I just discovered that this month the Kaiser Family Foundation released a comprehensive document reviewing the successes and failures of the Massachusetts health care reform laws from 2006. The Kaiser Family Foundation is a well-respected organization that focuses on research and public policy in the areas of health care and public health.
Their analysis of the Massachusetts reforms reveals both positive and negative aspects of the policy experiment. We can use lessons from Massachusetts to try to learn more about potential federal health care reform and where we can improve upon where Massachusetts failed.
First, in order to clear up any confusion, I will describe Massachusetts health insurance programs as they existed prior to the 2006 reform, and then describe how the reforms changed that system.
According to KFF, Massachusetts already had public safety nets that were generous compared to other states: MassHealth--Massachusett's variant of Medicaid--was offered to children up to 200% of the federal poverty line and parents up to 133%, and there were existing public programs to take care of the disabled and long term unemployed. Massachusetts also had an uncompensated care pool, which was used to compensate hospitals for unpaid charity care. A state program called the Medical Security Program (MSP) paid for part of COBRA premiums and offered transitional coverage to those facing long term unemployment. In addition, there was already limited community rating on the individual market.
The 2006 law expanded MassHealth to children up to 300% of the federal poverty line and created a new Commonwealth Care program which offers discounted insurance rates to individual adults, offered at premiums on a sliding scale based on income, up to 300% of the federal poverty line. An organization called Commonwealth Connector is charged with running the Commonwealth Care programs, creating a centralized marketplace (similar to Obama's insurance exchange idea) of Commonwealth Choice insurance plans which are unsubsidized, and ensuring that insurance plans offered met "minimum creditable coverage"--that is, inclusion of certain benefits, limits on out-of-pocket expenses, and various other consumer protections. With some exceptions (which will be discussed later), families are required to buy insurance that meets minimum creditable coverage so long as an "affordable" option was available (with the definition of a maximum affordable premium based on family size and income level), a provision known as the individual mandate. In addition, any employer not offering health insurance to a full time employee is now assessed a small fine, the so-called employer mandate. Finally, the uncompensated care pool was converted to the "health safety net", which is designated to pay part or all of hospital bills for the uninsured and underinsured. No new revenue sources were identified to pay for these reforms, though a combination of federal matching on Medicaid and a reduction of uncompensated care costs were expected to offset much of the cost of the reform.
KFF notes that there were some unqualified benefits of the Massachusetts reforms. First, the population is much better insured in Massachusetts than in most other states, and much better insured than it was before it enacted the reform:
The consumer surveys show that since the implementation of health system reform, Massachusetts adults experienced great improvements in health insurance coverage. Rates of uninsurance fell from 7 to 8 percent of non-elderly adults in 2007 to 3.7 percent of non-elderly adults in 2008. In 2008, among non-elderly adults, 8 percent of those with incomes under 150 percent of FPL were uninsured, as were 7.8 percent of those with incomes between 150 and 299 percent of FPL. Rates of underinsurance also fell in Massachusetts between 2006 and 2007.
Overall, for an American state, these are pretty impressive numbers. They are roughly similar to what the CBO believes the US as a whole can arrive at with any sort of reform short of single payer within ten years. Many of the newly insured are receiving their insurance through the expanded safety net programs, especially MassHealth and Commonwealth Care, meaning that Medicaid expansion and insurance subsidies have . The KFF cites interviews with several newly enrolled members of MassHealth and Commonwealth Care, who are paying low or no premiums and have been able to obtain health care that was unaffordable to them prior to enrollment. In addition, the KFF claims that the Health Safety Net has helped pay for out of pocket costs for some families who would have otherwise found it difficult to pay for health care. While this points to a problem with underinsurance, it also suggests that there is a role for safety net programs that do more than just cover the uninsured, because anyone can slip through the cracks.
On top of that, unsubsidized private insurance became cheaper and better:
According to the Connector, the cost of non-group insurance for a 37 year old prior to health system reform was approximately $335 for a plan with a $5,000 deductible and no prescription drug coverage. After reform, the cost for the same individual was reduced to $184 for a plan with a $2,000 deductible and prescription drug coverage.
The lower number of uninsured and underinsured and the advent of more affordable health coverage options may be a very real and tangible improvement in the lives of tens or hundreds of thousands of people in Massachusetts. The KFF points out that several of the people they interviewed were able to receive medical care that was completely inaccessible to them before the reform.
However, there are some pretty big problems, too:
In 2008, 17 percent of non-elderly Massachusetts adults with incomes under 300 percent of FPL did not get needed care because of costs, and 26 percent had medical debt. While these rates are significantly better than national averages, they still suggest that substantial numbers of people are having trouble getting care that is affordable to them.
This suggests that the Massachusetts reforms, while having some positive effect, failed to do enough. There are a whole variety of reasons for this.
