Part one in a series
The information in this series concerning the new Massachusetts health insurance laws was provided by state Rep. Robert Hargaves.
Who are the uninsured?
An estimated 550,000 people are uninsured in Massachusetts
People with limited or no access to employer-sponsored coverage include:Nashoba Publishing
— Part-time, seasonal workers
— Single, childless adults
— Young adults
The number of uninsured individuals is growing, due to slow recovery from the economic downturn, erosion of employer-sponsored coverage, and reduced uptake by employees as the price of health insurance increases.
Why is Massachusetts addressing this problem now?
Existing strong base of employer-sponsored insurance: 98 percent of employers with 100 or more employees and 65 percent of smaller employers contribute to their employees’ health insurance.
Substantial existing funds are spent on the uninsured: over $600 million in the Uncompensated Care Pool.
Reauthorization of federal Medicaid waiver requires Massachusetts to redeploy funds to reduce the number of uninsured people.
Political leadership creates the opportunity to take a major step forward to substantially reduce the number of uninsured.
Commonwealth Health Insurance Connector
What is the Connector?
A central mechanism to connect individuals and small businesses with health insurance products.
The Connector certifies and offers products of high value and good quality.
Who is eligible to “connect” to coverage?
Individuals and businesses with 50 or fewer employees. Employed individuals may purchase health insurance with pre-tax dollars through the Connector.
Can small businesses participate in the Connector?
Yes. In addition, employers can contribute any amount toward an employee’s health insurance. Also, more than one employer may contribute to an employee’s insurance premium, helping those employees with more than one job.
What kinds of policies will be available through the Connector?
This legislation protects the current range of benefits available through insurance in Massachusetts, including mental health and other mandated benefits. The Connector will review and certify products as being of good value and high quality.
Plans offered through the Connector can choose to contract only with good value providers, rather than contracting with all providers in the state.
The Connector will also offer a new range of products for young adults, ages 19-26, which will be tailored to meet their needs.
Policies will have to meet current regulations on deductibles and co-pays except for those sold with a Health Savings Account (HSA) which will be able to have slightly higher deductibles but only when offered with the account.
Who will oversee the Connector?
The Connector operate as an Authority, similar to the School Building Assistance Authority, under the Executive Office for Administration & Finance (A&F).
A new, separate board of the Connector will oversee the certification of products and the operations of the Connector.
The bill increases eligibility to children in families earning up to 300 percent of the Federal Poverty Level (FPL) ($38,500 per year for a family of two). Currently, children in families earning up to 200 percent FPL are eligible for MassHealth. Massachusetts receives federal reimbursement of 65 percent for most MassHealth programs for children.
All MassHealth benefits that were cut in 2002, including dental and vision services, chiropractic and prosthetics, will be restored.
Commonwealth Care Health Insurance Program
What is the Commonwealth Care Health Insurance Program?
Commonwealth Care will be operated through the Connector and will provide subsidies to people with incomes at or below 300 percent of the Federal Poverty Level, on a sliding scale, based on income.
Who will be eligible for the Commonwealth Care Health Insurance Program?
People who earn up to 300 percent FPL ($48,000 per year for a family of three), and are not eligible for other public insurance. People who have employer-sponsored insurance may be eligible, but the employer must pay a portion of the premium cost.
People who earn below the base FPL ($9,600 per year for an individual) will not be subject to any premium.
What benefits will be provided through the Commonwealth Care Health Insurance Program?
Enrollees in the Commonwealth Care Insurance Program will have a portion of their health insurance subsidized by the state.
Plans offered through the premium-assistance program will not include a deductible. There will be special protections for enrollees with incomes below the base FPL.
Plans will be offered through the Commonwealth Care Health Insurance Connector, and must be approved by the Connector and meet other standards set by the Connector board.
What types of insurance products will this legislation authorize to be available on the market?
Merging the small- and non-group markets will stabilize the non-group market, and lower rates by 24 percent for individuals.
New, targeted products will be offered to those 19 to 26 years old at low cost. These plans will offer “first dollar” coverage for primary care visits and comprehensive benefits.
