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PERSPECTIVEThe Massachusetts Model: An Artful Balance
The Massachusetts health reform law has attracted national attention for its bold vision and its unique combination of tested and innovative policy approaches. Despite the law’s promise, implementation challenges lie ahead, including building and sustaining public and legislative support for the law; ensuring care for those who are left out; and containing health care costs. The provisions that are most certain of success should provide coverage to 70 percent of the state’s 530,000 uninsured residents. The state’s ultimate success in reaching its goal of near-universal coverage will depend on how well the state can respond and adjust as implementation proceeds.
TALKING AND WRITING about the new Massachusetts health reform law is tricky for many of us in the Massachusetts health policy community. We want to pay homage to what’s been achieved, and yet be honest and realistic about what lies ahead. In seeking to strike that careful balance myself, I have come to think of the new Massachusetts health reform law as an avant-garde mobile—the health policy equivalent of an early Alexander Calder. It’s big and bold: It seeks to provide coverage to nearly all residents of the state, and it transcends political ideology and embraces untested approaches to get there. It has lots of pieces that are interconnected and delicately balanced: Medicaid expansions, sliding-scale subsidies for lower-income people, an individual mandate, employer assessments, and a new state purchasing pool. Some of these pieces are solid and recognizable, while others are more abstract and subject to interpretation by the viewer. It’s exciting and energizing. But the piece has yet to be hung in a windy public space. As with all kinetic art, its ultimate success will depend on how well it can move and adjust as it confronts the gusts and air currents ahead. The papers by John McDonough and colleagues and by John Holahan and Linda Blumberg are excellent early commentaries on this new work.1 They provide insightful analysis of the politics and policy of the new law, identify many of the key challenges ahead, and strike a careful balance between optimism and caution. They also convey the excitement in most of the Massachusetts health care community, and among many national policy experts, about the state’s health reform law.
The new law is worth getting excited about. Big thinking won out over modest incremental expansions. The law is a tremendous victory and validation of Medicaid at a time when the program is under assault on the national level and in so many states. Massachusetts has recognized that lack of health coverage for more than a half-million of its residents is a shared problem and requires a shared solution, one in which government, employers, and individuals must participate. The state has also faced up to the reality that new investments are needed to expand coverage and has been willing to make them, along with financial support from the federal government, employers, and individuals. The health reform process in Massachusetts demonstrates the power of a big, ambitious goal to energize and galvanize: Only the shared belief that something important was at stake could have motivated and sustained so many people to work so hard over so many months to pass this law. We will need all of that leadership and commitment, and more, to resolve the difficult policy issues and decisions that lie ahead, to realize the full promise of the law.
The papers by McDonough and colleagues and by Holahan and Blumberg identify many of these decisions and issues, including defining affordability for purposes of the individual mandate and the new subsidy program, ensuring adequate funding, and maintaining a strong system of employer coverage. I add several other challenges to their lists. Building and sustaining the support of the public. The history of health coverage expansion efforts in Massachusetts and elsewhere demonstrates how easily laws passed with great promise and hope can unravel without strong public support and ongoing commitment by legislative leaders. It is likely that most of the Massachusetts public has little or no idea about the substantive details of the new reform law, or about how they will be affected. So far, Medicaid expansions are the only pieces of the law that have gone into effect, and these changes will be greeted favorably by those affected, since they bring coverage with little or no required financial contribution. However, this will not necessarily be the case for other provisions of the law that have yet to be implemented. Most important, the individual mandate, which goes into effect in July 2007, will obligate residents of the state to purchase health insurance if "affordable" coverage is available. The need for an individual mandate as part of a plan to get Massachusetts to near-universal coverage was demonstrated by researchers from the Urban Institute in their work on the Blue Cross Blue Shield of Massachusetts Foundation’s Roadmap to Coverage initiative.2 This is a fundamental cultural shift: It makes the purchase of health insurance an individual responsibility and obligation for those who can afford it. Many people who don’t now purchase insurance will have to do so or face financial penalties. As Holahan and Blumberg note, if insurance products available through the state’s new purchasing entity, the Connector, or elsewhere in the market are not viewed as a good value, residents without access to employer-sponsored insurance may opt to face tax penalties (half the cost of the cheapest qualified plan available) instead of purchasing coverage. Even those who do have access to employer coverage might believe that they cannot afford it, given other personal expenses, particularly if they are not eligible for state subsidies on the same basis as people without employer coverage. Without public support, there could be a public outcry and backlash against the individual mandate itself. The economic situation of the state over the next twelve to eighteen months will be a key factor in the mandate’s success. Massachusetts is one of only a handful of states that are losing population—particularly middle-class families. If the individual mandate is perceived, rightly or wrongly, as worsening this problem, legislative and employer support for the mandate could erode. This argues that the board of the new Connector, which is charged with developing the affordability standard, must be very cautious in its work and highly attuned to the political as well as policy