Massachusetts Health Reform Nancy Turnbull Blue Cross Blue Shield of Massachusetts Foundation

The Massachusetts Law: A Landmark Ambitious goal: Near universal coverage Ambitious goal: Near universal coverage Transcends ideology Transcends ideology Combines policy solutions from the right and the left Combines policy solutions from the right and the left Partnership between federal government and state Partnership between federal government and state Novel approaches Novel approaches Individual mandate Individual mandate Employer responsibility Employer responsibility Merger of small group and direct pay insurance markets Merger of small group and direct pay insurance markets Energizing effect on other states Energizing effect on other states

Massachusetts: The Building Blocks for Reform Relatively low rate of uninsurance History of health coverage expansions Broad Medicaid program 1115 waiver implemented in 1996 Uncompensated Care Pool Funded in part by assessment on health plans and hospitals; paid by employers Strong Safety Net providers Highly regulated small group and individual health insurance markets

Massachusetts: The Moment for Reform Increasing number of people without coverage Increasing number of people without coverage Medicaid waiver renewal Medicaid waiver renewal $385 million per year in federal funds at risk $385 million per year in federal funds at risk Leadership by Governor, Senate President and Speaker of House Leadership by Governor, Senate President and Speaker of House Affordable Care Today (ACT) Coalition Affordable Care Today (ACT) Coalition Health reform ballot initiative (including payroll tax) Health reform ballot initiative (including payroll tax) Growing concerns about under-funding of Uncompensated Care Pool and Medicaid cost-shifting Growing concerns about under-funding of Uncompensated Care Pool and Medicaid cost-shifting BCBSMA Foundation’s Roadmap to Coverage initiative: begun in early 2004 BCBSMA Foundation’s Roadmap to Coverage initiative: begun in early 2004

The Starting Point: People were Losing Coverage in Massachusetts Sources: “Health Insurance Status of Massachusetts Residents,” 1998, 2000, 2002, 2004, Massachusetts Division of Health Care Finance and Policy. “Massachusetts Residents Without Health Insurance, 1995,” Blendon, et al, Harvard School of Public Health. Office of Medicaid MassHealth caseload snapshot, 7/31/06.

Roadmap to Coverage: Goals Provoke thoughtful public debate Provoke thoughtful public debate Inform debate with rigorous, independent, non- partisan information Inform debate with rigorous, independent, non- partisan information Urban Institute Urban Institute Use Foundation’s neutrality to engage policymakers and leaders Use Foundation’s neutrality to engage policymakers and leaders Develop practical, phased-in plan to extend coverage to most, if not all, Massachusetts residents Develop practical, phased-in plan to extend coverage to most, if not all, Massachusetts residents

Roadmap to Coverage: Three Phases The cost of medical care for the uninsured (November 2004) The cost of medical care for the uninsured (November 2004) Detailed options to achieve near universal coverage (June 2005) Detailed options to achieve near universal coverage (June 2005) Phased-in implementation plan (October 2005) Phased-in implementation plan (October 2005) All reports available at: All reports available at:

Deliberate process to build understanding and support Policy committee of Foundation board Policy committee of Foundation board Joint meeting of BCBS and Foundation boards Joint meeting of BCBS and Foundation boards 3 “Access Summits” 3 “Access Summits” Presentations by Urban, panel discussions Presentations by Urban, panel discussions Keynote by major leader: Senate President, Governor, and House Speaker Keynote by major leader: Senate President, Governor, and House Speaker Pre-summit briefings with legislators, media and other key opinion leaders Pre-summit briefings with legislators, media and other key opinion leaders Regular meetings with other important stakeholders, including key media contacts Regular meetings with other important stakeholders, including key media contacts Increased grant funding to key advocacy groups Increased grant funding to key advocacy groups

