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Lessons From Massachusetts

A few years after, the state's ambitious plan gets mixed reviews

In 2006 Massachusetts enacted a landmark law requiring all residents to have health coverage by July 2007. Then-governor Mitt Romney declared that “Massachusetts is leading the way with health insurance for everyone, without a government takeover and without raising taxes.” Ever since, Massachusetts has been widely seen as a model for national reform.

Now, two years after it was implemented, Massachusetts’ bold venture is drawing both praise and criticism. It’s also raising questions about the lessons to be drawn as President Obama and Congress grapple with ways to reform health care nationwide.

“We think there’s a lot that national policymakers can learn from Massachusetts in terms of the broad picture of our model, but its details would have to change dramatically in a national context,” says Brian Rosman, research director of Health Care for All MA, a state advocacy group that had a prominent role in getting the 2006 law passed.

Massachusetts’ big success is in having drastically cut the uninsured rate to 2.6 percent—by far the lowest in the country. The average national rate is 15 percent. The program subsidizes people with 2009 income of up to $32,508 for individuals and $66,168 for a family of four. The Connector, an independent state agency, links consumers to six private insurers, each of which offers four different levels of coverage. Nobody can be denied insurance or charged higher rates because of health status or preexisting conditions. And while coverage is mandatory—with penalties of up to $1,068 a year for adults who don’t comply—people who can’t afford the offered plans can apply to the Connector Board for a waiver from the penalty.

But while achieving near-universal coverage, the state has not yet attempted to control costs, which are ballooning. “At stake ultimately is whether the Massachusetts reforms can survive,” a recent report from the Urban Institute, a Washington research group, warned.

Massachusetts has now appointed a Payment Reform Commission, made up of a range of stakeholders from government, industry and consumer advocacy groups, to figure out ways of reining in costs. In 2006 “the consensus among political leaders and activists was to get coverage done first and cost issues next,” says Rosman, “because [the latter] are much harder.”

The Massachusetts system has also drawn fire over the issue of affordability. Those eligible for subsidies “have benefited tremendously from the reforms,” says Diane Archer, director of the Health Care Project at the Campaign for America’s Future in Washington and author of an analysis of the reforms. But among those with incomes above the subsidy level, “about 60,000 have been able to demonstrate that [the plan choices] aren’t affordable for them and have not had to pay a penalty, and about another 100,000 have chosen to pay the penalty rather than buy insurance.”

Residents ages 50 to 64 are among those feeling the pinch most, because the law allows insurers to raise premiums as people age. “Often people in this age group are paying premiums that are twice as high as younger residents,” says Deborah Banda, AARP state director. Banda cites, as example, a woman who paid $422 a month when she signed up in 2006, when the law took effect. “When she turned 55, her premium went up 45 percent to over $600 a month.” In other states, such premiums can be up to nine times higher than those for younger people.

National health care proposals from the Obama administration and Democratic leaders in Congress contain some of the elements of the Massachusetts reform—establishing a Connector-like exchange to help people buy insurance, premium subsidies for those with low or moderate incomes, eliminating exclusions for preexisting medical conditions, and (except in Obama’s proposal) mandatory coverage for all.

But there are also big differences. The national proposals seek to control costs, improve the quality of care and achieve near-universal coverage all at the same time. They also include setting up a government-run public insurance option in competition with private plans—an idea the insurance industry fiercely opposes. These are ambitious and politically fraught goals, experts say.

For consumers, the main issue is a fear of being compelled to buy insurance that’s not affordable, says Robert Blendon, a professor at the Harvard School of Public Health who tracks public attitudes about health care. “That was central in Massachusetts,” he says—hence the penalty waiver in the law.

This is one reason the reforms remain quite popular in the state, Blendon says, the others being that it involved no new taxes (except on tobacco) and made no difference to people who have employer insurance. “It fixed something important [coverage of the uninsured],” he adds, “without threatening them.”

But if health costs continue to rise unchecked in harsh economic times, and more Bay Staters become eligible for subsidies or penalty waivers, the program could falter.

Patricia Barry is a senior editor at the AARP Bulletin.

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