Massachusetts mandates insurance coverage for all; costs at issue

Some view the effort as a potential model for nationwide universal health care.

By Elaine Monaghan — Posted April 24, 2006

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Washington -- Doctors broadly welcomed a bill passed by the Massachusetts Legislature to cover the uninsured, but some questioned whether the state can generate the affordable plans it promised low-income residents.

Some doctors and experts said that by requiring people to insure themselves and offering subsidies for the poor, the state had made itself a testing ground for universal health care throughout America.

About 11% of Massachusetts residents lack insurance, compared with 16% nationwide, according to the Kaiser Family Foundation.

"The AMA is not only very encouraged by this [vote] but enthusiastic about the way both sides of the political aisle were able to work together to create a plan that hopefully will provide coverage for everybody in Massachusetts and at the same time allow people to have choice," said AMA Secretary Joseph M. Heyman, MD.

The American Medical Association wants coverage for low-income people and children to be expanded incrementally in the short term. In the long term, the AMA seeks a market-based plan that uses tax credits and insurance market reforms to boost coverage.

In that sense, the Association's vision is close to the Massachusetts bill, which embraces the idea of subsidies, Dr. Heyman said. The AMA hopes to put coverage of the uninsured high on the agenda of this year's congressional elections and make it a top priority for the 2008 presidential race, he said.

Alan M. Harvey, MD, president of the Massachusetts Medical Society, said his state stood to become the first to have a universal health plan.

Lawmakers had been responsive to his organization's concerns, and the group enthusiastically welcomed the outcome, he said.

The plan creates incentives for employers and individuals, who can use pretax dollars to buy insurance from the Commonwealth Health Insurance Connector. This new entity will set premiums, sign up insurance companies, and be overseen by a board of private and public representatives. "We hope the medical society will have a seat on that board," Dr. Harvey said.

He predicted that the state's three main health insurers -- BlueCross BlueShield of Massachusetts, Harvard Pilgrim Health Care and Tufts Health Plan -- would produce competitive but basic benefits packages. He compared the system to the federal employees' health program, which offers many insurance options.

E. John Lentini, DO, who practices in Braintree, Mass., and is president of the Massachusetts Academy of Family Physicians, said he was "concerned" that the bill had not spelled out the cost of premiums for a new state-run program. It will subsidize people who are ineligible for Medicaid and earn up to 300% of the poverty level, or $28,800 for a single person, and offer affordable plans to people who earn more but are uninsured.

However, he added: "This is good for patients, who'll be able to see their physicians more easily, and good for physicians."

Dr. Lentini wondered about the bill's impact on physicians as small business owners. At his busy two-doctor practice, which employs about 30 people full or part time, those workers whose insurance he does not fund have coverage through a spouse or from an earlier plan.

He expects that he will be exempt from the annual $295 fee per worker the state plans to levy for businesses that employ 11 or more people and fail to pay for their insurance.

But he isn't sure. "The bill is 165 pages. I would like an answer," he said.

Amy Lischko, director of health care policy for the Massachusetts Executive Office of Health and Human Services, said Dr. Lentini could stop worrying.

She said employers of part-time workers would not become liable for their health insurance, and that many of those individuals now would have the option of buying low-cost insurance through the Health Insurance Connector. The bill also allows more than one employer to pay into someone's insurance.

She played down the concerns some have expressed that the bill eventually would lead to high deductibles, penalizing those whose income was more than 300% of the poverty level but still not well-off.

"There's a bit of 'Chicken Little' going on," she said. Insurance companies in the state estimate that premiums can be kept down with deductibles as low as $250 to $1,000, she said.

Republican Gov. Mitt Romney, who is contemplating a presidential run in 2008, is expected to sign the bill but to impose a line-item veto for the $295 fine on businesses. In that event, the Democratic-dominated Legislature is expected to override him.

The bill, which would go into effect in July 2007, increases Medicaid payments by $90 million in 2007, a figure that doubles in 2008 and triples in 2009. Physicians will get 15% of the new money. Some of hospitals' share will be linked to performance measures, including the reduction of racial and ethnic disparities. Other measures would include those adopted by the National Quality Forum, the Hospital Quality Alliance and other national groups, the bill said.

Critics doubt the impact

Dr. Harvey said one of the reasons Massachusetts is optimistic that this can succeed is that it has a relatively low number of uninsured, put at 500,000 by lawmakers.

But Physicians for a National Health Program, which lobbies for a single-payer program, said the plan had underestimated the number of uninsured by nearly a quarter of a million because it used a telephone survey instead of Census Bureau data from 2004, which put the uninsured at 748,000. The state's Lischko said this number was an overestimate.

David Himmelstein, MD, associate professor of medicine at Harvard Medical School in Boston and co-founder of PNHP, noted provisions in the bill to improve access for Medicaid patients and boost hospital finances. "But beyond that, it is very unclear whether this is going to amount to anything substantial at all."

Uwe Reinhardt, PhD, a health care economist and professor at Princeton University in New Jersey, said that if the premium was about $250 a month, as has been suggested, it would rise 10% a year and soon would be unaffordable.

Within a decade, Dr. Reinhardt said, not only Massachusetts but the entire nation must face the question politicians are avoiding: Will the upper third of the population be willing to pay for the working poor in the bottom third -- "the gas station workers and waitresses" -- who by then will be unable to afford health care?

"My only hope is that the taxpayers of Massachusetts will either voluntarily step up to the cashier's window, or these people will revolt," he said. Then perhaps the poorer Americans would start to vote in large numbers for tax increases, which he called the only solution.

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Who's covered

Most Massachusetts residents have employer-based insurance. Public programs cover many, but there's still a contingent of the uninsured.

Source of coverage Residents Portion
Employer 3,785,500 60%
Individual plan 272,530 4%
Medicaid 806,210 13%
Medicare 737,560 12%
Other public program 43,240 1%
Uninsured 715,070 11%

Note: Figures are for 2003-2004. The percentage does not add up to 100% due to rounding.

Source: Kaiser Family Foundation

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A look at the bill

Here are key points of a health insurance reform bill the Massachusetts Legislature passed April 5:

  • Establishes an "individual mandate" next year that obliges all residents to buy insurance. Noncompliance initially leads only to the loss of the personal tax exemption. From 2008 on, the penalty will increase to a portion of the insurance cost.
  • Requires employers of 11 or more people to pay $295 per uninsured worker per year. The bill also imposes a surcharge on employers who fail to offer health insurance and whose uninsured workers get "free care." The fee ranges from 10% to 100% of treatment costs, with the first $50,000 exempted.
  • Creates the Commonwealth Health Insurance Connector, which would certify insurance products that consumers could buy using pre-tax dollars.
  • Merges the individual and small-group insurance markets next year, a move expected to reduce individual premiums by an estimated 24%.
  • Creates the subsidized "Commonwealth Care Health Insurance Program" for people ineligible for Medicaid but earning up to $28,800, or 300% of the poverty rate. Offers Medicaid-like private insurance to people at or below the poverty level, or $9,600, without premiums or deductibles. People between 100% and 300% of poverty will pay a portion of premiums on a sliding scale but will have no deductibles.
  • Includes $81 million to boost physician Medicaid reimbursement over three years.

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External links

IssueSource on the Massachusetts health reform legislation (link)

AMA on health insurance reform (link)

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