The document summarizes the Massachusetts Model of Health Reform, including its origins, structure, impacts, challenges, and lessons for national reform. Key points: - The 2006 reform law expanded insurance coverage through an individual mandate, employer requirements, and subsidizing coverage up to 300% of poverty. - It reduced the uninsured rate from 10% to around 4-5% but increased costs for employers and individuals. Financial challenges grew for safety-net hospitals. - While more have coverage, costs continue rising faster than income. If not addressed, the system may not be sustainable long-term. National reform efforts aim to achieve Massachusetts' coverage gains while better controlling health care spending.

1. The Massachusetts Model of
Health Reform in Practice
And the Future of National Health Reform
http://masscare.org/massachusetts-health-reform-in-practice/

2. Massachusetts Health Reform (“Chapter 58”)
April 12, 2006
Patient Protection and Affordable Care Act Presidential Elections
March 23, 2010 November, 2012

3. Origins of Mass. Health Reform
• 2006 expiration of Massachusetts Medicaid
Waiver (Section 1115).
• Bush Administration opposition to state’s ‘Free
Care Pool’ payments: culture of insurance.
• Two binding ballot initiatives for ’06 election.
The ‘Free Care Pool’
• Hospital & health center reimbursement for care of
uninsured, 0 to 200% of poverty line.
• 452,000 users in FY2006 (659K uninsured).
• $710 million in FY2006 (Medicaid: $10 bill).
• Covers all services available at hospitals, health
centers, no cost-sharing, not considered insurance.

4. Structure of Mass. Health Reform
• Commonwealth Care: free subsidized insurance from 0
to 150% of poverty; sliding subsidies from 150% to
300% of poverty.
• Commonwealth Choice: ‘exchange’ for individual and
eventually small business market (40K users currently).
• Individual Mandate: adults above 150% of poverty
must demonstrate insurance coverage or pay a fine
($200 to $1,200) on tax forms.
• Employer Play-or-Pay: with 11+ employees, must
cover 1/4th of employees and offer to cover 1/3rd of
premium costs, or pay $295/per worker per year fine.
• No New Revenue: financed from existing free care
pool funds, federal matching funds, private payments,
and limited cash from state’s General Fund.
• No Cost Control: limited to access for political reasons.

5. Impact on the Uninsured
12% 11.3%
10.4%
10%
10.3%
Health
9.3% Reform
9.2% 8.5%
8% Census/ACS
7.4%
6.2% Census/CPS
5.6%
6% 6.4%
5.5%
5.3% State/CSR
5.7%
5.4% 4.4% 4.4% 4.4%
State/Urban Inst
4%
4.2% 4.3%
4.1%
CDC/BRFSS**
2% 2.6% 2.7%
1.9%
0%
2004 2005 2006 2007 2008 2009 2010

6. Notes on the Uninsured
• Most commonly cited estimates are
impossibly low: state survey finds less than
144,000 uninsured in fall 2008, but 150,000
report they are uninsured for whole year on
tax returns.
• Most reliable surveys show uninsured
population cut in half, around 4-5% of pop.
• State reports that 4/5ths of the newly insured
received public subsidies – majority of these
were eligible for free care prior to reform.

7. Impact on the Employer-
Sponsored Coverage
80%
77%
76%
75%
72%
70%
69%
70% 68%
65%67%
63% 63%
60%
60%
55% 57%
54%
50%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
% of Employers Offering Workplace Coverage
% of Employees Buying Workplace Coverage

8. Impact on Employer Coverage of
Low-Income Residents
70.0%
59.4%
60.0% 55.6%
54.2%
50.0% 46.1%
42.4%
40.0%
30.0% 26.2% 25.3%
21.8% 20.9%
20.0% 17.2%
10.0%
0.0%
2005 2006 2007 2008 2009
Employer-Sponsored Insurance Public Insurance

9. Access to Regular Source
of Care Improved
Massachusetts Residents, Ages 18-64, Reporting a Regular Source of
Care, Three Sources of Data
94.0%
92.1%
92.0% 91.0%
89.9%
90.0% 89.0%
90.0%
88.0%
88.0%
87.0% 88.3%
87.8% 87.7%
86.0%
86.3%
85.4%
84.0%
82.0%
2005 2006 2007 2008 2009 2010
BRFSS Blue Cross/Urban Inst State/Urban Inst

10. Cost Barriers to Care Declined
Massachusetts Residents, Ages 18-64, Didn’t Receive Needed Care
Due to Costs, Three Sources of Data
35.0%
29.0%
30.0%
27.0%
26.0%
25.0%
20.0%
16.3%
15.0%
11.6% 11.7%
10.0%
9.9%
8.6%
7.8% 7.9% 7.6%
5.0% 6.9%
0.0%
2005 2006 2007 2008 2009 2010
BRFSS Blue Cross/Urban Inst State/Urban Inst

