Lessons from MA reform

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Lessons from MA reform

• The good, the bad, and the ugly

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Incrementalism made MA reform easier

• Access was expanded over 15 years with reforms.
  Chapter 58 built on those reforms
• MA had been aggressive with FFP funding and 1115
  Waivers in the past
• MA had a highly regulated insurance market with
  guarantee issue
• ESI in MA much stronger than the rest of U.S.

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MA incremental reforms
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MA took money for free care and

• Expanded S-Chip from 200 to 300 FPL
• Removed eligibility caps on Medicaid (MassHealth)
  (about 75,000). Still no caps on eligibility
• Commonwealth Care-subsidized for those under 300
  FPL (about 175,000 insured). Provided by MMCOs
  currently in market. Public design and
  financing, private insurance.
• Commonwealth Choice and private insurance-not
  subsidized, for individual and small businesses
  (about 21,000 CommChoice and 170,000 private).
  Only now expanding CommChoice into small business
  market
• Used close to one billion in the free care pool
  as funding for insurance coverage CMS tied this
  to ending the IGT payments and special funding to
  big DSH hospitals within 3 years (now).

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MA the National Context

• MA represents 2 of the national population
• MA is responsible for 24 of the decline
  nationally in the number of uninsured

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MA pays coverage by

• Provider tax 160M 20M
• Insurers 160M 33M from reserves
• Businesses Increased who covered by fair and
  reasonable (25 take-up, 33 payment), and 35M
  from MSTF
• Consumers increased co-pays and premiums
  Tobacco tax of 150M

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MA built reform around ESI

• MA decided to build around ESI so that employer
  was not lost to finance health insurance
  coverage
• People are generally happy with their ESI- high
  quality, low deductible plans, with average
  Employer payment of premiums at 75 coverage of
  premiums for both individual and family
• There has not yet been crowd-out, with the number
  insured by ESI growing 160,000. From 68 to 72
  ESI covered.
• Has added more admin complexity
• 60,000 or 10 of all uninsured have ESI but cant
  afford it. This will be true nationally and a
  problem MA has not been able to address.
• ERISA is an obstacle to changing insurance and
  coverage, and is a continuing fear in MA. Many
  states have worse ESI coverage that MA.
• Section 125 plans, and fair and reasonable
  standards

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An Individual Mandate to expand coverage

• MA has the first individual mandate
• No political backlash yet-shared responsibility
  is accepted regionally
• Support is still strong (at 69 support, up from
  60)
• Signed up 70 of uninsured in less than 3 years
• Tax penalties on individual growing gradually
  (219/917)
• Shared responsibility is something that resonates
• Mandate is on individual adults
• Problem of family coverage S-CHIP was made free
  in MA if adults signed up. Many cant afford
  family coverage through ESI and cant get into
  CommCare. Unresolved
• ERISA means the mandate is on individuals, not
  businesses-if a plan does not meet MCC,
  individual is on the hook for penalty, not
  employer

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How did we get young workers insured?

• Biggest group of uninsured are young males-the
  invincibles-some because MA regulated market
  meant younger workers paid a lot, and had left
  the market.
• In MA, 60 uninsured were young males
• Even with mandate, they are the group that is
  most resistant to buying coverage. When young
  adults opt-out, this raises the costs of those
  who do buy
• Tension between creating lower cost options for
  young adults, and bringing them into higher risk
  pools vs. raising the cost of broader coverage
  for young adults
• Young-Adult-Plans (like student coverage), and
  families may now cover children until 26.

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MA Insurance market reforms started before
Chapter 58

• Guarantee issue no medical underwriting rate
  bands limited to 21.
• More expensive for young adults less expensive
  for older adults.
• 60 of uninsured were young males.
• Chapter 58 merged non-group and small group
  markets, which lead to decrease in non-group
  costs by 25-30, with improved benefits

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Whats happened in the non-group market?

• Pre-reform plan choice for 37-year-old
• Monthly premium of 335
• No Rx coverage
• 5,000 deductible
• Post-reform plan choice for 37-year-old
• Monthly premium of 175
• Rx coverage
• 2,000 deductible, with office visits and ER
  coverage prior to the deductible

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Universal Coverage requires guaranteed issue and
no medical underwriting

• Only 5 states have guaranteed issue
• MA uses age and gender rating bands substitute
  for medical underwriting (paying more if you are
  sick) modified community rating
• In CA, individual mandate was demand of insurers
  if they were to play ball
• AHIP has said they would agree to guarantee issue
  if combined with individual mandate
• I.M. gets younger (healthier) people into market
  and risk pool

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MA set a high bar for what minimum coverage must
be

• Need to define what minimum coverage is
• Think of MCC as a minimum wage for health
  benefits
• MA Connector Board defined it (MCC)-not
  politicians!
• ERISA is an obstacle to raising quality of
  coverage-threat of an ERISA challenge if we
  mandate too high a level of coverage individuals
  will be penalized if not MCC compliant, not
  businesses
• Real struggle with Taft-Hartley's
• Without a definition, many skinny products
  could have entered our market without solving
  coverage needs.
• MA requires drug coverage, deductibles of no more
  than 2,000 for individual/4,000 for family at
  least 3 preventative visits pre-deductible no
  annual or per-episode limit a broad range of
  medical services
• MCC does not cover larger self-insured and
  Taft-Hartley plans
• Most insurance regulation is set state-by-state
  and could be an obstacle to reform from the
  national level. Progressive state leaders are
  looking for flexibility in reform.

