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Massachusetts: Major Coverage Expansion Legislation

Updated April 17

On April 4, the Massachusetts legislature overwhelmingly passed a bill containing mechanisms for nearly all of its residents to obtain health coverage. It includes the first "individual mandate" in the nation. After months of wrangling among the House, Senate, and governor, the legislature developed a compromise bill that Governor Romney signed April 13. The key features, based on principles that span the political spectrum, include:

  • A requirement that all state residents obtain health coverage by July 1, 2007; individuals who can afford insurance but do not purchase it by that date will be penalized on their state income taxes;
  • A new "Commonwealth Health Insurance Connector" that will certify and offer insurance products of high value and good quality, connect individuals and small businesses with health insurance products, and allow for portability of coverage from one job to another;
  • The Commonwealth Care Health Insurance Program, providing public subsidies (on a sliding scale) to families with income up to 300 percent of the federal poverty level (FPL) toward the purchase of private insurance plans through the Connector; subsidized insurance products with comprehensive benefits will also be made available to individuals earning less than 100 percent of FPL who are ineligible for MassHealth (the state's Medicaid program), including many childless adults. Premiums and deductibles will be waived for this group;
  • Expansion of Medicaid coverage for children with family income from 200 percent to 300 percent of the FPL;
  • An increase in Medicaid reimbursement to providers, with rates tied to specific performance goals;
  • An assessment of up to $295 per worker per year on companies with 10 or more employees that do not provide coverage, with the money helping to pay the costs of the uninsured;
  • A Free Rider surcharge imposed on employers who do not provide health insurance, when an employee uses free care more than three times, or whose employees receive free care more than five times in a year; the surcharge will range from 10 to 100 percent of the state's costs of services provided to the employees, with the first $50,000 per employer exempted;
  • Ability of individuals and businesses with 50 or fewer workers to buy insurance with pretax dollars;
  • Incentives to insurance companies to offer low-cost "basic" insurance plans to individuals aged 19 to 26;
  • Insurance market reforms including the merging of the non-group and small-group markets, expected to reduce premiums by nearly 25 percent;
  • A restoration of all MassHealth benefits that were cut in 2002, including dental and vision services;
  • A phasing-out of the state's Uncompensated Care Pool by October 1, 2007, which will be replaced by the Health Safety Net Fund, run by a new division within Massachusetts' Medicaid office.
Legislators expect the plan to cover 515,000 uninsured people—about 95 percent of the uninsured—within three years. The program is estimated to cost $1.2 billion over that period, with only $125 million in new state money. Most of the financing will come from federal funds and existing state health funds. Federal funds would continue through the renewal of the state's 1115(a) MassHealth demonstration waiver, with a shift in uncompensated care payments from individual hospitals (as free care declines) to health coverage for uninsured individuals. Legislators expect that no new state money will be required after three years. The bill was developed with input from multiple stakeholders, and appears to have the support of the business community, health care industry, and consumer advocates.

For More Information
See: Health Care Conference Report, Summary and Fact Sheet
Full text of bill (House Bill 4850)
Section-by-Section Summary

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