When Gov. M. Jodi Rell created her Charter Oak Health Plan in 2006 in an attempt to get uninsured residents to get coverage, she settled with an incentive-based approach that was slow to catch on with carriers and prospective members.
In Massachusetts, policymakers went with the stick ”“ and appear to have licked the problem.
As Connecticut continues to debate an overhaul of its insurance plan, Congress and the Obama administration are considering following Massachusetts lead and making health insurance coverage mandatory for most citizens, possibly to include a penalty for businesses that do not offer an affordable option for their employees.
Massachusetts took such a path in passing its landmark health care reform bill of 2005, which requires businesses with more than 10 employees to offer a plan, and requires residents to get insurance or pay $300 when filing their individual income taxes.
Rather than painting an image of required insurance, Massachusetts policymakers prefer the vision of “shared responsibility” in lowering health care costs ”“ employers must make a fair contribution to their worker”™s insurance premiums; carriers must participate; adults must have a policy as long as affordable options exist; and taxpayers must shoulder the costs of the poorest who simply cannot or will not pay.
From an initial support rate among likely voters of 61 percent in the first year of the program, that support has swelled to 68 percent since, according to the most recent poll by the Harvard School of Public Health and the Blue Cross Blue Shield of Massachusetts Foundation.
The Massachusetts program was appealing enough that when Connecticut State Board of Optometry board member Eugene Whinakor retired and moved from Norwich to Cape Cod, he opted for the Massachusetts program, saving $600 monthly compared to the COBRA payments he otherwise would be paying.
About 165,000 Massachusetts residents receive health insurance through the state-funded portion of the program, and just 2.6 percent of Bay State residents now lack health insurance, catapulting Massachusetts from the seventh lowest rate in the nation to the lowest in a year”™s time.
The Commonwealth Care insurance program is administered by an independent agency called the Commonwealth Health Insurance Connector Authority, which negotiates rates with major carriers in the Massachusetts market. Commonwealth Connector is run by Jon Kingsdale, a former senior executive of Tufts Health Plan. Its board includes Ian Duncan, president of the Hartford-based actuarial consulting firm Solucia Inc.
As is the case in Connecticut, Massachusetts is now attempting to find ways to reduce premiums further by finding ways to reduce costs at hospitals and clinics.
“Massachusetts took the ethical high ground and chose to begin with near-universal coverage,” Kingsdale said, in commentary printed last month in the publication Health Affairs. “Only by controlling costs can Massachusetts sustain near-universal coverage. Everyone acknowledges this.”
Open enrollment for the state”™s Commonwealth Care program runs through June 25; in March, Commonwealth Connector announced premiums would decline slightly for the upcoming fiscal year. A healthy 37-year-old living in Boston ”“ the state”™s median age ”“ can obtain insurance for $184 a month, compared to $335 pre-reform, while receiving twice the benefit levels.
Of taxpayers who reported not having health insurance, just under 100,000 deemed themselves able to afford it at tax time and assessed themselves a penalty; while about 70,000 residents were exempted either due to their inability to afford it or their religious beliefs. About 2,400 residents contested the penalty levied against them in 2007.
According to officials running the Massachusetts program, there is little evidence to date of crowd out, or the shifting of enrollment from the private sector to the public sector due to the attractive rates or benefits of the latter. Of residents signing up for insurance after the bill”™s passage, 43 percent did so through a private plan ”“ the first significant increase in privately insured individuals in decades.
Less trumpeted is the fact that Commonwealth Care went over budget by $150 million in the 2008 fiscal year ending last June, which Commonwealth Care attributed to greater-than-expected interest in the program ”“ without attributing that to the phenomena of crowd out ”“Â rather than to an unforeseen escalation in costs per member.
Massachusetts is still struggling with some components of the plan, however. For instance, still at issue is whether to cap prescription drug reimbursements, and if so at what level (several self-insured plans have proposed such caps at ranges varying between $5,000 and $25,000 annually); and how to handle situations in which a company has significant numbers of part-time employees.
