Massachusetts: Implementation of Comprehensive Reforms

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Massachusetts is still the only state that has implemented an individual mandate and therefore continues to draw much of the nation’s attention with its unique and comprehensive reform plan. Enacted in spring 2006, Massachusetts’ landmark health reform law seeks to cover nearly all of its residents within three years. Enactment of the law represented the culmination of more than a year of negotiations and compromise between lawmakers and former Governor Mitt Romney. Four major principles have guided the state’s health care reform initiative throughout its evolution:[i]

  • A public/private partnership that requires the participation of a wide range of stakeholders and the dedication of both federal and state funds to ensure subsidized coverage.
  • Transparency around health care quality and costs with the 2012 goal of being a state that consistently ranks among those states achieving the highest levels of performance in health care.
  • A shift from free-care safety net funding to insurance funding by redirecting public funds previously spent on uncompensated care into coverage for individuals in an insurance-based system.
  • An emphasis on shared responsibility among the government, employers, individuals, health plans, and health care providers. Massachusetts is the first state to attempt near-universal health coverage for its residents by issuing an individual mandate, in combination with a requirement that employers of 11 or more provide a minimum amount of health insurance or pay $295 annually per worker per year.[ii]
States continue to follow with interest the developments of the Massachusetts health reform plan. The state’s four main measures designed to expand health insurance coverage are: 
  • A mandate that nearly all adults 18 and older obtain health insurance or face tax penalties;
  • The expansion of MassHealth (Medicaid) for children up to 300 percent FPL and insurance subsidies for low-wage small business employers and workers;
  • The creation of Commonwealth Care, a subsidized health insurance program for adults up to 300 percent FPL who are not eligible for MassHealth and do not have access to employer-sponsored insurance; and,
  • The development of the Commonwealth Health Insurance Connector which is a health insurance purchasing mechanism with responsibility for Commonwealth Care as well as Commonwealth Choice—an unsubsidized health insurance program for uninsured adult Massachusetts residents. 
Both the comprehensive benefit design of the Commonwealth Choice plans and the idea of a Connector helping residents obtain affordable health coverage have generated particularly strong interest among states.[iii]
When the Massachusetts Division of Health Care Finance and Policy released its August 2008 report, Health Care in Massachusetts: Key Indicators, an editorial in the New York Times described the Massachusetts plan to provide health insurance to all its residents as “more and more successful with each passing month.”[iv] The most significant finding from the report was that more than 439,000 people have acquired health insurance since the reforms were implemented in mid-2006. That number is two-thirds of the estimated 650,000 people who were without insurance at the time of the plan’s inception.[v] Other key figures for Massachusetts since the time of implementation include:
  • The overall uninsured rate dropped from 6.4 percent in 2006 to 5.6 percent in 2007. Massachusetts is now the state with the lowest rate in the nation.
  • More than 40 percent of the newly insured gained private coverage without any government subsidies. Among the state’s insured population, 82 percent have private insurance, 14 percent are covered by Medicaid, and 3 percent are enrolled in Commonwealth Care subsidized plans.
  • The percentage of employers providing health insurance rose to 73 percent in 2007 and increased to 79 percent in 2008.
  • The number of residents using free care from hospitals or community centers declined by 37 percent from the past year and the cost of uncompensated care decreased from $166 million in the first quarter of the pool’s 2007 fiscal year (FY) to $98 million in the first quarter of FY 2008.[vi]
On December 18, 2008, results from the 2008 Massachusetts Health Insurance Survey were released, revealing that—based on survey results from summer polling—the uninsurance rate in the state had fallen even further to 2.6 percent of the total population and only 167,300 people remain uninsured.[vii] 
While the Commonwealth Care cost per individual has been less than anticipated, the unexpected success of enrollment has required funding adjustments. The first-year cost of the program has grown from an expected $472 million to $630 million. 
In late September, CMS granted Massachusetts a three-year, $10.6 billion Medicaid waiver that will enable the state to expand its landmark health reform legislation. The waiver gives Massachusetts the authority to spend about $21.2 billion over the next three years. This amount is $4.3 billion more than was permissible under the previous waiver agreement, which expired on June 30. The federal government granted a number of waiver extensions during the intervening months while negotiations were occurring. This waiver agreement preserves existing eligibility and benefit levels, along with federal matching funds for all programs. It also enables Massachusetts to meet all of its health care obligations for FY 2009.[viii]
The governor’s plan to pay for the higher costs includes increasing contributions from businesses, insurers, and providers, and instituting a tobacco tax (amounting to an increase of $1.00 per pack of 20 and $1.25 per pack of 25). Furthermore, in an effort to prevent crowd-out, premiums in the Commonwealth Care program have been raised by 10 percent, with an additional increase in co-payments for some beneficiaries, to make the plan more in line with private plans.[ix]
In September 2008, the Massachusetts Commonwealth Health Insurance Connector Authority Board voted unanimously to proceed with new minimum standards for health coverage that were first drafted in 2007. The goal of this requirement is to ensure that all Massachusetts residents have sufficient coverage while still making the insurance affordable. In general, in order to meet the state’s minimum creditable coverage standards, health benefit plans must offer coverage for prescription drugs, physician services (including preventive and primary care), hospitalization, ambulatory patient services, mental health and substance abuse services, and emergency services.
The new rules also will mandate that effective January 1, 2010, plans must provide coverage for radiation and chemotherapy, maternity and newborn care, medical/surgical care, and diagnostic imaging and screening tests. The board voted to delay until January 2010 the implementation of the new standards to give employers an opportunity to revise their policies, if necessary. Individuals will be responsible for making sure that their coverage meets the state’s minimum standards and will be personally assessed for failure to comply. The tax penalty for not obtaining coverage under the universal healthcare law in tax year 2008 ranges from $210 to $912 a year, depending on age and income; these penalties are likely to increase in 2009. [x]
At the start of the program, Massachusetts employers were required to meet a premium contribution standard by satisfying at least one of the following: contributing at least 33 percent of the cost of an employer-sponsored group health plan offered to all full-time employees or enrolling at least 25 percent of full-time employees in their health insurance plan (to which the employer must be making a financial contribution). Starting January 1, 2009, the determination of what it means to be a contributing employer will become more stringent for employers with 50 or more full time equivalent employees. Companies with more than 50 full-time equivalent employees will be required to meet both of the above tests, while companies with 50 or fewer full time employees will continue to satisfy the fair share requirement by meeting either of the two tests.[xi] 
While Massachusetts has initially focused on coverage and accessibility, there has been an increased focus on cost containment and quality improvement measures. In August, the governor signed a bill (S.2863) intended to promote cost containment, transparency, and efficiency in the delivery of quality health care.
The bill includes measures that promote efficiency in the health care system, including:
  • Creating a Special Commission on Health Payment Reform to investigate restructuring the current payment system to provide incentives for efficient and effective care.
  • Authorizing MassHealth (Medicaid) to establish a “Medical Home” demonstration program to promote coordinated, comprehensive patient care and strengthen the role of primary care providers.
  • Establishing a Pharmacy Academic Detailing Program to educate providers on the use of lower-cost brand names and generic drugs in place of expensive brand name drugs, where therapeutically appropriate.
  • Authorizing the Department of Public Health to establish a list of so-called “never-events” to be updated annually and that prohibits health providers from billing for costs related to a “never-event.”
To improve access to health care services the bill:
  • Creates a new Health Care Workforce Center within the Department of Public Health to improve access to health care services in the Commonwealth, with a particular focus on primary care.
  • Institutes a new loan forgiveness program for doctors and nurses who commit to practicing certain specialties in medically underserved areas.
  • Requires health insurers to recognize and reimburse nurse practitioners as primary care providers.
  • Directs the MassHealth Payment Policy Advisory Board to study methods of improving reimbursement or bonuses for those engaged in primary care.
Measures to enhance quality and transparency of health care costs include:
  • Mandated reporting of “serious reportable events,” adverse drug events, and hospital-acquired infections.
  • Regulation of marketing practices to health care professionals from the pharmaceutical and medical device industry based on an industry-accepted code of conduct.
  • Regulation and oversight of the disposition of the reserves and surpluses of health insurers and providers by the Division of Health Care Finance and Policy.
And finally, the bill encourages adoption of health information technology by:
  • Setting a goal of statewide adoption of electronic health records by the year 2015 to improve patient safety and lower costs.
  • Dedicating $25 million to the new Massachusetts e-Health Institute to facilitate the financing and implementation of a statewide, compatible system of electronic health records.[xii]
As Massachusetts introduces its adjusted financing schemes, states considering their own ambitions for state health reform will continue to look to that state as an invaluable case study. In a written statement, Senator Edward M. Kennedy noted that Massachusetts has “made major progress in the program’s first two years, cutting the number of uninsured in half and increasing employer-sponsored coverage. [The Massachusetts] experience with health reform…argues well for our debate on national health reform next year.”[xiii]


