Four plans to expand health insurance coverage in Massachusetts

By ADHC Intern Emma Libby and Ann Eldridge Malone, RN, MSN

May 14, 2005

As you may have heard about in the news, four different plans are being proposed to expand health insurance coverage in Massachusetts. What you may not appreciate are the significant differences among these plans and how they each measure up to the goals of universal coverage, responsible stewardship of resources, and quality care for all. In this short article we have attempted to summarize and contrast each of the plans and provide links to more detailed information.

Brief Description of the Four Plans

1) The first is a plan proposed by Governor Mitt Romney to create two new insurance products accompanied by a legal mandate that all persons have health insurance. "Safety Net Care" will be a product for families that do not currently qualify for MassHealth, the state's Medicaid system for those with limited income. Safety Net Care will extend health insurance to roughly 150,000 residents who are currently relying on "free care" provided by hospital emergency rooms and other providers who are then partially reimbursed from a state-run pool. "Commonwealth Care" is the other product and will be a limited coverage product to be offered thru the not-yet formed "Insurance Exchange"-- a public-private agency. The Governor has not yet filed his full bill with the Legislature but is expected to file legislation this summer to establish the so-called Safety Net program.

2) The second is a bill titled The Health Access and Affordability Act. Its lead sponsor in the Legislature is Senator Richard Moore, Chair of the Joint Committee on Health Care Financing. This bill's lead community sponsor is the organization Health Care For All (HCFA) and a coalition they have formed called "Affordable Care Today!". The bill builds on two existing components of how health insurance is obtained: MassHealth and employer-based health insurance, and contains detailed plans to raise additional revenues.

3) The third reform effort is a bill filed by Senate President Robert Travaglini. This bill has many similarities to Senator Moore's/HCFA's bill but contains less ambitious coverage expansion goals, and seeks to raise less additional revenues.

4) The fourth plan is a bill titled The Massachusetts Health Care Trust, has as its lead sponsor Senator Steven Tolman, chair of the Joint Committee on Mental Health and Substance Abuse and vice-chair of the Joint Committee on Health Care Financing. Its lead community sponsor is the statewide coalition organization called MassCare (which includes HCFA among its over 100 organization members). This bill proposes an entirely new system to finance and provide health insurance for all state residents. The approach this bill uses is often referred to as a Single-Payer Universal Coverage system.

Details of the Four Plans

Governor Romney's plan is not being introduced as an actual bill until late summer so there is little information available regarding its specifics and funding. As previously written, his proposal seeks to create two new insurance products. "Safety Net Care" will insure individuals and families who do not qualify for MassHealth/Medicaid, but who cannot afford to purchase other insurance products. It will have sliding scale state subsidies. "Commonwealth Care" would have more limited coverage than any insurance products that currently exist in the state. It would be available to individuals, small businesses, and employees of large businesses that don't currently provide health insurance. The co-payments and deductibles are expected to be high. Employers would have no legal requirement to provide insurance under Governor Romney's proposal, but those who do offer Commonwealth Care will be permitted to display a sticker.

The Health Access and Affordability Act sponsored by Senator Moore and HCFA builds on MassHealth and employer-based insurance coverage. The bill expands MassHealth eligibility by authorizing MassHealth to cover adults who earn up to 200% of the Federal Poverty Level (2,005 Poverty Levels: $9,570 for an adult in a family of one; $12,830 family of two; $16,090 family of three; $19,350 Family of four and so on) and eliminates the requirement that these adults be parents. It also authorizes MassHealth to expand eligibility for children in families earning up to 300% of the Federal Poverty Level.

To make health insurance more affordable for small businesses and individuals this bill proposes a number of changes to existing state law. It removes the most expensive cases to insure from the market; this system is called re-insurance.
Funding for these coverage expansions will come from a variety of sources: so-called "employer responsibility assessments", increasing the cigarette tax by 50 cents per pack, savings from the state's free-care pool, and Federal Medicaid matching funds.

Senate President Travaglini's bill is much like Senator Moore's/HCFA's but its scope for expanding coverage is less ambitious, aiming to insure about 250,000 (half of those currently without health insurance in the state). No change to the current system of MassHealth coverage eligibility for those with low incomes is proposed. The bill does create the same re-insurance program, taking the most expensive to insure cases out of the commercial insurance market, which would hold premiums down and presumably make it more affordable for small businesses and individuals to purchase coverage. Senator Travaglini's bill allows for the creation of an extremely limited coverage insurance product available at less cost.

