Massachusetts health reform (known as “Chapter 58”) has been billed as a “model for the nation” and a “blueprint to universal coverage.” This rhetoric has generated expectations that Massachusetts residents of all incomes will be able to get affordable coverage. This hype distracts us from what really has been achieved, what hasn’t, and the strengths and weaknesses of the political strategy that brought us the new law.

Click here to download this easy-to-understand pamphlet by Mass-Care and Massachusetts Jobs with Justice describing how the law works, its successes, and its short-comings.

Free Care Pool
Prior to the passage of Chapter 58, the uninsured had a safety net for seeking medical care, commonly known as the “Free Care Pool”. The Uncompensated Care Pool was created in 1985 as a means of paying for medically needed service provided by hospitals and community clinics and health facilities to uninsured and underinsured low-income residents up to 200% of the poverty line. The Free Care Pool also provided partial uncompensated care to individuals between 200% and 400% of poverty, and aided individuals of any income level in cases of extreme medical hardship or debt.

Health Safety Net
Under Chapter 58, the Health Safety Net was created as a successor to the Free Care Pool. It was implemented on October 1, 2007. Like the Free Care Pool, the Health Safety Net covers medically needed services to those who are not eligible for health insurance and cannot afford to purchase it under the individual mandate. The Health Safety Net has provided care to many who once relied on the Free Care Pool. However, differences between the plans mean that some consumers of subsidized health care are no longer covered under the new plan, or must contribute more fees to their healthcare, which can make needed services less affordable. The Uncompensated Care Pool’s safety net which aided so many has been put in danger by this new law.

Differences Between the Plans - Consequences of Chapter 58:

• Subsidies for low-income residents in Massachusetts are less generous under Chapter 58 than they were for uncompensated care. Prior to the passage of the bill, individuals up to 200% of the poverty line received free care through the Free Care Pool. Under Commonwealth Care, however, only individuals up to 150% of poverty receive care with no premiums.
• The free care pool had no cost-sharing (co-payments and deductibles), while Commonwealth Care does. These fees make care less affordable for some.
• Some have benefited from the new law, as in parts of the state, there were few Free Care providers. Under Commonwealth Care, it is easier for some to find medical care providers.
• The new law cannot be funded, as suggested, through the Free Care Pool. Funds are simply inadequate to achieve this goal.

Other Resources:
Health Safety Net Information

• “Health Safety Net: An Overview,” MassResources.org, July, 2008.

Free Care Pool

• “Massachusetts Uncompensated Care Pool,” Division of Healthcare Finance and Policy, November, 2005.
• “Groups Ask Romney to Postpone Free Care Pool Changes,” Healthcare for All, August, 2005.
• “What’s Next for the Uncompensated Care Pool?” Nancy Turnbull, May 2007.

General Info from mass.Gov

• “Uncompensated Care Pool,” Office of Health and Human Services, 2008.

With health care costs sky-rocketing and employer-sponsored health coverage increasingly burdensome for many businesses, the employer-related provisions in Chapter 58 have done nothing to stop the erosion of an already weakening foundation of employer-provided health coverage. Businesses are trying to shift rising costs onto workers by providing plans with higher levels of employee cost-sharing and employee contributions to premiums and deductibles or by cutting health care benefits completely. In an attempt to slow the erosion of employer-sponsored health benefits, the Massachusetts Health Reform includes two employer-responsibility provisions. However, in practice they have proven easy to evade and ineffective.

In addition, the law has had unexpected consequences for labor relations in the state. A November 2007 survey found that 28% of businesses with uninsured workers plan to hold down wages so that their employees will qualify for subsidies under the law. The reform was supported by some unions, but has been met with stiff opposition by others in Massachusetts. Nationwide, individual mandates have been opposed by many labor groups. John Sweeny, the president of the AFL-CIO, commented that “forcing uninsured workers to purchase health care coverage or face higher taxes and fines is the cornerstone of (Newt) Gingrich’s health care reform proposals. And it is unconscionable that Massachusetts has adopted this misguided individual mandate.” Workers have been saddled with higher fees and the possibility of fines, while the reform’s attempts to involve business in cost-sharing have not been effective.

