MASSACHUSETTS: Doing the same thing and expecting different results


There has been much talk about Massachusetts since the victory of Senate Republican Scott Brown. Many have suggested this victory was a referendum on the Democrat’s health care reform “overhaul” awaiting a unified bill to be signed by President Obama. The centerpiece of this plan is a mandate, i.e., a legal obligation to buy health insurance, with subsidies for eligible groups, or else face a fine.

But what is the reform law enacted as Chapter 58 of the Acts of 2006 that Mr. Brown has inherited anyways? Is it really the “universal coverage” it was promised to be?  The short answer is “no”.

The momentum for reform in Massachusetts in 2006 was spurred by the Bush Administration, who was insisting that the state reduce block funding of indigent care through the state’s free care pool or lose $385 million of Federal Medicaid funds. The state has an Uncompensated Care Pool that provides funds to hospitals and community health centers that deliver care to those without insurance coverage.  This pool is funded by assessments on hospitals, health insurance premium taxes, and federal matching funds. As the number of uninsured people rose significantly in 2006, the financing for the pool became fragile and the Bush Administration threatened their federal funds if Massachusetts failed to reduce the money spent on “free care”.

So, with 657,000 uninsured residents, or 10.4% of the population, the Massachusetts Health Care Reform Act was born.  At its center is The Connector, an independent state agency offering a “menu” of private insurance plans and assisting individuals obtain their insurance. For residents at or below 300% of the Federal Poverty Level (FPL), The Connector offers “Commonwealth Care”, where “customers” can choose a subsidized health plan based on a sliding scale.  So this should expand people’s health care choices, right? Wrong. Not if your employer offers insurance. If so, you are not eligible for these subsidized plans.  For all other residents above 300% PFL, and for small employers, The Connector offers “Commonwealth Choice”, a series of regulated, non-subsidized private plan options.  Truly American, “Commonwealth Choice” allows you to choose from the Gold, Silver, Bronze, or Young Adult plans, so-rated depending on how comprehensive they are. But the bottom line is: you get what you pay for.

By way of example, the cheapest plan available to a middle-income 56-year-old now costs $4,872 annually in premiums.  However, if the policy holder becomes sick, he or she must pay an additional $2,000 deductible before the insurance kicks in.  Thereafter, the policy holder pays 20% co-insurance, (20% of all medical bills) up to a maximum of $3,000 annually.  This totals to $9,972 dollars, if heaven forbid, the policy holder becomes ill. And we haven’t even begun to talk about “uncovered services”, that “affordable” policies Massachusetts-style are full of. For those, you are on your own, as you were before.

The plan also includes an “employer mandate”, that is, employers have some obligation to contribute to the cost of insurance, in 2008 an employer could opt out by paying $295 per employee and an individual could opt out by paying $912 yearly – as a fine. These surcharges were predicted to yield $45 million dollars annually, but totaled only $5 million in the first year of the program.   In addition, individuals can apply to be excluded from the program, for “hardship waivers”, if they can prove at a court of law that there is no affordable option available to them. In 2009, 79,000 residents applied and were “exempted” based on these grounds. Or, in plain English, 79,000 individuals remained uninsured.

The financing for this reform comes from the fines mentioned above and funds diverted from the state “free care pool”, that is, from appropriations originally invested on safety net facilities for those without insurance.

Since 2006, the outcome from the Massachusetts reform has been costly and still has yet to address the issue of access to health care. Because, it is important to remember, health insurance is not health care, but rather a means to it. And whether insurance will or will not improve access to medically necessary care depends of course on what type of coverage it offers. In Massachusetts, as explained above, coverage depends on how much you pay, from “Cadillac” plans (if you have the money) to bare-bones plans, if you belong to the so-called generation of “invincibles” (the young, often cash-strapped).

In 2008 the cost of the program for the state, to pay the subsidies and administrative costs to run the program, was 1.1 billion dollars, and rose again in 2009 reaching 1.3 billion. More expensive than expected, the Connector itself adds an addition 4.5% administrative cost to each policy it brokers. To reduce the price for the state, even if not for patients, insurers have increased premiums and co-pays.  As mentioned above, last year, as premiums rose 9.4% in 2009, 79,000 people who were not eligible for the subsidized Commonwealth plans were able to prove that they could not afford any other plan.

