “assessment,” rather than a “tax.”) As stated above, Massachusetts has an existing assessment on health insurance paid for by employers and individuals who purchase health insurance; This $295 charge helps eliminate the inequity that now penalizes those employers that provide coverage, as opposed to those that don’t. The Massachusetts bill also has a “free rider surcharge” if an employers’ workers use uncompensated care often.
- INDIVIDUAL MANDATE: All residents in Massachusetts would be required to obtain health coverage. However, the requirement is limited, in that there must be “affordable” coverage available, although that term is presently undefined. If no coverage is deemed “affordable,” there is no penalty. While those under 300% of the federal poverty level are eligible for subsidized insurance or public insurance programs, those over 300% of the poverty level are at risk for the penalty, which range from the loss of the personal tax exemption (around $150) to half the cost of coverage (perhaps around $1,000).
SUPPORT AND OPPOSITION: While the plan got some important business support, it is not surprising that some business leaders are attacking the employer assessment as a tax. The plan did get bipartisan, near-unanimous support from elected leaders in Massachusetts , and from a broad coalition including many consumer, and health advocates.
WHAT IT IS AND ISN’T: Some of the critiques of the Massachusetts proposal, especially from traditional supporters of universal health care, is to point out various elements missing from the proposal. First and foremost, even supporters of the Massachusetts measure are clear that the proposal is not universal, despite some of the characterization in media coverage. There are criticisms that it leaves some residents without coverage; that it doesn’t control costs; that it is either underfunded, by not raising enough money through the employer assessment, or by not wringing savings from insurers or providers.
Boston physicians Steffie Woolhandler and David Himmelstein, co-founders of Physicians for a National Health Prorgam, and veteran advocates for a universal single-payer system,stated: “The legislation will do nothing to contain the skyrocketing costs of care in Massachusetts …. Indeed, it gives new infusions of cash to hospitals and private insurers… The program is simply not sustainable over the long- or even medium-term.”
Many supporters of the Massachusetts measure also support a universal, single-payer health care system, and would admit that the package isn’t all that they wanted—it was a compromise that didn’t include all that was in the pending ballot measure, such as a much larger employer assessment and a tobacco tax to help fund the program. But they state that given all the issues in the health care system, it isn’t fair to criticize a plan for what it isn’t, but critics should focus on what it does do.
John McDonough, director of the Massachusetts group Health Care for All, states in his online blog: “We are confident the new law will result in new coverage for hundreds of thousands of uninsured in Massachusetts , with the best help going to those at the bottom of the economic ladder, as it should be. We would love it if we had been able to raise a lot more money to push the subsidies higher…Wish we could have gone further. Still, this is a damn good improvement.”
He also states: “Fundamentally, this law is about expanding access to affordable coverage, not about reducing costs. Everybody has favorite ideas how to lower costs, and most of them lack sufficient political support to be achieved.” Other supporters indicate how this proposal can serve as a foundation toward additional reforms, including bigger program expansions, employer assessments, and cost controls, as well as the ultimate reform of publicly-financed universal health care.
OPPOSITION TO INDIVIDUAL MANDATE: Despite the multiple components of the measure, what has gotten the most attention in the media is the “individual investment” section, which is being attacked from both the right and the left. The right-wing chorus includes attacks from the libertarian Cato Institute and the Wall Street Journal, which challenge this as “big government,” both in the programs created, and the intrusion on individuals.
Of those forces that support reform, the most prominent critique was from AFL-CIO chief John Sweeney, who stated, “Forcing uninsured workers to purchase health care coverage or face higher taxes and fines is the cornerstone of Mr. Gingrich’s health care reform proposals. And it is unconscionable that Massachusetts has adopted this misguided individual mandate.”
“The bill protects workers with the lowest incomes, but punishes middle-income families. A typical family in which the husband and wife each earn a little more than $30,000 and who have two children would be forced to purchase health care, but would not be qualified for any help even if their employer does not offer any coverage or they can’t afford their share of the premium.. We believe that workers have to participate in the solution to the problem, but this plan puts the entire burden on workers while letting employers off the hook.”
Supporters argue that they accepted individual requirements as part of a package that includes requirements on employers, that 2/3 of the uninsured are under 300% and would get significant assistance, and that the mandate would not apply unless there was an “affordable,” meaningful plan available.
CALIFORNIA DEBATE ON INDIVIDUAL MANDATE: Many consumer advocates are concerned that the media’s focus on the individual mandate (rather than on the many other provisions) places the emphasis on a problem that really doesn’t exist: that people overwhelmingly take up coverage when offered, but either are not eligible through an employer or by a public insurance program, and otherwise find it unaffordable or unavailable, due to “pre-existing conditions.” Consumer advocates have often opposed such individual requirements that are not in the context of a social insurance program (such as Medicare) that ensures access and affordability. And there is disagreement about whether the Massachusetts bill provides such a context.
An “individual mandate” proposal that was vastly different than the Massachusetts bill, AB1670(Nation/Richman), was considered last year in the California legislature. The proposal, which shifted the entire burden of the cost of health care on to the individual, and mandated high-deductible, bare-bones “skeleton” policies, was opposed by Health Access California and numerous other health care and consumer organizations, and ultimately only got two votes on the Assembly Health Committee.
A new “individual mandate” bill, AB2450 (Richman) is also pending this year, set to be heard later this month in Assembly Health Committee, again without the consumer and financial protections, shared responsibility and systematic reforms in place in Massachusetts. Health Access California opposes AB2450 (Richman) in its current form.
DIFFERENCES WITH CALIFORNIA : As California advocates evaluate the Massachusetts proposal, it is important to note the differences between the policy environment in the two states. As stated above, Massachusetts starts with a different public policy foundation, including an existing pool of funds for uninsured care, and a broader range of regulation on insurers.
The scope of the problem is almost twice as great in California , where nearly 1 in 5 residents are uninsured, as opposed to in Massachusetts , which is closer to 1 in 10. Finally, the scale is different, as Massachusetts is smaller than Los Angeles County . Massachusetts has to close a gap in health coverage. California has to close a chasm.
MOMENTUM FOR REFORM FROM THE STATES: Despite these differences, there are lessons to learn from the Massachusetts proposal, both the policy, and the politics that led to its passage. Most importantly, the discussion is re-igniting national interesting universal health care and possibility of moving ahead with major health reform.
California helped start this conversation with the passage of SB2 in 2003, which was hailed, along with the Dirigo Plan in Maine , as the start of state-based efforts to expand coverage to the uninsured. Just this past year, Illinois won universal coverage for children, Maryland passed a minimum health care contribution for very large employers, and now Massachusetts has put forward this multi-pronged program. The hope is that if enough states breakthrough with reforms, this will force health care reform onto the national agenda.
CALIFORNIA PROPOSALS: California has multiple proposals pending, to continue to provide leadership in this regard:
- Of particular note is SB840 (Kuehl), the California Health Insurance Reliability Act, which would establish a universal, publicly financed, single-payer health care system in California, similar to the Medicare program.
- There are new attempts to set a standard for on-the-job health care benefits, most prominently at the local level in San Francisco .
- Many advocates are ramping up efforts to cover all children in California , with an urgency to pass something this year, through bills including SB437(Escutia/Chan), the budget, and a ballot box initiative pending for November.
The momentum continues to build for the goal of quality, affordable health care for all. Health advocates can use the attention to this Massachusetts measure to ensure that these and other proposals move forward, that candidates feel obliged to talk about health reform in this upcoming election season, and to make it clear that comprehensive health reform is not just urgent, and necessary, but achievable.