The Employer Fair Share Contribution is a portion of the law which requires that all employers with more than 10 employees make a “fair and reasonable contribution” towards their workers’ health premiums, or pay a $295 per worker per year fine to the state. While the fine is small compared to the cost of health insurance, the state has defined “fair and reasonable” so that it is easy for employers to evade the fine in practice. Employers covering 25% of their workers or offering to pay 33% of the premium costs for any plan are off the hook. The employer fine was applied to no firms in 2006 and only 500 firms in 2007, raising a paltry $5 million. The expected revenue from the Fair Share program in 2006 alone was $45 million. Firms have avoided the fine by paying a smaller share of premiums for more of their workers, or by spinning off parts of the business to get under the 11 employee mark.

Another provision of the law, the Employer Free-Rider Surcharge, would fine employers whose uninsured workers receive care through public insurance. However, employers who offer a “cafeteria plan,” allowing workers to pay for their own benefits even if employers pay nothing into the plans, are off the hook.

Health care costs and access have been an increasingly troubling problem for both business and labor interests. Between 2000 and 2005, premiums for employer-based insurance rose an average of 9% each year. Nationwide, the percentage of employees covered by their employer plans dropped from 81% in 2001 to 77% in 2005, and the trend continues. If our current ineffective system remains in place, there is no end in sight for rising costs and limited access to care. A single-payer system will reduce costs for employees and for those employers currently providing care to their workers. This coverage would also be portable from job-to-job and during times of unemployment.

Further Resources:

• “Firms Find Way Around State Health Law,” Alice Dembner, December 2007.
• “Mass Has Yet to Collect Fees From Firms for Healthcare,” Alice Dembner, May 2007.
• “Worker’s Health Insurance: Trends, Issues, and Options to Expand Coverage,” Paul Fronstin, Ph.D., March 2006.
• “Changes in Employees’ Health Insurance Coverage, 2001-2005,” Kaiser Family Foundation, October 2006.
• “Chapter 58 of the Acts of 2006: How the Law Affects Employers,” Joint Committee on Healthcare Financing, October 2006.

Chapter 58’s most controversial provision is an individual mandate which requires all uninsured residents to purchase health insurance if an “affordable” plan is available. Those below 150% of poverty get free coverage, those from 150-300% get sliding subsidies, while everyone else (about half of the uninsured) must purchase coverage on their own. The standards for affordability have been criticized by health care advocates.

Governor Mitt Romney publicly supported the individual mandate as a means of eliminating so-called “free riding” in the health care system. Romney claimed that “40% of the uninsured were earning enough to buy insurance but had chosen not to do so” (Wall Street Journal). Patients at 300% of the poverty line and up - those targeted as “free riders” by individual mandate supporters - represent less than 5% of uncompensated care costs in Massachusetts, however.

The Personal Responsibility Movement grew largely out of Newt Gingrich’s attack on welfare receipts, the “Personal Responsibility Act” of his 1994 “Contract with America.” The Personal Responsibility Movement aims to prevent “free riding” by public program recipients, and shift financial burdens onto disadvantaged communities, often through punitive enforcement mechanisms. This idea was revived in the 21st Century in the effort to solve the health care crisis.

An individual mandate is one of the most regressive ways of paying for expanded health coverage, shifting responsibility for health care costs onto individual households. Additionally the penalties for non-compliance are extremely stiff. In its second year residents will be fined roughly $1,000 for being uninsured, similar to the fines for some serious crimes.

Further Resources:

• “New York Times examines Massachusetts Individual Health Mandate,” Kaiser Daily Health Policy Report, November, 2007.

The United States has the highest health care costs in the world, with Massachusetts leading the country in health care costs per person. Premiums have steadily risen at rates above 10 percent per year, more than three times the rate of inflation. These trends are expected to continue in the coming years.

The Massachusetts plan lacks cost controls as well as any new revenue sources that could sustain a significant expansion in access to health care. Initial estimates of the costs and available revenue for the reform were wildly unrealistic. Planning for the law significantly underestimated the number of uninsured in the state. Revenues from the employer fine were estimated at $48 million per year, but fell vastly short, raising no funds the first year, and only $5 million the second year. Almost all funding is coming from the state general budget and federal matching grants: however, subsidies for low-income individuals are coming in hundreds of millions of dollars over budget each year, and the Bush administration is poised to cut federal matching funds.