The Massachusetts reform does not change the cost of purchasing health insurance. In addition, the funding for these new insurance policies has replaced the “free care” system that included safety net clinics where low-income residents could receive care.  Now these residents are required to pay co-pays at the clinics due to the elimination of state funding, and they simply can’t afford to do so.  Therefore, this mandate to purchase a private product doesn’t achieve universal access to health care nor does it reduce the financial burden of disease on low- or middle-income families.

Steffie Woolhander, a professor of medicine at Hardvard, calls private insurance a defective product, one that leads people to bankruptcy and at the same time doesn’t provide the health care they need.  She explains, “Once failure to buy health insurance is a federal offense, what’s next? A Ford Pinto in every garage? Lead-painted toys for every child? Melamine-laced chow for every puppy?”  The idea here she’s exaggerating is that forcing residents to buy a flawed product they can’t afford, and that doesn’t provide what’s it’s supposed to, i.e. relief the “financial burden of disease”, is not a way to provide health care. Further, this mandate to buy a faulty product is no way to deliver “universal coverage” and Massachusetts should provide ample evidence for this.

But then, one does not need the over 2000 pages of legislation produced either by Congress or the Senate to realize why this is so. A much briefer paper of only 15 pages, written back in 2003, by four prestigious Princeton economists explains it very clearly. They studied why it is that the United States spends more than any other industrialized nation on health expenditures for the same amount of care, and concluded that “It’s the prices, stupid!” We may want to add to these extraordinary prices the close to 400 billion dollars in administrative waste generated by an extraordinary system built upon the idea of avoiding to pay for the costs of health care: private insurance policies.

Isn’t it time for U.S. policymakers to stop doing the same thing and expecting different results? Yet for for some odd reason, our President and many in Congress are “urging common ground” to go exactly in the same direction. Change we can believe in? Hardly.

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2 Responses to “MASSACHUSETTS: Doing the same thing and expecting different results”

  1. 1Sophia Constantino

    Thank you Dr. Fox for your comments. The data I have used for the blog, however, paints a different picture in terms of satisfaction with the Massachusetts plan than the one you suggest. I invite you to look at the sources linked in my blog for evidence that many residents are very unhappy, because the plan, while working for the relatively healthy and employed, sorely fails the sick, the lower-income, and those thrown to the ‘individual market’. I am sure you will agree that the measure of successful reform is not whether it works for those who do not need the system or are better off, but for those who need it and may be in vulnerable positions.

    Also, the sources I cite also indicate that the proponents of the Massachusetts plan decided, unwisely in the opinion of many, including mine, to leave the issue of cost control for “later”. As a result of this, the state promised more than what it could actually achieve, and as costs of health care continue to rise, because the profit motive in the sale of insurance policies was let untouched, the system has reduced services, enrollment, and subsidies.

    As an aside, I am not surprised that The New York Times and the Henry J. Kaiser Family Foundation support the Massachusets plan, as they have been supporting the Democrats’ plan, which includes a mandate and is essentially a “clone” of Massachusetts. But a universal obligation to purchase a for-profit policy is not a universal right to health care, by a long shot. And I have yet to see a single policy reason why these prestigious institutions dismiss a single-payer system.

    As for Single Payer, my hope lies in the power of the people, in their capacity to create a movement similar to the civil rights movement to enact REAL change in health policy.

  2. 2Aaron Fox, MD

    The Massachusetts election was not a referendum on mandates. There are vocal opponents to Massachusetts’ mandate based “universal coverage,” but the program is popular and people seem to be satisfied. To me, the election indicates that voters won’t “pay” for something that they perceive will be of no benefit to them. Sad, but this seems to be the case. Single payer is a good plan, the volumes of research and powerful talking points speak for themselves, but what is the strategy for enacting it in the United States (especially when voters in a liberal state are voting Republican)?

    From the NYT on Jan 26th:

    A poll taken in Massachusetts after the election by The Washington Post, the Henry J. Kaiser Family Foundation and the Harvard School of Public Health found that a surprising 68 percent of those who had voted said that they supported their own state’s plan, including slightly more than half of those who had voted for Mr. Brown.

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