By Greg Vadala, CQ Staff
October 30, 2008 -- The landmark 2006 Massachusetts law to bring near-universal health coverage to the state has not caused employers to cut back coverage for their employees, new studies have found. But other research suggests the law could diminish employer's motivation to offer coverage in the long run.
Three studies published this week on the Web site of the health policy journal Health Affairs reported, respectively, that the percentage of companies in Massachusetts offering health coverage to their employees has increased, employers have not tightened coverage eligibility, and that public support for the overhaul remains high.
But according to a study released Thursday by the Center for Studying Health System Change (HSC), high costs could "potentially weaken employers' motivation and ability to provide coverage." The study also found that employer frustration seems to be on the rise as the state requires them to take on greater responsibilities.
Since the Massachusetts overhaul was enacted, 439,000 people have enrolled in health insurance, according to the Massachusetts Division of Health Care Finance and Policy. Under the law, uninsured Massachusetts residents over age 18 are required to obtain health insurance if affordable coverage is available and pay penalties if they do not. Likewise, employers with 11 or more workers must contribute toward the cost of health coverage or pay a penalty of $295 annually per uncovered employee if they do not.
One of the three studies published on the Health Affairs Web site reported that the percentage of companies in Massachusetts with three or more workers offering coverage increased to 79 percent in 2008, from 73 percent in 2007. The study, led by Jon R. Gabel of the National Opinion Research Center, which is affiliated with the University of Chicago, found that 52 percent of employers agreed that the overhaul "has been good" for the state. This year, 29 percent of companies considered the overhaul a financial burden, down from 36 percent in 2007.
Gabel's study also found that the percentage of companies with 11–50 workers offering coverage increased to 92 percent in 2008, from 88 percent in 2007. Nationwide, the percentage of companies offering coverage was statistically unchanged from 2007 to 2008, at 60 percent and 63 percent, respectively.
Gabel and his coauthors expressed concern that nearly 90 percent of employers who were unaware of the requirement to offer a plan to enable employees to pay for their health insurance on a pre-tax basis, known as a Section 125 plan, did not do so. The authors also were worried that 60 percent of companies with 11–50 workers not offering coverage said they did not pay their annual "fair share" contribution of $295 per employee.
In a second article, Sharon K. Long and Paul B. Masi of the Urban Institute asked employees for their views of the law's impact on their benefits. The findings were based on surveys conducted in the fall of 2006, just before many of the overhaul's critical elements were implemented, and the fall of 2007, about a year after they were enacted.
Employees reported that little had changed over the course of the year. Overall, 90 percent of employees were covered in businesses of all sizes. Long and Masi "found no evidence that employers made major changes in the scope of benefits, network of providers, or quality of available care under their health plans as reported by their employees. Nor is there evidence that employers have shifted a greater share of the cost of health care onto their workers in response to reform."
The third study, led by Robert Blendon, a professor at the Harvard School of Public Health, found that 69 percent of Massachusetts residents currently support the overhaul, up from 61 percent in September 2006.
Blendon's team also found that support for the law's "individual mandate" provision, which requires the state's residents to purchase health insurance if "affordable" coverage is available, increased to 58 percent in 2008 from 52 percent in 2006.
Grace-Marie Turner, president of the Galen Institute, said she was not surprised that Blendon's study found that those who were uninsured at some point during the previous year were less likely to support the law and the mandate.
"They're the ones who are really feeling the pinch of the program," Turner said.
According to the study, this year 45 percent of uninsured people said the law is beneficial, down from 72 percent in 2007. Also this year, 33 percent of the same group said the law is having a negative impact, up from 17 percent in 2007.
In assessing the three articles in Health Affairs overall, Joseph Antos of the conservative American Enterprise Institute said, "This is a good example of how eager some foundations and analysts are to show that [the program] is a success."
Antos contended that the studies do not hold much weight because not enough time has lapsed since the overhaul's enactment.
"We have to give employers a chance to really accommodate to this," he said. "When you try to answer the questions too soon, you don't get a clear answer. We don't have a clear answer."
For her part, Turner said she is troubled that the studies did not address the impacts of the program's cost on individual taxpayers and employers.
"The program is going to succeed or fail around the issue of cost, and none of the three papers addresses that," she said.
The issues of cost and employer involvement are at the core of the HSC study. It found that 160,000 newly insured residents, or 36 percent of the total, complied with the law by getting coverage through their employer, and that the estimated annual cost to employers adds up to about $540 million.
The HSC study was conducted between May and August of this year and is based on interviews with 28 stakeholders, including representatives of employer groups, benefits consultants, providers, and others.
According to the study, employer costs likely would increase as more residents are expected to take up employer coverage to steer clear of the tax penalty, which is "significantly higher in 2008 at half the annual premium of the lowest cost health plan available." That penalty is about $900 for an adult making approximately $31,000 a year, the study said.
The study also found that employers are frustrated that they will be required to take on more responsibility. For example, beginning on Jan 1, 2009, the state will require employers with more than 50 full-time employees to cover 25 percent of their employees and make a 33 percent premium contribution. Currently, employers are required to meet only one of those two thresholds to avoid the penalty of $295 annually per uncovered worker.
Debra A. Draper, a coauthor of the study and an HSC senior fellow, said in a statement, "Many respondents were concerned that unless the state seriously addresses the underlying factors driving costs that the current trajectory of the reform is financially unsustainable."
HSC is a nonpartisan health policy research organization funded in part by the Robert Wood Johnson Foundation, which funded the survey and the study.
The Robert Wood Johnson Foundation and the Blue Cross Blue Shield of Massachusetts Foundation funded the survey led by Gabel. Those two organizations and The Commonwealth Fund supported the study by Long and Masi. The Kaiser Family Foundation and the Blue Cross Blue Shield of Massachusetts Foundation funded the research by Blendon's team.