Health Savings Accounts (HSAs) will be given favorable state tax treatment and authorized to be sold by HMOs.
Will this legislation affect mandated benefits?
The bill places a moratorium on new mandated insurance benefits until January 1, 2008, at which time the state will have completed a review about the costs and necessity of all current mandates.
All current mandated benefits are protected. New plans offered on the market will continue to provide high-quality benefits.
Why is an individual investment necessary?
Currently, every taxpayer pays for the care of those who are uninsured and need emergency care. Requiring those who can afford health insurance to purchase coverage is fair.
Projections of the individual mandate show that the vast majority of the uninsured will take coverage.
Experience and research have shown that voluntary measures aren’t enough. Regardless of the price of insurance, some people choose to hedge their bets on health insurance by going without.
By requiring everyone to have coverage, those who are healthy and currently uninsured will enter the insurance risk pool and thus help to stabilize the cost of premiums for the currently insured.
No health care reform proposal without an individual mandate has ever been projected to enroll more than half of the uninsured.
Why is the “affordability” clause included in the bill?
It is fair to require individuals to have insurance when an affordable product is available to them, based on a graduated affordability scale.
What will the penalties be for not having health insurance?
Beginning in July 2007, Massachusetts residents will confirm health insurance coverage by reporting whether or not they had insurance on state income tax forms in 2008.
Why does the bill require a financial contribution by employers?
Currently, a portion of the health insurance payments made by employers who do provide coverage for their employees go towards reimbursing hospitals and other providers for the cost of caring for the uninsured. Employers who do not provide health insurance do not pay this premium. It seems fair to ask employers who don’t contribute to pay a portion of the cost of providing health care to the uninsured.
How will the employer contribution work?
Employers who don’t make a “fair and reasonable” contribution toward employee health insurance premiums will be required to make a per-worker “fair share contribution.” The contribution will be calculated to represent the cost of free care used by the employees of non-contributing employers, but will be capped at $295 per employee.
Businesses with 10 or fewer employees will not be subject to the contribution. The amount of the contribution will be pro-rated for temporary or seasonal employees.
Other Frequently Asked Questions:
How will this bill affect small businesses?
The Connector will take away the administrative burden of offering insurance with pre-tax dollars.
The Connector will help small businesses choose high-value, good-quality products.
The Connector will allow for multiple employers’ paying into one person’s insurance premium and allow for portability — an excellent benefit for part-time employees.
Individuals who leave a small business that offered coverage through the Connector will be able to maintain the same health plan on their own — a valuable benefit for seasonal employees.
The bill expands eligibility for the current Insurance Partnership Program. Employees with incomes up to 300 percent FPL (instead of 200 percent) will be able to participate, and their employer will receive a subsidy towards his or her share of the premium cost
How will this health reform legislation impact the large safety-net hospitals?
Boston Medical Center and Cambridge Health Alliance will continue to be supported for providing care to the uninsured.
How will this legislation impact community hospitals?
Community hospitals will benefit from additional funds available for Medicaid provider payments.
Expanded Medicaid eligibility and assistance with purchasing private insurance will result in more people with insurance coverage, reducing the burden of free care and bad debt that hospitals bear now.
A more rational system for reimbursing hospitals for the cost of providing uncompensated care will help community hospitals receive their fair share of available reimbursement funds.
Will the bill provide rate increases for providers?
Hospitals and physicians will receive Medicaid rate increases of $90 million each year in FY07, FY08 and FY09.
In FY08 and FY09, these increases will be tied to quality and other performance measures.
What will happen to the Free Care Pool under this legislation?
The current Uncompensated Care Pool is eliminated by this legislation.
A new, reformed Health Safety Net Fund, overseen by the Office of Medicaid, will reimburse hospitals and community health centers more fairly for uncompensated care.
Reforms will make the Health Safety Net Fund efficient — reimbursements will be made using a new standard fee schedule, instead of the current charge-based payment system
Less money will be needed for the Health Safety Net Fund as more people in Massachusetts acquire coverage.
Some funds used for the Health Safety Net Fund now will be transferred to provide subsidized Commonwealth Care Health Insurance to individuals in the future, as the number of uninsured declines.