With healthcare reform having passed, how will the health insurance market look a few years from now? Although Mitt Romney may (or may not) deny it, Massachusetts has been a model for President Obama’s health reform bill. In 2006, Massachusetts passed its own health reform and when the share of uninsured residents was at 14%. By 2008, this figure had fallen to 2.6%. Let us now take a look at the specific reforms Massachusetts implement to increase coverage.
Based on the research of Doonan and Tull (2010), one can divide the Massachusetts expansion efforts into five broad categories.
- Medicaid Expansion. Massachusetts expanded Medicaid eligibility to all children below 300% of the federal poverty line (FPL) and all adults below 150% of the FPL.
- New subsidized health insurance exchange. Commonwealth Care is a program that provides aces to health insurance for individuals with incomes between 150% -300% FPL. The government subsidizes these plans depending on the individual’s income. The state moved individuals who were previously in the stat’s uncompensated care pool (UCP) to Commonwealth Care by restructuring the UCP so that copays, deductibles, and premiums were similar to those offered in Commonwealth Care.
- Insurance Exchange for Individuals and Small Businesses. Commonwealth Choice is a program that provides a number of unsubsidized insurance plans to individuals and small businesses (with 50 or fewer employees).
- Mandates. The Massachusetts legislature enacted an employer mandate and an individual mandate. The employer mandate stats that employers with more than 50 people who do not provide insurance must pay a “fair share” assessment of $295/employee/year. The state also mandates that all residents purchase insurance through an individual mandate. Each year, each Massachusetts resident must submit a Schedule HC to the Massachusetts Department of Revenue to verify that they do indeed have Connector-approved insurance. After a 90 day grace period, individuals are penalized each month that they are not insurance in the previous tax year. The penalty for not having health insurance in Massachusetts is generally much larger than what Congress is currently considering.
- Insurance Regulation. The Commonwealth Health Insurance Connector Authority (the Connector) created minimum standards for any insurance product to be offered in the state. Thus, individuals could not bypass the individual mandate by taking out a very inexpensive health insurance product with a $50,000 deductible. The Connector Board recommended that the minimum credible coverage (MCC) include preventive and primary care, emergency services, hospitalization benefits, ambulatory patient services, mental health services, and prescription drug coverage. Doonan and Tull (2010) claim that the mandated benefits were fairly generous, but not out line with what private insurance companies previously had offered. Because there is more heterogeneity in insurance products across the country than within Massachusetts, Congress would have a much more difficult time determining a valid coverage minimum that did Massachusetts.
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