Continue reading on: Substantial Health Reforms: passed in 2008

[i] “State Strategies,” State of the States, State Coverage Initiatives, AcademyHealth, January 2008.
[ii] Ibid.
[iii] “State Strategies” op. cit.; Iselin, S. “Health Care Reform in Massachusetts,” National Academy for State Health Policy, Annual Conference, October 2008.
[iv] “The Massachusetts Way,” The New York Times, editorial, August 30, 2008.
[v] “Health Care in Massachusetts: Key Indicators,” Massachusetts Division of Health Care Finance and Policy (August 2008); “Massachusetts Sees 439,000 Newly Insured Residents During the Past 21 Months,” St@teside, State Coverage Initiatives, September 2008, available at; “The Massachusetts Way” op. cit.
[vi] Ibid.
[vii] Long, S. et al. “Health Insurance in Massachusetts: Estimates from the 2008 Massachusetts Health Insurance Survey,” Urban Institute, December 18, 2008.
[viii] “Governor Patrick Announces $21.2 Billion Medicaid Waiver Agreement,” Office of Massachusetts Governor Deval Patrick, press release, September 30, 2008; Lazar, K. “Mass. Gets $10.6 b for Healthcare Insurance,” The Boston Globe, October 1, 2008.
[ix] “Massachusetts Sees 439,000 Newly Insured Residents During the Past 21 Months,” St@teside, State Coverage Initiatives, September 2008, available at
[x] Lazar, K. “State Tweaks Health Insurance Rules,” The Boston Globe, October 18, 2008.
[xi] Code of Massachusetts Regulations, 114.5 CMR: Division of Health Care Finance and Policy, 114.5 CMR 16.00: Employer Fair Share Contribution.
[xii] Massachusetts Senate File 2863, available at
[xiii] Lazar, K. “Mass. Gets $10.6 b for Healthcare Insurance,” The Boston Globe, October 1, 2008.