Urban Institute Policy Options Four “building blocks” Medicaid expansions for children, parents and childless adults Medicaid expansions for children, parents and childless adults Sliding scale tax credits up to 400% FPL Sliding scale tax credits up to 400% FPL New voluntary purchasing pool New voluntary purchasing pool Publicly funded reinsurance Publicly funded reinsurance Three options: n Individual Mandate: Building blocks + individual mandate n Broad Employer Mandate: Building blocks + individual mandate + employer pay-or-play for firms with 10 or more employees n Narrow Employer Mandate: Building blocks + individual mandate + employer pay-or-play for firms with 500 or more employees

Comparison of Roadmap to Coverage and Final Health Care Reform Law Roadmap to Coverage Final Health Care Reform Law MassHealth Expansions √√ Subsidies√√ Purchasing Pool √√ Reinsurance√ Individual Mandate √√ Employer Responsibilities √√

Key Elements of the Massachusetts Law Medicaid Expansions and Restorations Medicaid Expansions and Restorations Health Insurance Connector Health Insurance Connector Commonwealth Care – Premium Subsidy Program Commonwealth Care – Premium Subsidy Program Health Insurance Market Reforms Health Insurance Market Reforms Individual Mandate for all adults Individual Mandate for all adults Employer Responsibilities (for firms > 11 employees) Employer Responsibilities (for firms > 11 employees) Medicaid provider rate increases Medicaid provider rate increases

MA Health Care Reform Law: Key Components: Connector   New public authority (10-member board)   Administers “Commonwealth Care” premium subsidy program   Will offer “affordable” health insurance products to individuals and small businesses (50 or fewer employees)   Premiums can be paid with pre-tax dollars   Mechanism to reach part-time and seasonal workers, individuals with more than one job   Can pool premium contributions from multiple employers

MA Health Care Reform Law: Key Components: Commonwealth Care Eligibility rules Household income <300% FPL Resident of Commonwealth for previous 6 months Includes “qualified aliens” and documented refugees Not eligible for MassHealth or Medicare No employer coverage “available” for past 6 months Can be waived by Connector – employer’s contribution then goes to offset state premium subsidy costs Benefits are comparable to, or better than, most employer coverage

Commonwealth Care Premiums FPLIndividual Couple (2 adults) Couple with 3 children <100% $0 (0%) – 150% $18 ( %) $36 ( %) $36-$48 ( %) % $40 ( %) $80 ( %) $116 ( %) – 250% $70 ( %) $140 ( %) $200 ( %) – 300% $106 ( %) $212 ( %) $296 ( %) Minimum* Monthly Premiums (Percentage of Income) * Premiums could be higher if individual selects a higher cost MCO and/or higher cost product.

Mass Health Care Reform Law Key Components: Market Reforms Non-group and small-group insurance markets will be merged Non-group and small-group insurance markets will be merged Retains regulatory structure of small group law Retains regulatory structure of small group law Guaranteed issue and renewal Guaranteed issue and renewal Modified community rating by class of business Modified community rating by class of business Must comply with all mandated benefit laws Must comply with all mandated benefit laws Young Adult plans for year olds Young Adult plans for year olds More flexibility in benefit design More flexibility in benefit design Must be rated in same risk pool as individuals and small groups Must be rated in same risk pool as individuals and small groups Age for eligibility for dependent coverage for health insurance raised to 25 years Age for eligibility for dependent coverage for health insurance raised to 25 years

Mass Health Care Reform Law Key Components: Individual Mandate Applies to all MA adult residents (July 1, 2007) As long as “affordable” coverage is available Standard of affordability to be determined by the Connector (based on household income) Minimum acceptable benefit package also to be determined by Connector Enforcement mechanisms Indicate insurance policy number on state tax return Loss of state personal income tax exemption for tax year 2007 Fine for each month without insurance equal to 50% of affordable insurance product cost for tax year 2008

