Commonwealth of Massachusetts Executive Office of Health and Human Services Universal Coverage in Massachusetts: Resource Allocation and the Care of Disadvantaged Populations Secretary JudyAnn Bigby, M.D. April 23, 2010

1  Overview of Massachusetts Health Reform  Similarities to Federal Health Reform  Impact on Resource Allocation  Impact on the Care of Disadvantaged Populations  Lessons for Federal Reform  Comprehensive reform

2 Who Pays for Medical Care in US? 46+ million uninsured Employed individuals and their families Low-income children, pregnant or parenting women, disabled, elderly Previously employed disabled and elderly Self-pay, cross-subsidized by insured and by government Employer sponsored insurance (cost shared by employee and employer, tax deductible) Individual insurance purchase Medicaid (cost shared by state and federal government) Medicare (federal, covers about 80% of health care costs) Commercial insurance Self-pay

3 Principles of Massachusetts Reform Build on the existing base, fill in gaps Shared responsibility  Individuals  Employers  Government Increased access to private market coverage  Employer sponsored insurance  Merge non-group and small group markets  Subsidies for low-income individuals

4 Elements of the Massachusetts Reform Government supports for low-income individuals  Medicaid expansion  Subsidized insurance for non-Medicaid eligible with incomes up to 300% of Federal Poverty Level* Insurance reform  Merger of individual and small group (employers with <50 employees) market  Expand options for young adults Fair employer contributions  $295/year for each full time employee if insurance not offered or not taken up Individual mandate to purchase insurance for those who can afford it  Enforced through Department of Revenue  Tax penalties for non-compliance (50% of lowest cost plan available to individual) *300% FPL = $32,000 individual/ $66,000 family of four

5 Elements of the Massachusetts Reform Connector Authority (Exchange)  Independent public authority overseen by 10-member board  Brings the insurance market together for young adults, individuals, small businesses, and voluntary plans (one- stop shopping)  Set minimum standards for coverage  Defined Minimum Creditable Coverage (MCC) for individual mandate  Seal of Approval for health plans  Set standard for affordability

6 Uninsured Adults in Massachusetts Health Care Reform 10/06

7 Massachusetts Newly Insured July 2006 – September 2009 Source: Massachusetts Division of Health Care Finance and Policy

8 Massachusetts Division of Health Care Finance and Policy Type of Health Insurance Coverage, 2009 Source: Urban Institute tabulations on the 2009 Massachusetts HIS

9 Massachusetts Division of Health Care Finance and Policy Uninsurance Rates by Income, 2008 Source: Urban Institute tabulations on the 2008 Massachusetts HIS

10 Impact on Access Source: On the Road to Universal Coverage: Early Impacts of Health Reform in Massachusetts (Sharon Long, Urban Institute June 2008); Long S. et.al. Access and Affordability: An Update on Health Reform in Massachusetts, Fall Health Affairs May 2009; HCFP Household Insurance Survey Did not get necessary health care 25%21% Have usual source of care 86%89%92%91% Made doctor visit for preventive care 70%74%76%79% Made dental visit68%72%75%n/a

Unmet Need for Health Care Due to Costs17%11% Had Problem Paying Medical Bills32%24%28% Paying Off Medical Bills Over Time27%23%26% Impact on Affordability of Care Source: Long S. et.al. Access and Affordability: An Update on Health Reform in Massachusetts, Fall Health Affairs May 2009

12 Impact on Resource Allocation A strong foundation for reform in Massachusetts :  Relatively low rate of baseline uninsurance  History of health coverage expansions  Expanded Medicaid program  1115 Waiver  Funding from Uncompensated Care Pool  Private insurance protections already in place before the 2006 reform

13 Impact on Resource Allocation Health reform has not been an unreasonable drain Massachusetts’ budget  State budget spending on health reform has grown from a base of $1.041B in FY06 to $1.748B in FY10 (+$707m)  State share is $353m ($~88m/year) Overall spending on health care reform has been shared  Blue Cross Blue Shield Foundation study in May 2009 found that Individuals, government and employers have all increased spending on health insurance but was proportional to the spending prior to reform The economy has made funding all state programs challenging, but not reduced the commitment or the need for universal coverage

14 Health Care Reform Financing Weissman J; Bigby J NEJM 2009; 361: 2012

15

16

17 Similarities to Federal Reform  Federal health reform was modeled on Massachusetts Health reform:  Shared responsibility  individual mandate,  employer responsibility  expanded government subsidies  The Exchange modeled on the Massachusetts Connector  Builds on privately available options  Biggest difference is that federal subsidies are up to 400% FPL, as opposed to 300% 300% FPL is about $32,000 individual/ $66,000 family of four 400% FPL is about $43,000 individual/ $88,000 family of four

18 Who are the uninsured? Massachusetts HIS 2008, Division of Health Care Finance and Policy

19 Impact on the Care of Disadvantaged Populations The Uninsured are more likely to be:  Male (63.2% of the uninsured are male vs. 47.9% in general population)  Hispanic (12.6% vs. 6.5%)  Non-citizen (6.8% vs. 4.5%)  Low-income  <150% FPL (32.9% vs. 20.2%)  % FPL (35.1% vs. 18.3%)  With less formal education  High school graduate or GED (73.6% vs. 40.9%)  Non-working or working only part-time  If work, work for a small sized firm (<51 employees) and for a firm that doesn’t offer employer-sponsored insurance (ESI)

