The Massachusetts Model of Health Reform in Practice

http://masscare.org/massachusetts-health-reform-in-practice/

And the Future of National Health Reform

Massachusetts Health Reform (“Chapter 58”) April 12, 2006

Patient Protection and Affordable Care Act March 23, 2010

Presidential Elections November, 2012

Origins of Mass. Health Reform • 2006 expiration of Massachusetts Medicaid

Waiver (Section 1115). • Bush Administration opposition to state’s ‘Free

Care Pool’ payments: culture of insurance. • Two binding ballot initiatives for ’06 election.

The ‘Free Care Pool’ • Hospital & health center reimbursement for care of

uninsured, 0 to 200% of poverty line. • 452,000 users in FY2006 (659K uninsured). • $710 million in FY2006 (Medicaid: $10 bill). • Covers all services available at hospitals, health

centers, no cost-sharing, not considered insurance.

Structure of Mass. Health Reform • Commonwealth Care: free subsidized insurance from 0

to 150% of poverty; sliding subsidies from 150% to 300% of poverty.

• Commonwealth Choice: ‘exchange’ for individual and eventually small business market (40K users currently).

• Individual Mandate: adults above 150% of poverty must demonstrate insurance coverage or pay a fine ($200 to $1,200) on tax forms.

• Employer Play-or-Pay: with 11+ employees, must cover 1/4th of employees and offer to cover 1/3rd of premium costs, or pay $295/per worker per year fine.

• No New Revenue: financed from existing free care pool funds, federal matching funds, private payments, and limited cash from state’s General Fund.

• No Cost Control: limited to access for political reasons.

Impact on the Uninsured

4.1% 4.2%

4.4%

11.3%

9.2%

10.4%

5.4%

5.5%

4.4%

5.6% 7.4%

6.4%

5.7%

2.6% 2.7%

1.9%

9.3%

10.3%

8.5%

6.2%

4.4%

5.3%

4.3%

0%

2%

4%

6%

8%

10%

12%

2004 2005 2006 2007 2008 2009 2010

Census/ACS

Census/CPS

State/CSR

State/Urban Inst

CDC/BRFSS**

Health Reform

Notes on the Uninsured • Most commonly cited estimates are

impossibly low: state survey finds less than 144,000 uninsured in fall 2008, but 150,000 report they are uninsured for whole year on tax returns.

• Most reliable surveys show uninsured population cut in half, around 4-5% of pop.

• State reports that 4/5ths of the newly insured received public subsidies – majority of these were eligible for free care prior to reform.

Impact on the Employer-Sponsored Coverage

69% 68%

70%

72%

76% 77%

67%

63%

57%

63%

60%

54% 50%

55%

60%

65%

70%

75%

80%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

% of Employers Offering Workplace Coverage

% of Employees Buying Workplace Coverage

Impact on Employer Coverage of Low-Income Residents

21.8%

26.2%

17.2% 20.9%

25.3%

46.1% 42.4%

54.2% 55.6% 59.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

2005 2006 2007 2008 2009

Employer-Sponsored Insurance Public Insurance

Access to Regular Source of Care Improved

85.4%

86.3%

87.8% 87.7% 88.3%

90.0%

87.0%

92.1%

89.9% 89.0%

88.0%

91.0%

82.0%

84.0%

86.0%

88.0%

90.0%

92.0%

94.0%

2005 2006 2007 2008 2009 2010

BRFSS Blue Cross/Urban Inst State/Urban Inst

Massachusetts Residents, Ages 18-64, Reporting a Regular Source of Care, Three Sources of Data

Cost Barriers to Care Declined Massachusetts Residents, Ages 18-64, Didn’t Receive Needed Care Due to Costs, Three Sources of Data

9.9% 8.6% 7.8% 6.9%

7.9% 7.6%

16.3%

11.6% 11.7%

26.0% 27.0%

29.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

2005 2006 2007 2008 2009 2010

BRFSS Blue Cross/Urban Inst State/Urban Inst

From Safety Net Care to Publicly-Subsidized Private Insurance

Co-Payments by Safety Net Plan

Free Care Pool Commonwealth Care (2011) Income Eligibility

0-200% poverty

0-100% poverty

100-200% poverty

200-300% poverty

Annual Premium (for lowest cost plans)