One of the major pitfalls in insurance affordability in Massachusetts is that:
...people with access to employer-sponsored coverage are ineligible for Commonwealth Care, regardless of whether the premiums are affordable according to the state’s affordability standards. While workers with unaffordable employer-sponsored insurance are exempt from the tax penalties imposed on state residents who do not have health insurance, they face a difficult choice – enroll in a health plan that is unaffordable or go without insurance coverage.
Clearly this is not a "decision" that anyone should ever have to face. At a federal level, those without affordable coverage through employers should not also be firewalled out of the insurance exchange. I am pretty sure this is not the case in the HELP and House bills and if the employer insurance is deemed unaffordable you are allowed to buy (subsidized) insurance through the exchange, but I would appreciate it if any knowledgeable commenter would tell me more about that.
In addition, underinsurance (having insurance that has out of pocket expenses that could prove unaffordable and leave a family with a large amount of medical debt or prevent access to necessary medical care) continues to be a serious problem in Massachusetts. Those who have access to employer-sponsored insurance are most vulnerable to being underinsured because employer-sponsored insurance does not need to meet the minimum creditable coverage required for entry into the individual insurance market. Even the minimum creditable coverage in Massachusetts contains out of pocket costs that are high enough to unnecessarily burden those making just over 300% of the FPL; those who are making less money and enrolled in plans that have higher cost sharing are likely to take on medical debt or fail to receive needed medical care.
However, even those who are not bound to employer sponsored insurance have difficulty in the Massachusetts system. Complexity in the Massachusetts system has resulted in a lot of confusion, which can in turn lead to poor coverage:
The multiplicity of programs in Massachusetts provides health coverage options for a variety of populations. However, the programs have varying eligibility criteria and program rules, which create the potential for gaps in coverage as people move in and out of programs or move from one program to another. People may also fall out of programs because of confusion over program procedures. In addition, the complexity of the system makes it more likely that people will not learn about programs that may benefit them.
The KFF notes that it is often unclear to families whether they should be applying for MassHealth, Commonwealth Care, or the Medical Security Program. One interviewee was mistakenly approved for MassHealth before discovering she should have enrolled in the Medical Security Program, resulting in a coverage gap that put an unnecessary (and, frankly, unacceptable) financial burden on her. It is especially bad to have complicated administrative procedures for low income familie because they are less likely to have the time, education, and experience to deal with them, and more likely to suffer for a gap in coverage.
In addition, while the Commonwealth Choice plans are cheaper than the pre-reform options, they can still be excessively expensive for those making just over 300% of the FPL, especially for older residents due to the allowance of premiums to vary by up to 2:1 based on age:
For example, the lowest cost Commonwealth Choice plan, which has a deductible of $2,000 and 20 percent co-insurance after the deductible, costs $417 a month for someone aged 62, or about $5,000 a year. For an individual earning $33,000 a year, just over 300 percent of FPL, this premium constitutes about 15 percent of his or her income.
Expensive insurance and large out of pocket costs can result in medical debt, and according to the KFF, those with medical debt often struggle to pay it off, and are sometimes as resistant as the uninsured in seeking medical care. This is especially common (and, incidentally, especially dangerous) for those with chronic diseases.
The pitfalls of the Massachusetts plan suggest a few things we should look out for in the bills being considered in Congress:
We need to ensure that employer sponsored insurance gives at a minimum the same benefits and maximum out of pocket expenses allowed in the insurance exchange, in order to avoid situations where Americans are underinsured because they only have access to their employer's insurance.
We must ensure simplicity by consolidating safety nets at the federal level and making broad eligibility requirements. A mish mash of different programs that have different eligibility requirements can result in unnecessary confusion and in the worst case result in coverage gaps. We should shoot for eligibility requirements that are too wide rather than too narrow, and simplify the system so that it is easy to understand. One way to simplify what Massachusetts has is by replacing the functions of Commonwealth Care and the Medical Security Program with an affordability credit that applies to the same exchange as those buying unsubsidized insurance use, as in the House, HELP, and Baucus proposals. People should have to switch between different public safety net plans as infrequently as possible, because it is difficult and burdensome for both potential enrollees as well as government administrators. A final federal public safety net, similar to the Massachusetts Health Safety Net, should be considered for those who slip through the cracks.
We need higher subsidies (such as the up to 400% of the FPL subsidies in the House and HELP bills) and a more stringent minimum creditable coverage in the insurance exchange in order to ensure that premiums and out of pocket costs are less likely to hurt low income families and individuals.
We should have strict limits on out-of-pocket spending, especially to exempt low-income families with chronic conditions from paying too many co-pays because they can add up and create a large amount of medical debt.
I encourage everyone to read the KFF report. It contains a lot of interesting anecdotes and statistics.