Massachusetts Health Reform:

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Academy HealthState Coverage Initiatives Program

• Massachusetts Health Reform
• Progress and Prognosis
• August 2, 2007

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Todays outline

• Year one review
• The role of the Health Connector
• What lies ahead

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Why health reform?

• 370,000 uninsured adults
• Free Care isnt free
• Leads to expensive and inconsistent care
• Generates implicit and explicit tax, primarily
  paid through health insurance premiums
• Improve health of the uninsured
• Control costs

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Principles of health reform

• Public/private partnership
• Transparency
• Funding follows the individual
• Shared responsibility

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1 Public/private partnership

• Health reform activities require the
  participation, support and collaboration of a
  wide range of groups
• Importance of the tent (employers, businesses,
  health care industry, community-based groups,
  consumer advocacy organizations)
• Federal/state partnership for subsidized coverage
  especially critical
• State/health plan partnership for subsidized and
  non-subsidized insurance has been invaluable

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Public/private partnership

• Mitigating Crowd-Out
• Prohibits individuals with access to
  employer-sponsored insurance (ESI) from
  eligibility for Comm Care
• Imposes annual assessment on employers that do
  not offer ESI (Fair Share Assessment)
• Requires employers offering ESI to extend
  eligibility to all full-time employees
• Prohibits employers that offer coverage from
  charging a higher premium to lower-paid employees
  than they do to higher-paid employees
• Pegs Commonwealth Care benefits, co-pays,
  enrollee contributions to ESI

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2 Transparency

• HCR provides for more transparency around health
  care quality and costs
• Having most people in the insurance system will
  improve prevention, quality and
  cost-effectiveness
• Refines infrastructure for continued focus on
  cost quality

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3 Funding follows the individual

• Commonwealth Care redirects public funds from
  providers of uncompensated care to individuals in
  an insurance-based system
• Focuses responsibility on the individual to find
  the best fit
• Consistent with the mandate
• Promotes individual choice

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4 Shared responsibility

• Individuals
• Required to have health insurance by 7/1/2007
• Government
• Expanded MassHealth eligibility
• Created Connector Authority Comm Care
• Established Cost Quality Council

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Shared responsibility

• Employers
• Gives employers with 11 full time equivalent
  employees a choice to make a fair and reasonable
  contribution or pay an assessment
• Requires employers to provide voluntary benefit
  option (S.125 Plan) to most workers not offered
  insurance (part-time temporary)
• Prohibits all (insured) employers from
  discriminating against lower-paid employees
• Biggest impact on most employers who currently
  offer insurance may be increased take-up

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Commonwealth Care

• Shifts funds from providers (free care pool
  reimbursements) to individuals (subsidized
  insurance)
• Subsidized insurance for adults that do not
  otherwise have access to subsidized health care
  (e.g., employer-sponsored insurance, Medicaid,
  Medicare, VA)
• Available to adults with family income at or
  below 300 of the federal poverty level (FPL)
• Single person
• 2,553 monthly or 30,636 annually
• Family of four
• 5,163 monthly or 61,956 annually

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Commonwealth Care

• Initial estimate of 170,000 eligible adults
• Targeted 54,000 adults that had recently received
  services paid for by the states free care pool
• Four health carriers (MMCOs) to choose from
• Boston Medical Center HealthNet Plan
• Fallon Community Health Plan
• Neighborhood Health Plan
• Network Health

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Commonwealth Care

• Established four benefits packages with sliding
  scale premium schedule
• FPL Category Monthly Premium
• Up to 150 FPL 0
• 150.1 200 FPL 35
• 200.1 250 FPL 70
• 250.1 300 FPL 105

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Commonwealth Care

• Enrollment for adults with income at or below
  100 FPL started on October 1, 2006
• Program fully implemented for adults with income
  between 100 - 300 FPL on January 1, 2007
• As of July 2007, over 92,000 previously uninsured
  adults now covered by Commonwealth Care

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Commonwealth Choice

• Designed to promote choice in non-group and small
  group markets
• Commercial (non-subsidized) health insurance
  distribution system
• Four prime target markets
• Non-group individuals
• Young adults not offered ESI
• Employees not offered/eligible for group coverage
• Small businesses

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Commonwealth Choice

• Contracting with six carriers, representing 90
  of MA non-group/small group market
• Blue Cross Blue Shield of MA
• Fallon Community Health Plan
• Harvard Pilgrim Health Care
• Health New England
• Neighborhood Health Plan
• Tufts Health Plan
• Each carrier offers seven plan choices

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Commonwealth Choice
Tier Benefits
Gold (1) Average July 2007 monthly cost 285 to 570 No or small payment when you go to the doctor or stay in the hospital Choice of large number of doctors and hospitals
Silver (2) Average July 2007 monthly cost 225 to 420 Additional cost-sharing required at point-of-service Some plans may limit which doctors and hospitals you can use.
Bronze (2) Average July 2007 monthly cost 146 to 280 Highest amount of cost-sharing required at point-of-service Some plans limit which doctors and hospitals you can use
Young Adult (2) Average July 2007 monthly cost 104 to 205 Highest cost-sharing required at point-of-service Most plans include an annual benefit maximum Only available to people age 19 to 26, without access to employer-sponsored insurance
Average monthly costs based on weighted average
individual premium for a 37-year-old. Actual
monthly costs vary by region and health plan.
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Whats happened (so far) 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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Commonwealth Choice

• Developed state-of-the-art web site
  (www.MAhealthconnector.org
• Learn more about health insurance options
• Compare plan benefits, cost sharing and monthly
  premiums
• Enroll on line
• Employers able to set up voluntary (Sec. 125)
  plan for non-benefits eligible employees
• Stay up-to-date on MA health reform

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Health Connector Board

• Major policy decisions
• Commonwealth Care eligibility, benefits and
  premiums
• Commonwealth Choice carriers and plan designs
• Minimum creditable coverage standards
• Affordability schedule
• Section 125 requirements

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What is Minimum Creditable Coverage?

• Effective Jan. 1, 2009, to satisfy individual
  mandate, health insurance must include
• Comprehensive medical benefits, including
  prescription drug coverage
• In-network deductible must not exceed
  2,000/4,000
• If plan has deductible or co-insurance on core
  services, plan must include out-of-pocket max lt
  5,000/10,000 on core services (Rx and co-pays
  of lt 100 can be excluded from max)
• No indemnity fee schedules allowed
• No annual or per illness maximum allowed
  (lifetime maximums are allowed)
• Federally compliant HSA/HDHP plans qualify as MCC

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2007 Affordability Schedule Individuals
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2007 Affordability Schedule Couples
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2007 Affordability Schedule Families
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Progress to date

• Commercial insurance rolls expanding
• 15,000 individuals added during May-June open
  enrollment
• Comm Care enrollment growing
• 92,000 previously uninsured now covered
• Free care pool costs falling
• 15 decline in costs in FY 2007
• 30 drop in funding for FY 2008
• MA residents aware and supportive of the law
• 87 aware
• 67 support

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What lies ahead?

• Will costs moderate?
• Will free care pool usage decline?
• Can crowd-out be avoidedor at least minimized?
• Will the public accept the reality (and
  consequences) of the individual mandate and the
  MCC standards?
• How will employers respond to new rules (e.g.,
  fair share assessment, non-discrimination,
  Section 125)?
• Will Section 125 plans serve as the magic
  elixirand will the Connector establish critical
  mass?
• Will deductibles and higher cost-sharing be
  accepted in the Massachusetts market?