This bill authorizes an increase in Medicaid reimbursement rates for hospitals and physicians, similar to that proposed in Senator Moore's bill, but Travaglini's bill goes further to increase rates to reach the level of Medicare payment amounts. The increased costs associated with Senator Travaglini's bill will be paid for through state Reserves, federal reimbursements, and a "free-rider surcharge" collected from businesses with 50 employees or more when their employees use the Free Care Pool because they are not offered coverage by their employer.

The Massachusetts Health Care Trust bill, sponsored by Senator Tolman is the only bill that achieves both universal coverage and cost savings through reduced administrative expenditures. This is accomplished by utilizing the "Single-Payer" financing method, where all health care dollars are collected and managed by a newly created Massachusetts Health Care Trust. (This financing method is currently in use by the federal government for the Medicare program that has administrative costs of approximately 2%.)

The state Trust that will replace the current patchwork of public and private health insurance plans and their expensive administrative bureaucracies which have been estimated to consume up to 25%-39% of every health care dollar. The Trust, appointed by the Governor, will have representation from consumers, professionals and government.

This bill will allow patients unlimited choice in providers yet is projected to cost less than the present "system". It will be paid for with existing income tax, federal and state Medicaid funds, and contributions by employers. There will be no additional cost to the people of Massachusetts while everyone in the state-individuals, businesses both large and small, and government officials who seek to improve health insurance coverage and costs-will benefit greatly.

Under the Health Care Trust legislation every resident of Massachusetts will automatically be eligible for comprehensive health insurance. Coverage will not be linked to or affected by employment status, income, nor health of the patient. HMOs will be available as an elective option for patients. The patient and their care provider without influence or interference from outside entities will make all decisions affecting an individual's health care. This legislation guarantees every Massachusetts resident affordable and comprehensive health insurance coverage.

Critique of the Four Plans

Significant differences exist among these four health reform proposals. Both Governor Romney and Senator Travaglini's bills are lacking in that they do not aim to provide coverage for everyone, and they each perpetuate the existing layers of wasteful bureaucracy and excessive administrative costs endemic to our current system. A relevant reminder is that in Massachusetts, over $16 billion (or 39%) of our annual health care spending goes to administrative costs instead of to patient care (see LECG Report for full figures).

A major shortcoming of the Senator Moore/HCFA bill is that it does not provide affordable coverage to those who are unemployed unless they meet the expanded MassHealth eligibility guidelines. There are many other drawbacks to this bill. These include: high administrative costs, insurance coverage would remain job or income level dependent, most of us would still have to pay high premiums, deductibles, and co-pays--even those with low-incomes who become eligible for state-funded MassHealth insurance. Also, choice of health care providers will remain limited under this plan.

Overall, Senator Moore's bill does not achieve expansion of coverage that is needed and health insurance costs for both employers and employees will continue to increase. It may be better than what currently exists but it falls short of what the people of Massachusetts both need and deserve.

Like the reform proposals made by Governor Romney and Senator Travaglini, Senator Moore's/HCFA's bill perpetuates the irresponsible and wasteful bureaucracy and accompanying maze of public and private insurance programs that both fragment care and drive up costs in the current system.

Of the four proposals, Senator Tolman's/MassCare's Massachusetts Health Care Trust legislation best satisfies the reform goals of universal coverage, responsible stewardship of resources, and quality care for all. The collection and allocation of health care monies will be redesigned utilizing the cost effective "single-payer" financing method. The current maze of insurance companies and myriad MassHealth categories will be eliminated in the state.

This reform approach calls for courageous leadership from the Legislature and from community advocates as it requires major structural overhauls in how health insurance is paid for and provided. Under the Massachusetts Health Care Trust, responsible stewardship of resources prevails over market-driven insurance schemes; private health insurers, be they for-profit or non-profit, become obsolete with this approach. Hence, we can expect vigorous resistance and heavily funded lobbying efforts against this bill to continue, resulting in many advocates of universal health coverage to give weak support if any, stating "it's the best solution but just isn't politically feasible".

Links to More Information on the Four Plans

Governor Romney's Plan

Senator Travaglini's Bill Testimony and Bill Language

Senator Moore's/HCFA's Bill

Senator Tolman's/MassCare's Bill

Chart Comparison of 4 Current Massachusetts Health Reform Proposals