20 Massachusetts Division of Health Care Finance and Policy Uninsurance Rates by Race/Ethnicity Source: Urban Institute tabulations on the 2008 Massachusetts HIS Sources: UMass CSR 2007; Urban Inst 2008; Note: Differences in methodology may be responsible for larger, or smaller, true difference. HIS 2009, HCFP

21 Massachusetts Division of Health Care Finance and Policy Uninsurance Rates of Non-Elderly Adults by Race/Ethnicity Source: Urban Institute tabulations on the 2008 and 2009 Massachusetts HIS

22 Massachusetts Division of Health Care Finance and Policy Non-Elderly Adults with an Emergency Department Visit in Past 12 Months by Race/Ethnicity Note: In some cases, what appear to be relatively large differences in estimates between 2008 and 2009 are not statistically significant. This arises because estimates based on small subgroups of the overall population have larger variances, making point estimates less precise. Source: Urban Institute tabulations on the 2008 and 2009 Massachusetts HIS * (**) (***) The 2009 estimate is significantly different from the 2008 estimate at the 10% (5%) (1%) level, two-tailed test. * * *

23 Massachusetts Division of Health Care Finance and Policy Non-Elderly Adults Not Getting Needed Care Due to Cost in Past 12 Months by Race/Ethnicity Note: In some cases, what appear to be relatively large differences in estimates between 2008 and 2009 are not statistically significant. This arises because estimates based on small subgroups of the overall population have larger variances, making point estimates less precise. Source: Urban Institute tabulations on the 2008 and 2009 Massachusetts HIS

24 Massachusetts Community Health Centers’ Role in Reform ,005446,559482,503 Patient Caseload Source: Ku L, etal. How is Primary Care Safety Net Fairing in Massachusetts? Community Health Centers in the Midst of Health Reform. Kaiser Family Foundation, 2009

25 Care for Disadvantaged Populations - Summary While Massachusetts has made great strides to reduce uninsurance and improve access to care the Hispanic population is more likely to:  be uninsured  have financial barriers to needed care The Hispanic, non-elderly adult population is less than other populations likely to have a usual source of care In addition, Black, non-Hispanic non-elderly adults were more likely to:  use the emergency department in the past 12 months  have sought care in the ED for a non-emergency  have problems paying medical bills

26 Lessons for the Implementation of Federal Reform Stakeholder involvement in implementation efforts is key  Massachusetts had buy-in from the drafting of the legislation and kept that commitment  Open and transparent process Universal access to health insurance does not cure all ills in a health care system  Payment reform is necessary in order to sustain access expansions  Health disparities do not evaporate, need independent commitment

27 Index of Health Expenditures Per Capita and Other Indicators in MA, Sources: Part I : Per capita health expenditures: Centers for Medicare & Medicaid Services (CMS), Office of the Actuary, National Health Statistics Group, 2007 ( data are projected). Per capita GDP and wage and salary: Regional Economic Information System, Bureau of Economic Analysis, U.S. Department of Commerce. CPI-Urban for Boston area: Bureau of Labor Statistics, U.S. Department of Labor. Part II (except for health spending): US Social Security Administration, “The 2008 OASDI Trustees Report,” Supplemental Single-Year Tables, intermediate projection, Per capita GDP index: real GDP annual change + GDP price index annual change – population annual change; wage index: average annual wage in covered employment. Per Capita Health Expenditures: 550 in 2020 Per Capita GDP: 337 in 2020 Wage and Salary: 325 in 2020 Consumer Price Index (CPI): 224 in 2020

28 Comprehensive Health Care System Reform Access Uninsured Financial barriers to care All insured Financial and structural barriers to access removed Costs/Payments High and growing costs Volume and price driven to generate revenue Fee-for-service Value/Quality driven HIT Spotty implementation Lack of interoperability Potential not met Wide adoption Interoperable Informs and transforms clinical practice Systems Inconsistent Quality Errors and adverse events Misuse, overuse, and duplication Inequities in care Disorganized, poorly coordinated Not always evidenced based Emphasis on specialty care Predictable outcomes Patient safety Appropriate use Disparities eliminated Coordinated, integrated care Evidenced based Patient centered primary care Payment Reform Health Care Workforce Planning Health Resources Planning Insurance Product Redesign (Malpractice Reform)

29 The Dartmouth Atlas Regional Variation in Medicare Spending per Capita $10,250 to17,184 (55) 9,500 to <10,250 (69) 8,750 to <9,500 (64) 8,000 to <8,750 (53) 6,039 to <8,000 (65) Not Populated Source: Elliott Fisher and the Dartmouth Atlas Project

30 Where are the greatest opportunities for savings? General overuse: 20-30% of care is unnecessary Preventable ED visits: $400 Million (DHCFP) Preventable hospitalizations: $580 Million* (DHCFP) Potentially preventable readmissions: $380 Million* (DHFCP) End-of-life care: MA provides more aggressive care than elsewhere in the country (Dartmouth Atlas) Reduce disparities in health outcomes * Note: There is some overlap between savings captured in each category. Also, savings are gross estimates and do not reflect investments that might be required to realize savings.

31 Massachusetts Health Care Quality and Cost Council - 31 The Roadmap to Cost Containment: Eleven Key System-wide Strategies Adopt comprehensive payment reform  Focus on improved health outcomes and quality Adopt and use health information technology Implement evidence- based coverage informed by comparative effectiveness information Develop health resource planning Support system redesign Implement health plan design innovation to promote use of high- value care Enact malpractice reform and peer review protections Implement administrative simplification Engage consumers Encourage healthy behaviors and healthy communities Further promote transparency