Massachusetts Health Reform: The Financing Reallocation of existing financing (~2/3 of total) Reallocation of existing financing (~2/3 of total) Federal financing for safety net and uninsured Federal financing for safety net and uninsured Portion of Uncompensated Care Pool funds Portion of Uncompensated Care Pool funds New funds (~1/3 of total) New funds (~1/3 of total) Medicaid expansion Medicaid expansion New assessments on employers New assessments on employers State general revenues State general revenues Premium contributions and cost-sharing by newly insured people Premium contributions and cost-sharing by newly insured people

Massachusetts Health Reform: How Do the Pieces Fit Together? Percent of State’s Total Uninsured Targeted by Different Aspects of Law

Medicare Medicaid Employer Coverage IndividualMandate Medicaid Expansions Employer Responsibility Insurance Market Reforms Affordable Products Young Adult Products Connector Commonwealth Care

What’s Been Accomplished Since April? On July 1 st On July 1 st MassHealth benefits restored to ~575,000 members MassHealth benefits restored to ~575,000 members 40,000 new adults and children eligible for Medicaid (~20,000 enrolled so far) 40,000 new adults and children eligible for Medicaid (~20,000 enrolled so far) As of October 1 st As of October 1 st 57,000 with incomes <100% FPL became eligible for Commonwealth Care 57,000 with incomes <100% FPL became eligible for Commonwealth Care No premiums, broad coverage, little cost-sharing No premiums, broad coverage, little cost-sharing As of January 1 st As of January 1 st 155,000 with incomes % FPL will be eligible to purchase Commonwealth Care 155,000 with incomes % FPL will be eligible to purchase Commonwealth Care

Massachusetts: Challenges Ahead Outreach and enrollment Outreach and enrollment Adequacy of benefits and level of cost-sharing of products offered through the Connector Adequacy of benefits and level of cost-sharing of products offered through the Connector To whom will individual mandate apply? How will “affordability” be defined? To whom will individual mandate apply? How will “affordability” be defined? Public opinion abut the individual mandate Public opinion abut the individual mandate Employer response and behavior: how much crowd-out? Employer response and behavior: how much crowd-out? Adequacy and sustainability of financing Adequacy and sustainability of financing Keeping a strong safety net for those who will remain uninsured (especially undocumented immigrants) Keeping a strong safety net for those who will remain uninsured (especially undocumented immigrants) Moderating health care cost trends Moderating health care cost trends

Unexpected Good News: Number of Uninsured Appears to be Falling Sources: “Health Insurance Status of Massachusetts Residents,” 1998, 2000, 2002, 2004 and 2006, Massachusetts Division of Health Care Finance and Policy. “Massachusetts Residents Without Health Insurance, 1995,” Blendon, et al, Harvard School of Public Health. Office of Medicaid MassHealth caseload snapshot, 7/31/06.

Massachusetts: Reasons to be excited about what we’ve done Sweeping reform – not an incremental approach Sweeping reform – not an incremental approach Victory for Medicaid Victory for Medicaid Shared model of responsibility – individuals, employers and government Shared model of responsibility – individuals, employers and government Shared problem, shared solution Shared problem, shared solution Recognition of need and willingness to invest in reform Recognition of need and willingness to invest in reform Win for public health, too Win for public health, too Health disparities get attention in the law Health disparities get attention in the law

Massachusetts: Lessons for Others Political not a policy blueprint Political not a policy blueprint The past as prologue The past as prologue “Making the moment” “Making the moment” Think big Think big No reform is possible without strong organizing and advocacy No reform is possible without strong organizing and advocacy

The National Opportunity Ahead Critical mass of state coverage expansion efforts Critical mass of state coverage expansion efforts Maine, Illinois, Massachusetts, Vermont Maine, Illinois, Massachusetts, Vermont Next year in Congress Next year in Congress Reauthorization of SCHIP program Reauthorization of SCHIP program 2008 Presidential race 2008 Presidential race Massachusetts law has raised bar for candidates on health care Massachusetts law has raised bar for candidates on health care