| Group |
Income Eligibility |
| Children |
300% FPL |
| Pregnant Women |
200% FPL |
| Parents |
133% FPL |
| SSI Disabled |
74% FPL |
Medicaid, SCHIP, and Federal Authority2
Section 1115 Waiver - In 1995, Massachusetts received approval for the MassHealth Statewide Demonstration Project, which was created to make health insurance available to a number of previously uninsured individuals. In addition to the traditional Medicaid population, the demonstration provides coverage for the uninsured, the long-term unemployed, the working and non-working disabled, low-income workers and their families, individuals with HIV, and women with breast and cervical cancer. Children in families with income at or below 200 percent FPL receive MassHealth through both demonstration and SCHIP provisions.
In July 2006, Massachusetts received approval from CMS for the revised Section 1115 MassHealth waiver. In the revision, Massachusetts received authority to claim XXI matching funds for children between 200 and 300 percent FPL effectively replacing the Children's Medical Security Program (CMSP). Premium assistance payments will continue if the family has access to employer coverage. The waiver makes revisions to the Insurance Partnership (IP) raising income guidelines from 200 to 300 percent FPL and coordinating coverage between IP and the Connector. Finally, the uncompensated care pool will undergo significant reforms that shift uncompensated care payments to facilities into premium subsidies for the uninsured.
Other
Commonwealth Care
Massachusetts' reform legislation is aimed at covering 95 percent of state residents without insurance within three years and represents a culmination of more than a year of negotiations and compromise between lawmakers and Governor Mitt Romney (R). The need to find compromise and act on comprehensive reform was made more urgent by the potential loss of $385 million in federal matching funds that had been previously used to fund care for the uninsured. In what has been referred to as a demonstration of 'unusual political maturity'20 and a 'serendipitous collision of interests,'21 the state's comprehensive plan includes provisions to increase access to health insurance, contain health care costs, and improve quality. In fact, the very ability of policymakers in Massachusetts to reach bi-partisan consensus on landmark reform fueled new hope for the possibility of health care reform and put state efforts at center stage of the national debate on the uninsured. This notable political feat has many policymakers watching closely as the state finalizes the program design and rolls out the first phases of implementation. Massachusetts ' reform package is built on six key elements:
An individual mandate that all who can afford insurance obtain it
Massachusetts broke new ground with its requirement that individuals purchase health insurance. Individuals who can afford insurance are required to obtain health insurance by July 1, 2007 or risk the loss of their personal exemption for 2007 income taxes. In subsequent tax years, the penalty will include a fine equaling 50 percent of the monthly cost of health insurance for each month without insurance.
An employer requirement for 'fair and reasonable' contributions toward employees' health coverage
Massachusetts had a high rate of employer-sponsored insurance relative to the rest of the nation prior to the current reforms. Building on this foundation, the state added several provisions to share responsibility with employers. Employers with 11 or more full-time employees (FTE) that do not make a "fair and reasonable" contribution toward their employees' health insurance coverage will be required to make a per-worker contribution, not to exceed approximately $295 per FTE annually. Employers will pass the "fair and reasonable" test if at least 25 percent of full-time employees are enrolled in the company's group health plan and the employer contributes toward the premium. Should employers not meet that criterion, they still can pass if they can demonstrate that they offer to pay at least 33 percent of their full-time employees' health insurance premium.
In addition, by January 1, 2007, all employers with 11 or more workers must adopt a Section 125 "cafeteria plan" that (as defined in federal law) permits workers to purchase health care with pre-tax dollars, saving approximately 25 percent on the cost of premiums. If these employers do not "offer to contribute toward or arrange for the purchase of health insurance," they may be assessed a "free rider" surcharge if their employees or employees' dependents access free care. The surcharge will exempt the first $50,000 of free care that the employees use but, after that threshold is met, the employer will be charged from 10 to 100 percent of the state's cost of the free care, as determined by the Division of Health Care Finance and Policy.
The creation of a Commonwealth Health Insurance Connector Authority to improve availability and affordability of coverage
The Commonwealth Health Insurance Connector will be a vehicle to help individuals and small businesses find affordable health coverage. Plans participating in the Connector developed new benefit packages, designed to make coverage more affordable. The Connector will facilitate the process of small employers offering Section 125 plans and facilitating Section 125 plans for part-time, seasonal workers or employees who are ineligible for group coverage from large employers. Part-time and seasonal workers can combine employer contributions in the Connector as well. One of the unique features of the Connector is that it allows individuals to keep their policy (and therefore, their health care providers), even if they switch employers. The Connector will be the sole entity enrolling uninsured low-income populations in the Commonwealth Care Health Insurance Program.
Subsidies to assist low-income populations
The Commonwealth Care Health Insurance Program provides sliding scale subsidies to individuals with incomes below 300 percent FPL beginning January 1, 2007. No premiums will be imposed on those individuals with incomes below $9,800 (100 percent FPL). Additionally, an existing premium assistance program, the Insurance Partnership, will raise eligibility for employee participation from 200 percent to 300 percent FPL.
Insurance market reforms designed to reduce premiums and create new options
The health care reform bill also includes a number of insurance market reform provisions. Starting in July 2007, the non- and small group markets will be merged, although a study of this merger must be completed before that date to assist insurers in planning for the transition. Policymakers estimate that this action will reduce premiums for people currently purchasing in the individual market by at least a quarter of their current cost. The bill also will allow Health Maintenance Organizations (HMOs) to offer coverage plans that are linked to Health Savings Accounts (HSAs) and HMO products with co-insurance. In addition, under the bill, young adults may remain on their parents' policy for two years past the loss of their dependent status, or through age 25, whichever occurs first. Carriers will also design new products to attract young adults between the ages of 19 and 26.
Financing strategies that rely on state, federal, employer, and individual contributions
The reform will be financed via several significant sources. First, $385 million in federal matching funds previously used to fund the safety net and uncompensated care will be redirected to cover the subsidies. Additionally, the state will invest $308 million in general fund revenues over three years and will collect individual and employer contributions as well. The plan will be implemented in three phases. On October 2, 2006 enrollment began for the nearly 62,000 residents requiring a full subsidy. Starting in
January 2007, the state will begin enrolling residents with annual incomes between 100 percent and 300 percent FPL. This group will pay premiums on a sliding-scale basis. Finally, the last phase will occur in July 2007, when the individual mandate becomes effective.
Massachusetts Uncompensated Care Pool - The Massachusetts legislature established the Uncompensated Care Pool in 1985 to help ensure access to needed health care services to individuals with no other source of health care coverage. The pool makes payments to acute care hospitals and community health centers for eligible services provided to low-income uninsured and underinsured individuals. As a result of the Massachusetts health reform, funds from the uncompensated care pool will be shifted into premium subsidies for the uninsured.
Insurance Partnership - Massachusetts operates the Insurance Partnership as part of its Medicaid program under an 1115 waiver. The Partnership helps small employers (<50) offer insurance and helps low-income workers afford premiums. Small employers can have part of their cost paid for premiums paid on behalf of qualified employees. Workers with family income below 300 percent FPL qualify for premium assistance through the MassHealth program.
Adult Medical Security Plan - The Medical Security Plan, run by the Division of Unemployment Assistance, helps laid-off workers and their families who receive unemployment insurance payments. Depending on the workers' circumstances, the program either provides direct, state-based coverage or helps pay the cost of coverage available through former employers. This is a short-term program that serves a relatively healthy population and is available to families who have family incomes up to 400 percent FPL. The state's 1115 waiver provides federal Medicaid matching funds for all enrollees.
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