Failure to control costs not only threatens the sustainability of the reform law, but guarantees continued erosion of employer-sponsored health care for the insured population, and growing strain on state, municipal, business, and household budgets. Even those involved in the creation of the law are beginning to admit the problems with their reform. Massachusetts Senate President Therese Murray admitted that “if we do not constrain healthcare costs, the system we worked so hard to create and implement will collapse.” And John Kingsdale, the executive director of the Commonwealth Connector, announced that “if we have double-digit increases (annually in costs), health reform is not sustainable.”

Massachusetts spends enough to cover all residents with comprehensive health care benefits if we cut out waste in the system and use it for patient care. This will require more fundamental reform.

Further Resources:

• “State Health Plan Underfunded,” Alice Dembner, Boston Globe, March 2008.
• “Healthcare Cost Increases Dominate Mass Budget Debate,” Alice Dembner, Boston Globe, March 2008.”
• Healthcare Myths, Realities,” Alan Sager, Ph.D. and Deborah Socolar, M.P.H., Boston Globe Op-Ed, November 2005.
• “Mass Health Spending Soars to $62.1 billion in 2006,” Alan Sager, Ph.D. and Deborah Socolar, M.P.H., A project of the Health Reform Program of the Boston University School of Public Health, June 2006.
• “Without Cost Control, Universal Coverage Will Fail,” Himmelstein, David, M.D., May 2007

Though the Massachusetts health reform plan received ample media attention as unprecedented legislation, Massachusetts is just one of many states to implement public plans for the uninsured in an effort to achieve universal health coverage. The only original addition in the reform is the individual mandate law. Minnesota’s 2003 HealthRight bill, Tennessee’s TennCare program, and Oregon’s 1989 reform were similarly expected to create landmark change in health coverage among state residents. Washington and Vermont passed such legislation in the 1990’s. These reform attempts were all received similarly by the national media, but none lived up to their claims.

The Massachusetts reform is simply a reincarnation of nearly identical plans that have been tried and failed in numerous other states. However, this fact has been misconstrued by the national media, which has portrayed each attempt as unique and revolutionary. After the reform, Massachusetts was lauded as “the only American state committed to comprehensive medical care.” (CBS, 4/6/06) Minnesota’s reform involved subsidies for the uninsured and a state pool that employers could buy into, and was welcomed as a “plan to solve the health insurance crisis.” (USA Today, 7/1/92) Similarly, Oregon’s health reform in 1989 made headlines such as “Oregon’s Health Law Cure for National Ailment.” (Tulsa World, 10/10/89) Tennessee’s governor claimed his plan would become “a national model” and “the most radical health care plan in America.” (Federal and State Insurance Week) All of these plans, advertised as solutions to the national health care crisis, were eventual failures. Harvard professors David Himmelstein and Steffie Woolhandler note that “each of these reform efforts promised cost savings, but none included real cost controls.”

Tennessee’s massive healthcare reform, TennCare, exemplifies the typical trend of these incremental state reforms. Tennessee planned to cover 300,000 uninsured residents in the first year, expanding to 500,000 in the second, through increased federal funds and expanded Medicaid access for the uninsured. The plan, however, quickly proved unsustainable, with the rate of uninsured in Tennessee dropping from 14.7% to 11.2% the first year, but then rising to 16.4% the following year as funding for new enrollment deteriorated. Studies show that, if left unchecked, TennCare would have consumed 91% of all new revenue growth by 2008, creating an overwhelming fiscal crisis and essentially eliminating the state’s ability to fund other state departments and priorities.

States which implemented “universal” incremental reforms, similar to Chapter 58, between 1987 and 2005 overwhelmingly followed the national trend of increasing percentages of uninsured citizens rather than resulting in decreased rates after the implementation of reforms. Consistently, these incremental reform strategies have faced overwhelming budget constraints due to inadequate cost-control strategies and few effective sources of revenue. These budget crises, coupled with rising health care costs, have prevented incremental reform movements in other states from delivering on promises of “universal” health coverage. Single-payer systems cut the waste out of health care by removing a large portion of the administrative overhead. Without addressing the underlying problem of waste and abuse by the insurance companies, universal health care will not be achievable.

