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April 2009

New Studies on Massachusetts Health Reform

Two recently released studies examine the effects of Massachusetts’ 2006 landmark health reforms.   The first study, Shared Responsibility, released by the Massachusetts Blue Cross Blue Shield Foundation, examines the impact of the reform on the distribution of health care spending. The second study, How Is the Primary Care Safety Net Faring in Massachusetts? Community Health Centers in the Midst of Health Reform, analyzes the impacts of the Massachusetts health reforms on community health centers and offers key lessons for national reform efforts.

 The ‘Shared Responsibility’ report, which uses data compiled by the Center for Health Law and Economics at the University of Massachusetts Medical School, represents the first evaluation of how the costs of the Massachusetts reform are being shared. A key tenant of the 2006 reforms was the concept of “shared responsibility,” that all stakeholder groups—employers, individuals, and government—would contribute to financing the drive to universal coverage.  The report concludes that the distribution of health care spending among these key stakeholders did not change from 2005 to 2007.

In 2007, $25.5 billion was spent on health coverage in Massachusetts, which represents an increase of $4.7 billion over health coverage spending in 2005 according to the report.  However, the reforms comprise only a small amount of this spending increase.  The report finds that 60 percent of the $4.7 billion increase would have occurred regardless of the reforms due to increases in health care inflation.  Another 31 percent of the increase was due to increased enrollment in already existing individual and public insurance programs. Roughly 8 percent of the increase in spending was attributable to the reform’s introduction of Commonwealth Care.  The remainder comes from the reform’s Fair Share Assessment, which levies a fee on firms that do not contribute to their employee’s insurance, and the tax penalty on individuals who do not acquire insurance if they are able to do so. 

The costs of health coverage in 2007 were distributed across the three groups with employers and union benefit funds contributing 48 percent, individuals covering 25 percent, and state and federal government comprising 27 percent.  This distribution barely changed from 2005, when the contribution of employers, individuals and government was 49 percent, 25 percent, and 27 percent respectively. 

Overall spending on uncompensated care dropped 40 percent from 2005 ($1.8 billion in 2005 to $1.1 billion in 2007).  While spending on uncovered health care services did decrease, this decrease was not distributed uniformly among individuals, government, and providers.  While the government’s and provider’s share of spending on uncompensated care dropped from 2005 to 2007 (from 83 percent to 77 percent of spending and from 8 percent to 7 percent of spending respectively), individual spending on uncompensated care increased (from 9 percent to 16 percent of spending).

Despite this disparity, the study finds that no significant shift in the overall burden of health care costs has occurred due to passage of the Massachusetts reforms thus far. As the authors state in the report, there indeed has been ‘shared responsibility’ in Massachusetts.

How Is the Primary Care Safety Net Faring in Massachusetts? Community Health Centers in the Midst of Health Reform, is a report from the Kaiser Commission on Medicaid and the Uninsured, which analyzes the impacts of the Massachusetts health reforms on community health centers and offers key lessons for national reform efforts based on these impacts.  The study details a number of ways the reforms have affected community health centers:

  • Community health centers serve newly insured residents as well as providing a key source of primary care to the uninsured.   Community health centers served an additional 50,000 between 2005 and 2007.  The numbers of uninsured served also rose from 22 percent in 2006 to 36 percent in 2007.
  • Many new community health center patients were previously uninsured.  These previously uninsured patients often suffered from chronic diseases and disabilities as a result of their lack of access to care, a fact that emphasizes the importance of ensuring that the health system is prepared to care for a population that will initially have high use of health services.
  • The reform not only increases the revenues of health centers, but increased their costs as well as changed their sources of funding. Community health center revenues rose by 14 percent during 2006-2007 but their expenditures also rose by 15 percent.  Revenue from patient’s health insurance (especially public programs like Commonwealth Care) increased while state grants and funding for uncompensated care decreased.   
  • Health centers suffered from inadequate staffing levels.  Recruitment and retention of staff have been frequent problems for health centers.  As health centers played a key role in enrolling individuals in newly created public programs, health center staff administrative workloads increased considerably as a result of the increase in the numbers of patients seeking enrollment assistance.  Insurance expansions also increased the burden on health center staff.  Post-reform, many health centers have pursued salary increases as a means to recruit and retain staff.

The report details three lessons that can inform the national health reform discussion from the experience of Community Health Centers in Massachusetts:

  • Insurance expansions increase demand for primary health care.  Oftentimes there is especially high demand in medically underserved areas where many patients will have particularly high demand for care that they did not receive while uninsured.
  • Investments to the primary care system will be critical.  Post-reform, community health centers continue to treat a number of the newly insured, as well as the uninsured, many of whom have more complex health and social needs than the general population.  As such, continued infrastructural investments and programs to attract primary care clinicians are crucial.
  • Sources of care for the uninsured will continue to be important.  Even with insurance coverage expansions, the safety net and community health centers will be necessary to provide care to those who are not able to acquire coverage.

Click here to read the full study Shared Responsibility

Click here to read the full study How Is the Primary Care Safety Net Faring in Massachusetts.