$0 $0 $0 - $468 $924 - $1,392

Primary Care Visit $0 $0 $10 $15

Specialist Visit $0 $0 $18 $22

Inpatient Care $0 $0 $50 $250

Outpatient Surgery $0 $0 $50 $125

Emergency Room Visit $0 $0 $50 $100

Generic Drugs $1-3 $1-3 $10 $12.50

Preferred Brand Drugs $3 $3 $20 $25

Non-Preferred Brand Drugs $3 $3 $40 $50

Maximum Prescription Co-Pays $200 $200 $500 $800

Maximum Other Co-Pays $0 $0 $750 $1,500

Patient Story on Mixed Access Impact

“Under Free Care I saw doctors at Mass General and Brigham and Women’s hospital. I had no co-payments for medications, appointments, lab tests or hospitalization; the care I received gave me a light at the end of the health care nightmare tunnel...Under my Commonwealth Care plan my routine monthly medical costs included the $110 premium, $200 for medications, a $10 appointment with my primary care doctor, and $20 for a specialist appointment. That’s $340 per month, provided I stayed well.”

Kathryn, Boston MA (2008)

Primary Care Wait Times Rise With Increased Demand

Average Wait Time for New Patient Appointment

47

33

52 50

44

53

48

25

30

35

40

45

50

55

2005 2006 2007 2008 2009 2010 2011

Days

Internal Medicine Trendline

Decline in Primary Care Practices Accepting New Patients

Percentage of Practices Accepting New Patients

66%

64%

51%

58%

44%

51%

49%

40%

45%

50%

55%

60%

65%

70%

2005 2006 2007 2008 2009 2010 2011

Internal Medicine Trendline

Underinsurance Rises: Primarily at Small Employers

Private Insurance Plans with High-Deductibles ($1,000+)

3.4%

6.1%

11.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2006 2007 2008

5%

50%

16%

28%

46%

15% 34%

8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

≤ 70% 70.1% - 80% 80.1% - 90% 90.1% - 100%

Share of Medical Costs Covered by Small Business Employees’ Insurance, 2007-2009

Out-of-Pocket Barriers Decline Change in % of Families with High Out-of-Pocket Spending

21.8%

18.4% 18.0%

9.4%

7.3% 6.7%

0%

5%

10%

15%

20%

25%

2006 2007 2008 2009

Out-of-pocket costs 5% of income or more Out-of-pocket costs 10% of income or more

Impact on Total Household Spending on Health Care

Change in Percentage of Families with High Total Health Spending

14.2%

3.6%

20.2%

5.2%

0%

5%

10%

15%

20%

25%

Spent 10%+ of income on health care Spent 25%+ of income on health care

2000 2009

Impact on Medical Debt and Medical Bankruptcies

19.1% 19.5%

59.3%

19.1% 20.3%

52.9%

0%

10%

20%

30%

40%

50%

60%

70%

Problems paying medical bills Paying medical bills over time Bankruptcies related toillness/medical bills*

2006/07 2009

Emergency Department Use

102

107

111

113

100

101

104

107

109

95

97

99

101

103

105

107

109

111

113

115

2004 2005 2006 2007 2008

Preventable/Avoidable ED visits Total ED visits

Trends in Emergency Department Use (Indexed to 2004)

Financial Crisis for Safety Net • Contrary to expectations, patient volume at safety net

providers has gone up since health reform: – 31% growth in patients receiving care at community health

centers – Ambulatory visits to safety net hospital clinics grew at 2X the

rate of visits to non-safety net hospital clinics • Reimbursement rates at safety net hospitals are down.

Promised Medicaid rate increases reversed through budget cuts and health safety net funds falling short, creating a serious financial crisis. – Unsuccessful lawsuit by Boston Medical Center and six

community hospitals for Medicaid underpayments in 2009. – “Soft landing” funds for two largest safety net hospitals run out

in 2010. – Cambridge Health Alliance forced to close six clinics and shut

down all inpatient services at one of its hospitals, seeking a buyer or a merger.

Rise in Premiums Has Accelerated, Growth in Provider Administration

• Employer premium growth accelerated in Massachusetts after health reform compared to other states: – For single coverage: premium growth was 5.9% higher in three

years after reform for all employers, 6.8% higher for small employers

– For family coverage: average annual premium growth was premium growth was 1.5% higher in three years after reform for all employers, 14.4% higher for small employers

• Small employer premiums due in part to merger of individual and small group markets in Mass.