Further Resources:

• “I Am Not a Health Reform,” David Himmelstein and Steffie Woolhandler, New York Times Op-Ed, December, 2007.
• “Struggling to Just Keep TennCare: Terminally Ill Woman Booted Under Changes,” Daniel Connolly, Memphis Commercial Appeal, June 2008.
• “The Impact of Federal and State Funding Levels on Strategic Decisions and How Those Affect Patient Care,” Randy L. Byington, K. Shane Keene, and Douglas Masini, The Internet Journal of Healthcare Administration. 2007.
• “Leading the Way? Maine’s Initial Experience in Expanding Coverage Through Dirigo Health Reforms,” Debra J. Lipson, M.H.S.A., James M. Verdier, J.D., and Lynn Quincy, M.A., December, 2007.

Massachusetts in 2006 passed major health reform legislation (known as “Chapter 58”), designed to provide “universal coverage” to Massachusetts residents of all incomes. However, Chapter 58 has significant weaknesses that prevent it from living up to its hype and is widely recognized as an unsustainable effort over the medium-term.

Background:
Chapter 58 was passed when the federal government insisted Massachusetts reduce the number of uninsured residents using the state’s Free Care Pool, or lose almost $400 million in matching federal grants. The law constituted a compromise between a Democratic state legislature, a Republican Governor, the Bush Administration, and powerful political entities in the state. The legislation thus included progressive provisions to expand public subsidies for health care, conservative calls for “individual responsibility,” and an effective moratorium on reform of the existing health care system to satisfy the health care industry in the state. The bill was introduced and passed within 24 hours with little public scrutiny. Early media coverage lauded Massachusetts for the introduction of the bill, deeming it “the only American state committed to comprehensive medical care” (CBS) and calling the bill an unprecedented piece of legislation that could achieve what “no other state has been able to do” (The New York Times).

What is Chapter 58?
Chapter 58 is a health coverage reform bill, based on a model of state reform that attempts to “plug the gaps” in health insurance coverage through new or expanded public programs, without making significant alterations to the health insurance or health care delivery system. Under Chapter 58 a public subsidy plan called “Commonwealth Care” subsidizes health coverage for residents up to 300% of the poverty level. The bill requires most other residents to purchase health insurance on their own or face penalties (an “individual mandate”). The law attempts to impose a small fine on employers not offering health benefits to their workers, and increased payments to many hospitals and health centers. The law, premised on moving the population into privately managed insurance plans, has also had a dramatic impact on the existing health care safety net in Massachusetts (called the “Free Care Pool”), as well as the hospitals and health centers who treat the uninsured.

Further Resources:

• Similar Reforms in Other States
• Health Care Costs and the Sustainability of Reform
• The Individual Mandate: Origins and Impact
• The Impact on Business and Labor
• The Health Care Safety Net and the Free Care Pool
• Mass-Care and JWJ Pamphlet: ‘Massachusetts Health Reform: Solution or Stopgap?’
• Mass-Care’s Slide Show on the Massachusetts Health Reform

In April of 2006, the Massachusetts legislature passed a major health care reform bill, known as Chapter 58 (Chapter 58 of the Laws of 2006). It attempts to extend subsidized health care coverage to uninsured people below 300% of the poverty line, and includes a controversial “individual mandate” that will attempt to force many uninsured people to purchase their own health care on the private market, or they could face thousands of dollars in fines.

Where did this law come from? What has happened to similar laws passed in other states? What will happen? And how will it affect you? Find out the answers to these questions in Mass-Care’s comprehensive powerpoint presentation on Chapter 58, below. If you would like to arrange for a Mass-Care speaker to give the presentation in your community or to a group that you belong to, get in touch with us through the contact page!

