Massachusetts Stops Short of Passing Health Reform

December 1, 2005

The Massachusetts General Assembly adjourned its formal session on November 16 without final action on several controversial health care reform bills. The Massachusetts legislature will remain in informal session for the rest of the year, during which a single objection from a single member can stop a bill. Both the House and Senate agreed to return for a special formal session on Dec. 20 if final agreements could be reached on health care reform and other key legislation.

Faced with growing numbers of uninsured and increased Medicaid expenditures, the Governor and several state legislators have proposed plans to provide coverage. Three plans have been proposed in Massachusetts this year to extend coverage to the state’s estimated 500,000 uninsured.

Governor Mitt Romney’s “Safety Net Care” proposal would convert the state’s uncompensated care pool (estimated to cost $1 billion annually) into an insurance plan (purchasing pool) that would provide premium assistance to enable the nearly 150 million people ineligible for Medicaid to purchase health insurance from a specified network of clinics, community health centers and hospitals. The amount of premium assistance will be based on a sliding income scale. A single person earning $23,925 per year would pay $18.46 per week for health insurance through the Safety Net program. Insurance companies would be asked to offer, through the purchasing pool, health plans with premiums as low as $200 a month for residents who are uninsured and do not qualify for Medicaid. Those who choose not to get health insurance and refuse to pay for health care they received would face tax penalties and possible garnishing of their wages.

The Massachusetts House approved a health care reform proposal (H.4463) by a vote of 131-22 on November 3. The House bill seeks to cover 95 percent of the uninsured in three years, mandates that all individuals obtain health insurance, and requires employers to provide insurance or face a payroll tax. According to a BNA report, House Speaker Salvatore F. DiMasi (D) said that approximately 163,000 more people would be covered by Medicaid; 220,000 would be covered by new insurance; and 203,000 would qualify for state subsidies.

The House bill:

Requires employers with 11 to100 employees to pay a 5 percent payroll tax, while those employing 100 or more would pay 7 percent. Companies with less than 10 employees would be exempt. Businesses that offer a health care benefit would be able to deduct those expenses from the payroll tax. Part-time workers would count as full-time employees in calculating the payroll tax.

Expands Medicaid eligibility coverage to include children in households earning 300 percent of the federal poverty level (FPL) and parents making 200 percent of the FPL. Approximately 130,000 more people would be enrolled in Medicaid.

Requires all individuals to obtain health insurance (individual mandate). The mandate combines rule changes that would allow insurance companies to offer limited, low-cost policies, and state subsidies to help people to buy them. People are exempt if the state determines that they cannot afford coverage, under an income-based formula. A financial penalty equal to half of the premiums would be charged to those who can afford to buy insurance but don’t.

A few days after the House Passed H. 4462, the Massachusetts Senate approved a bill (S.2266) that would in two years expand health care coverage to include more that half of the state’s estimated 500,000 uninsured residents, extend coverage to 16,300 Medicaid patients, and require employers with more than 50 employees without health benefits to reimburse the state for coverage. The Senate measure is less ambitious than the House bill and does not include an individual mandate or payroll tax.

The Senate bill (according to the Bureau of National Affairs (BNA) Health Care Daily Report): Seeks to reduce the $1.1 billion spent by the state on uncompensated care by imposing “a free rider surcharge” on employers of 50 or more employees that do not provide health insurance if their employees obtain state –subsidized health treatment. The amount of the surcharge would equal 50-100 percent of the cost of care, under regulations to be formulated by the state’s Division of Health Care Finance and Policy.

Individuals with income above 33 percent of the federal poverty level (FPL) and who are “voluntarily uninsured,” who decline employer health insurance coverage, would be required to pay between 30 to100 percent of the cost of their care under a formula established by state regulators.

Expands Medicaid to cover children in families with incomes up to 300 percent of the poverty level and parents in families with incomes up to 200 percent of the poverty level.

Market-based reforms include a requirement that health plans cover dependents up to age 25, tax deductions for having savings accounts, a moratorium on new mandated benefits and implementation of flexible plans funded by more than one employer to cover workers who change jobs.

Please contact Shuan Tomlinson at 800-338-2746 ext. 4547 or by email at stomlinson@acponline.org with questions on these or other topics.