• Job growth in Mass. health care industry almost double that of nation after reform, slower than nation prior to reform. Almost all of difference accounted for by growth in administrative occupations in Massachusetts, which grew by 18.4% over three years (compared to 8.0% nationally).

Concept of “Shared Responsibility”

“Massachusetts mandated shared responsibility… The costs of expanding coverage to all are considerable… the only way to ensure the sustainability of that expense over the long term is through universal responsibility, spreading the cost broadly among all sectors of society: individuals, government, and employers.”

Bruce Bodaken President and CEO, Blue Shield of California

Measuring Shared Responsibility

21% 22% 25%

28%

0%5%

10%15%20%25%30%

Employers and UnionPlans

Individuals State Government Federal Government

Change in Health Care Spending by Payer, Before and After Reform, 2005-2007

Measuring Shared Responsibility

21% 22% 25%

28%

0%5%

10%15%20%25%30%

Employers and UnionPlans

Individuals State Government Federal Government

Change in Health Care Spending by Payer, Before and After Reform, 2005-2007

Increase in Health Care Spending After Reform as a Percentage of Family Income, by Income Quintiles, 2005-2007

-1.5%

4.6%

1.7% 1.4% 0.4%

-2%

-1%

0%

1%

2%

3%

4%

5%

Bottom 20%($0 - $20k)

Second 20%($20k - $41k)

Middle 20%($41k - $66k)

Fourth 20%($66k - $111k)

Top 20%($111k+)In

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se in

Hea

lth S

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Income Quintiles: Bottom to Top 20% of Income Earners

Mass. Health Reform Has Had Positive Impacts, But Is

Unsustainable “If we have double-digit increases (annually in

costs), health reform is not sustainable.” Jon Kingsdale

Executive Director, Commonwealth Connector “If we do not constrain healthcare costs, the

system we worked so hard to create and implement will collapse..”

Therese Murray Senate President, Massachusetts Legislature

State Has Been Gradually Rolling Back Coverage to Control Costs Share of Commonwealth Care Enrollees Paying Premiums

0% 8%

25% 20% 23% 28% 29% 33% 32% 31% 31%

43% 42% 42% 42% 50% 49%

0%

20%

40%

60%

Q2

'07

Q3

'07

Q4

'07

Q1

'08

Q2

'08

Q3

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Q4

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Q1

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Q2

'09

Q3

'09

Q4

'09

Q1

'10

Q2

'10

Q3

'10

Q4

'10

Q1

'11

Q2

'11

3,654

177,136 178,686

152,571 5% 5%

9%

0%1%2%3%4%5%6%7%8%9%10%

020000400006000080000

100000120000140000160000180000200000

Nov

'06

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Mas

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Commonwealth Care Enrollment % Unemployed

Commonwealth Care Enrollment and Mass. Unemployment Rate

Individual Mandate Also Unsustainable, Mass. Has Raised

Affordability Thresholds Percent of Income Deemed Affordable for Health Premiums (Families of Three, 2007-2011)

3.3%

4.9%

5.9%

7.5%

5.6%

7.0%

3.4%

5.0%

6.0%

8.0%

9.5%

11.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

151% ofPoverty

201% ofPoverty

251% ofPoverty

301% ofPoverty

401% ofPoverty

500% ofPoverty

2007

2011

Takeaway Points for National Health Reform (PPACA)

1. Mass. reform affected the insurance status of about 4-5% of the population (half the previously uninsured), and improved access for about half of those. The impact in other states will vary depending on their existing safety net programs, but focus on access outcomes – not insurance coverage!

2. National reform is unlikely to have a significant impact on outcomes that predominantly afflict the insured population, including emergency department visits, medical debt, and health-related bankruptcy.

3. While safety net providers handle most of the increased demand for care that results from reform, Massachusetts and national reform rely on cuts to public health care programs that can threaten the viability of those providers. This increased demand will also increase strain on primary care provider networks.

4. Most of the population will be relatively unaffected by health reform, but will continue to experience the health care crisis of unaffordable premiums and high barriers to care. (They also vote!)

5. This model of reform defers serious action on cost control. Without addressing the systemic causes of our high costs – which has thus far proven politically impossible – access gains will face retrenchment, or will force us to sacrifice spending on other basic social goods.