Slide Show on New Massachusetts Health Care Law

The impacts of our commercial health care industry extend beyond the problems faced by individual patients. Businesses are losing profits and municipalities struggling to balance their budgets as they suffer under the weight of rising employee health care costs. Labor unions are losing the fight to win or preserve comprehensive health coverage for their members, often accepting wage cuts to keep benefits. Those who suffer from chronic illness hit disproportionately hard by the growth of cost sharing (co-payments and deductibles), are red-lined in many states for their pre-existing medical conditions, and struggle to preserve coverage from job to job. Even seniors are not immune to the woes of the private insurance world. The Medicare system is increasingly privatized, in the forms of Medicare ‘Advantage’ prescription drug plans, and inadequate coverage for hospitalization and long-term care, necessitating supplemental (or ‘Medigap’) insurance. Seniors spend on average 14% of their fixed incomes on medical expenses, much higher than the rest of the population. The effects of our costly and inefficient health care system reach into all corners of society. A single-payer system has the potential to relieve this strain by creating a coordinated system that is focused on efficiently and affordably caring for all patients.

Further Resources:

• Labor and Health Care Costs
  
• Businesses and Health Care Costs
  
• Municipalities and Health Care Costs
  
• Health Care Providers
• People with Chronic Diseases

Doctors, nurses, medical students, and other health care professionals have a unique perspective on the flaws of our commercial health care system and the advantages that single-payer health care would bring:

Access to and Quality of Patient Care
Americans currently pay enough to fund universal, single-payer health care, but we do not enjoy the benefits. About 33 cents of every health care dollar is currently wasted on profits and high administrative costs before ever reaching a health care provider.

Currently, Americans have poor access to care: in comparison to patients in Canada’s single-payer system, they are less likely to have a regular doctor, more likely to have unmet health needs, and less likely to fill prescriptions. Besides limiting access, the current system also provides a lower standard of care. Many studies have shown that for-profit hospitals, clinics, and long-term care facilities have higher death rates and more reports of poor quality of care. A single-payer system would take these profits and wasteful administrative costs and use them to allow doctors, nurses, and other providers to remove barriers to care and improve patient care and outcomes.

Efficient and Equitable Financing for Providers
In a single-payer system all billing is centralized and taken care of by the government (like the current Medicare system), meaning that providers would not need to act as bill collectors. Instead of spending significant time filling out complicated paperwork that varies for every private insurance company, physicians would bill a single payer that would quickly reimburse them. Providers across all specialties would also be free to negotiate fair salaries and reimbursement rates.

A single-payer system would not only provide comprehensive health insurance to every American so they can afford to seek medical care, but also would reimburse providers simply and fairly for these services. Since everyone is covered, doctors would be able to provide high-quality health care to every patient regardless of ability to pay out-of-pocket, without worrying about losing money or compromising care.

Freedom in Clinical Decision Making
Health care providers are currently told what kind of care they can provide by a myriad of insurance companies that each impose different rules on what services are covered and under what circumstances. This form of managed care is meant to minimize payments, not provide the proven standard of care. In a single-payer system providers and their patients have greater clinical decision-making power to decide what tests or treatments are necessary, constrained by professional standards and not by profit motives.

Health Care Information and Planning
A single-payer model supports comprehensive data collection and analysis, which allows for improved tracking of outcomes, monitoring of progress in eliminating health disparities, and establishing best practice and standard of care guidelines. Much of this valuable information is now lost due to the fragmented nature of data collection by each individual insurance company.

Further Resources:

• “Access to Care, Health Status, and Health Disparities in the United States and Canada: Results of a Cross-National Population-Based Survey,” Karen E. Lasser et al, American Journal of Public Health, July 2006, Vol. 96 No. 7.
• “Costs of Health Administration in the U.S. and Canada,” Steffie Woolhandler et al, New England Journal of Medicine, September 21, 2003, Vol. 349 No. 8.
• “Paying for National Health Insurance - And Not Getting It,” Steffie Woolhandler et al, Health Affairs, Jul/Aug 2002, Vol. 21 No. 4.
• “Payments for care at private for-profit and private not-for-profit hospitals,” P.J. Devereaux et al, Canadian Medical Association Journal, June 8, 2004, Vol. 170 No. 10.
• “Medical Malpractice, Health Care Quality and Health Care Reform,” Gordon Schiff, MD and Oliver Fein, MD, PNHP New York Metro Forum Report #4, May 2003.