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Affordability schedule

• Built around subsidized plans
• Only up to 300 FPL
• Does not consider OOP costs only premiums
• Were unable to resolve OOP because progressives
  wanted it as of income (10), but how do you
  calculate OOP (at sickest level), and does the
  shoebox approach really work?
• Big hole for those 300-500 FPL. Unaffordable,
  but no access to plans

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Medicaid and Medicare payments need to be
restructured

• MA had maximized Federal Medicaid dollars, and
  negotiated a 1115 waiver that allowed reform
• Promise of 90M/90M/90M in higher Medicaid rates
  for providers. Has been cut back because of
  economic downturn. Big problem. DSH hit
  hardest.
• Will every state be allowed this flexibility, and
  access to Medicaid dollars. Where will the
  additional funding come from?
• Even with expanded federal matching funds, it
  will require states to increase their expense on
  health care. How will national reform make that
  possible?

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MA reform took money from free care and provider
DSH payments, and used it to buy insurance for
individuals

• Through 1115 waiver, MA took safety net dollars
  to pay for insurance coverage for the poor.
• Built in a 3 year transition for MMCOs-sole
  contractors
• Has been a rough transition for Safety Net
  providers
• Patients have choice-some leaving safety net
  facilities
• Isolates undocumented immigrants in old free
  care/emergency system
• If the poor are insured, how do we get our safety
  net hospitals to compete in the market to capture
  patients they use to serve?

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Safety Net Care Pool
Before 2nd Waiver Extension
Now
State 287m Fed 287m
Chapter 58
State 385m (via IGT) Fed 385m
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Pre-Reform Funding Flow
Federal Govt.
Providers DSH hospitals BMC CHA
Medicaid 385 M
via IGT
Patients
UCP
Other Providers
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Post-Reform Funding Flow
Fed
MMCOs
UCP shrinks
Insured Patients
Providers All hospitals
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Free Care versus Comm Care Patients - Patient
volume continues to change but will stabilize as
the remaining Comm Care eligible patients
enroll(BWH and MGH Only)
Note Effective 10/1/07, those eligible for
Commonwealth Care could no longer choose to
remain on Free Care. These patients will
eventually become self pay patients unless they
enrolled in Commonwealth Care. Data Source SDSM
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Which comes first, the chicken (cost and quality)
or the egg (access)?

• Obama wants CQ first, before considering a
  mandate
• MA decided to do access first, and is now
  attacking cost and quality
• MA leaders think in hindsight their approach
  worked-people bought into the system, and are
  more willing to tackle cost economic downturn
  has increased this pressure. New Payment Reform
  Commission considering global payments

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Primary Care workforce development

• MA moved 442,000 new patients into a system over
  two years. The lack of primary care clinicians
  is a huge problem. National needs will be
  staggering.
• Need for rate changes that pay better for primary
  care
• Need for larger workforce, broader set of titles
  (PA, NP, LPNs, what else?)
• Need for training and workforce development
• Where will primary care be provided? Clinics,
  community health centers? Where will new
  workforce be employed?

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MA reform built around the Connector

• MA Connector was responsible for
• Making many policy decisions that politicians
  could not resolve (affordability, what should
  health insurance cover, etc.)
• Operated by consensus
• In charge of implementation and creating
  subsidized plans
• Not clear that small business offerings are a
  viable role for Connector
• Will that work nationally?
• National Connector for federal policy
• Local/regional Connectors to interpret and
  implement federal ideas
• Laws, regulations, and market are local and
  different.
• The politics of surviving backlash means a local
  face and stakeholders is important.

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MA was unable to cover undocumented immigrants
through reform

• MA has historically treated undocumented
  immigrants primarily through a free care pool.
• As others are pulled out of the pool and insured,
  the pool has become a ghetto for many
  immigrants. Have access to emergency care only
  and a bit of preventative care.
• Will need to have a federal change to allow
  Medicaid/CMS money to be used to cover everyone.

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Lessons/Issues

• Let Connector make many key policy decisions (not
  politicians)-affordability, minimum plans
• Implementation is as critical as the bill.
• MA put off issues of cost and made access first
  recent cost bill
• Health delivery system not reformed-just
  starting less complaints about Primary Care
  access than expected
• Built around Medicaid system-Kingsdale
  disagrees-interdependency
• CommCare is designed like MassHealth program-a
  private program build on 4 MMCOs-no public
  program
• Consensus decision-making-more power to the left
• How cover families, not individuals S-CHIP free
• Affordability on premiums only-unresolved debate.
• Those between 300-500 FPL not required to buy,
  but no coverage
• Those working but cant afford coverage left
  out-potential cost for those already buying
  coverage.
• Problems getting around ERISA on state level for
  funding and benefit levels
• States will have to spend more to get Federal
• What will happen to Safety Net providers?
• List billing for small groups
• How will the undocumented get covered?

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Problems for DSH hospitals

• CMS under Bush demanded that special DSH
  payments to big DSH systems be converted to
  health insurance. Pools of money for
  uncompensated care is now for insurance cards
• Special payments to MMCOs was declining, and will
  be eliminated by July 2009
• In economic downturn, MA Governor cut other
  special payments for high public providers, and
  cut Medicaid rates to DSH hospitals by 22
• Now Gov is asking the question What is the role
  of the safety net hospitals? Cant patients just
  go to Mass General now?

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Baucus/House plan like MA

• Individual mandate/shared responsibility
• Builds around ESI
• Guarantee issue and no medical underwriting
• Affordable/subsidies to 400
• Public programs
• An Exchange/Connector/Board to set policy
• Minimum coverage defined nationally

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• Resources
• www.mahealthconnector.org
• www.bcbsfoundationma.org
• www.roadmaptocoverage.org
• www.massmedicaid.org
• www.mass.gov/dhcfp
• www.hcfama.org
• www.mass.gov/myhealthcareoptions
• Celia.Wcislo_at_1199.org