February 2007 | Back to Table of Contents

Pulse

The Massachusetts Model

Massachusetts shares what it has learned about the process of transforming its health care system. And Minnesota is taking notes.

Massachusetts made headlines last April when it became the first state in the union to mandate health insurance coverage for all of its citizens. Since then, the state has been working overtime to develop the mechanisms to make that happen. And other states are watching to see what they can learn. In fact, health care reform proposals under scrutiny at the Minnesota Capitol this session appear to have borrowed aspects of what might be considered the Massachusetts model.

In November, Tim Murphy, secretary of the Executive Office of Health and Human Services of the Commonwealth of Massachusetts, was in Minnesota to discuss not only the intent of the state’s universal coverage law but also details about the multiple efforts underway to implement it. He spoke at the Midwest States Health Reform Summit, sponsored by the National Institute of Health Policy.

Murphy said one simple way of getting more people covered was to get those who were eligible for, but not enrolled in, Massachusetts’ Medicaid program into it. State officials discovered that about 100,000 of the estimated 500,000 uninsured residents fit that criteria. The state has streamlined its application process and beefed up its efforts to reach them.

But those who don’t qualify for such government programs and don’t have insurance through employers presented a thornier problem. The state’s solution was to create the Commonwealth Health Insurance Connector Authority.

Dubbed “the Connector,” the new state agency doesn’t administer or sell any insurance product; rather, it is building a marketplace for those who do. Essentially, it pools uninsured individuals and asks private insurance companies to come up with more affordable options for them.

More than a Mandate Massachusetts is changing nearly every aspect of its health care system as it seeks to implement its mandate to insure everyone. Here’s what the state set out to do and what it’s done so far. Organizing Principles What Massachusetts Has Done Stabilize the small-group insurance market and keep small businesses from dropping insurance • Merged individual and small- business markets to create a larger risk pool • Provided small businesses, sole proprietors, and individuals with more affordable products • Required employers of a certain size to contribute a “fair share” for employee insurance but not to provide insurance Introduce lower-priced, comprehensive health insurance products • Put out bids to the state’s Medicaid managed care organizations to come up with new, affordable products Bring younger, healthier people into the risk pool   • Extended the age of dependency • Created new insurance products for 19- to 26-year-olds Facilitate the purchase of insurance by part-time employees and employees with multiple employers   • Through the Connector, enabled individuals to buy insurance   • Provided premium assistance for low-income individuals Promote a culture of personal responsibility   • Made having health insurance the law as of July 1, 2007 • Promoted individual responsibility for both health and having insurance • Enrolled 80,000-plus eligible “uninsured” in Medicaid with a streamlined application process • Created tax penalties for those who don’t comply with law Control costs for system sustainability • Remains to be seen Source: Tim Murphy, Secretary, Executive Office of Health and Human Services, Massachussetts

Here’s how the process works: The Connector creates the pool, puts out a request to private insurance companies to come up with affordable products for the group, and promotes those products to qualifying individuals. The individuals select and then apply for health insurance by submitting an application through the Connector. Workers using the Connector can pay for coverage with pretax dollars, giving them the same tax benefits as those with
employer-provided insurance.

Minnesota Gov. Tim Pawlenty’s health care reform proposal announced in January includes creation of the Minnesota Health Insurance Exchange, an entity that very much resembles the Commonwealth Connector. Under the Pawlenty plan, individuals would be required to purchase health coverage through the exchange and could use pretax dollars to pay for premiums, according to a press release about the proposal. The insurance products would be regulated by the state.

The Phase-In
In Massachusetts starting in October, Connector Authority staff began contacting an estimated 50,000 people who meet federal poverty level guidelines with the news that they’re eligible for subsidized private health insurance. (The state is paying for their coverage with monies it formerly used to reimburse hospitals for charity care.) So far, 45,000 people have signed up.

Now they are attempting to reach an estimated 80,000 people with incomes between 100 percent and 300 percent of the poverty level, who will be expected to pay a portion of their premium. An individual with an annual income between 100 percent and 150 percent of poverty (between $9,804 and $14,706) who chooses the lowest-priced plan could pay as little as $18 a month; others would pay more.

Connector Authority officials also have put out a request to the insurance industry to develop more options for individuals with incomes over 300 percent of the poverty level and for low-cost plans aimed at 19- to 26-year-olds, another group that has traditionally had high rates of uninsurance.

Massachusetts’ big stick for motivating people to purchase health insurance is its tax code. People who don’t have coverage by July 1 will lose their personal exemption when they file their state income tax returns for 2007, according to Richard Powers, a spokesman for the Connector Authority. The following year, if they still haven’t purchased health insurance, they’ll be penalized by about half the price of a premium, $1,500 a year, Powers estimates. “And the folks will still not have health insurance,” he notes.

If Minnesota can learn anything from the Massachusetts model, it’s how much can be accomplished in a very short time. “If you think about it, this was all signed into law in April of last year,” Powers says. “In June, the first employee of the Connector Authority was hired. In a short period of time, he’s brought staff on board, he has these programs out there, and we have 45,000 people signed up.”—Carmen Peota