implications of its decisions. A relatively low affordability standard would limit the reach of the new mandate, but it would help ease the transition to the new "culture of insurance." It also suggests that we have much work to do to create broad community understanding and acceptance about the benefits for all of expanding insurance coverage and about the collective and individual contributions that are necessary to get us there. Ensuring access for those who are left out. Many people are left out of the new law. Massachusetts has an estimated 200,000–250,000 undocumented residents. Those who are uninsured and low income do not qualify for Medicaid or for the Commonwealth Care Health Insurance Program (CCHIP), the new subsidized insurance program. Approximately 50,000 uninsured children live in families with incomes too high to qualify for Medicaid; they will not be subject to the individual mandate. Even though Massachusetts has been more successful than other states in enrolling those eligible for public programs (an estimated 90+ percent of those eligible for the state’s Medicaid program are enrolled), we can assume that some of those newly eligible for coverage under health reform will not enroll. Massachusetts has long had a strong and relatively well-funded safety net, comprising an extensive system of community health centers (CHCs); several large public hospitals; and an organized mechanism, the Uncompensated Care Pool, for ensuring that care is provided to people without insurance and sharing the financing burden broadly. Much of the funding for the coverage expansions comes from reallocating money now spent on these safety-net programs. The shift away from institutional support to insurance will likely have many positive aspects; however, it will be essential to ensure that adequate resources remain within the safety-net system to provide access to care for those who will remain uninsured. Containing health care costs. The long-term success and sustainability of the new law will depend on finding successful ways to contain health care costs. If costs continue to rise rapidly, employer-sponsored health coverage will continue to erode, and the price tag of the new subsidized insurance program will increase. If the cost of health insurance continues to rise faster than personal incomes, the standard of affordability for the individual mandate will become less effective over time (that is, fewer people would be subject to it). To keep pace with the cost of health insurance, the state will need to increase the affordability threshold, which would impose a greater financial burden on families. Alternatively, the state could reduce the scope of the benefit package that meets the mandate. However, if as a result of the latter strategy, the law succeeds in reducing the number of people without insurance mainly by increasing underinsurance, many will legitimately question how much progress Massachusetts has really made. Managing the growth of health care costs is not a major focus of the new law. In fact, some key provisions will increase health spending. For example, hospitals and physicians received sizable Medicaid rate increases. Some of the increases for hospitals will be linked to performance, including improving quality and reducing racial and ethnic health disparities. While laudable, these provisions will likely have only a small impact on health care costs. To be fair, the law does create a new Health Care Quality and Cost Council, which could help create a statewide framework for beginning to wrestle with this vexing issue in a serious way. It is also possible that the individual mandate will focus renewed attention on rising health care costs and will create additional public pressure in the system to do something about them. Health plans could find new resolve to develop lower-price products by limiting provider networks. The Connector could become an aggressive purchaser rather than the mild facilitator envisioned in the law. Only time will tell. To steal a phrase from McDonough and his colleagues, I prefer to advance predictions about the law’s likely impact on costs with modesty and be pleasantly surprised.
The national attention generated by the Massachusetts law is exciting, but it is also a heavy burden. We know that whether we succeed or fail will have far-reaching implications for health coverage expansion efforts for years to come. So we feel a collective obligation, to our state and to the country, to implement the new law as well as we can. Our goal is near-universal coverage. Some pieces of the law will undoubtedly be successful in expanding coverage, while the impact of others is less certain. Forty percent of the state’s more than one-half million uninsured residents will be relatively easy to reach: Either they will be able to obtain coverage through the Medicaid expansions or the program of fully subsidized coverage for those living at or below the poverty level, or they have incomes high enough to afford coverage at existing prices and will be required to do so by the individual mandate. Another third of the uninsured will be eligible for sliding-scale subsidies; the major challenge will be to find and enroll them in CCHIP. The most difficult group to cover will be the 30 percent of the uninsured who do not qualify for Medicaid or subsidies and have incomes between 300 and 500 percent of poverty, likely not high enough to easily afford health coverage at existing prices. To reach them, we will have to find ways to make good-quality health insurance more affordable. But even if the new law reaches only the first two groups, Massachusetts will have by far the lowest rate of uninsurance in the country, about 3 percent. HEALTH REFORM IN Massachusetts is very much a work in progress. We will be challenged to emulate Alexander Calder, whose mobiles combine and recombine in often unpredictable ways but remain balanced and harmonious. Only time will tell if our artistry will be as nimble, successful, and enduring. But the early reviews are encouraging.
Nancy Turnbull (nancy.turnbull{at}bcbsmafoundation.org) is president of the Blue Cross Blue Shield of Massachusetts Foundation in Boston. The foundation played a leadership role in the Massachusetts health reform debate through its Roadmap to Coverage initiative. The views presented here are those of the author and should not be attributed to the Blue Cross Blue Shield of Massachusetts Foundation. The author thanks Sarah Iselin and Katharine Nordahl for their very helpful comments.
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Triumph of big thinking.
Remaining challenges.