11. From Safety Net Care to Publicly-
Subsidized Private Insurance
Co-Payments by
Safety Net Plan
Free Care Pool Commonwealth Care (2011)
Income Eligibility
0-200% 0-100% 100-200% 200-300%
poverty poverty poverty poverty
Annual Premium
$924 -
(for lowest cost plans)
$0 $0 $0 - $468 $1,392
Primary Care Visit $0 $0 $10 $15
Specialist Visit $0 $0 $18 $22
Inpatient Care $0 $0 $50 $250
Outpatient Surgery $0 $0 $50 $125
Emergency Room Visit $0 $0 $50 $100
Generic Drugs $1-3 $1-3 $10 $12.50
Preferred Brand Drugs $3 $3 $20 $25
Non-Preferred Brand Drugs $3 $3 $40 $50
Maximum Prescription Co-Pays $200 $200 $500 $800
Maximum Other Co-Pays $0 $0 $750 $1,500

12. Patient Story on
Mixed Access Impact
“Under Free Care I saw doctors at Mass General and
Brigham and Women’s hospital. I had no co-
payments for medications, appointments, lab tests or
hospitalization; the care I received gave me a light at
the end of the health care nightmare tunnel...Under
my Commonwealth Care plan my routine monthly
medical costs included the $110 premium, $200 for
medications, a $10 appointment with my primary
care doctor, and $20 for a specialist appointment.
That’s $340 per month, provided I stayed well.”
Kathryn, Boston MA (2008)

13. Primary Care Wait Times Rise
With Increased Demand
Average Wait Time for New Patient Appointment
55 53
52
50
50
47
45 48
44
Days
40
35
30 33
25
2005 2006 2007 2008 2009 2010 2011
Internal Medicine Trendline

14. Decline in Primary Care Practices
Accepting New Patients
Percentage of Practices Accepting New Patients
70%
66%
64%
65%
60% 58%
55%
51%
49%
50%
51%
45%
44%
40%
2005 2006 2007 2008 2009 2010 2011
Internal Medicine Trendline

15. Underinsurance Rises:
Primarily at Small Employers
Private Insurance Plans with Share of Medical Costs Covered by Small
High-Deductibles ($1,000+) Business Employees’ Insurance, 2007-2009
12.0% 100% 8%
11.3%
90%
34% 15%
10.0% 80%
70%
28%
60%
8.0%
50%
6.1% 46%
40%
6.0%
30%
50%
20%
4.0% 3.4% 16%
10%
0% 5%
2.0%
0.0%
2006 2007 2008 ≤ 70% 70.1% - 80% 80.1% - 90% 90.1% - 100%

16. Out-of-Pocket Barriers Decline
Change in % of Families with High Out-of-Pocket Spending
25%
21.8%
20% 18.4% 18.0%
15%
10%
9.4%
5% 7.3% 6.7%
0%
2006 2007 2008 2009
Out-of-pocket costs 5% of income or more Out-of-pocket costs 10% of income or more

17. Impact on Total Household
Spending on Health Care
Change in Percentage of Families with High Total Health Spending
25%
20.2%
20%
15% 14.2%
10%
5.2%
5% 3.6%
0%
Spent 10%+ of income on health care Spent 25%+ of income on health care
2000 2009

18. Impact on Medical Debt and
Medical Bankruptcies
70%
59.3%
60%
52.9%
50%
40%
30%
19.1% 19.1% 19.5% 20.3%
20%
10%
0%
Problems paying medical bills Paying medical bills over time Bankruptcies related to
illness/medical bills*
2006/07 2009

19. Emergency
Department Use
Trends in Emergency Department Use (Indexed to 2004)
115
113
113 111
111
109
107
107 109
105 107
102
103
100 104
101
99 101
97
95
2004 2005 2006 2007 2008
Preventable/Avoidable ED visits Total ED visits

20. Financial Crisis for Safety Net
• Contrary to expectations, patient volume at safety net
providers has gone up since health reform:
– 31% growth in patients receiving care at community health
centers
– Ambulatory visits to safety net hospital clinics grew at 2X the
rate of visits to non-safety net hospital clinics
• Reimbursement rates at safety net hospitals are down.
Promised Medicaid rate increases reversed through budget
cuts and health safety net funds falling short, creating a
serious financial crisis.
– Unsuccessful lawsuit by Boston Medical Center and six
community hospitals for Medicaid underpayments in 2009.
– “Soft landing” funds for two largest safety net hospitals run out
in 2010.
– Cambridge Health Alliance forced to close six clinics and shut
down all inpatient services at one of its hospitals, seeking a
buyer or a merger.

21. Rise in Premiums Has Accelerated,
Growth in Provider Administration
• Employer premium growth accelerated in Massachusetts
after health reform compared to other states:
– For single coverage: premium growth was 5.9% higher in three
years after reform for all employers, 6.8% higher for small
employers
– For family coverage: average annual premium growth was
premium growth was 1.5% higher in three years after reform for
all employers, 14.4% higher for small employers
• Small employer premiums due in part to merger of
individual and small group markets in Mass.
• Job growth in Mass. health care industry almost double
that of nation after reform, slower than nation prior to
reform. Almost all of difference accounted for by growth in
administrative occupations in Massachusetts, which grew
by 18.4% over three years (compared to 8.0% nationally).

22. Concept of “Shared
Responsibility”
“Massachusetts mandated shared
responsibility… The costs of expanding
coverage to all are considerable… the only
way to ensure the sustainability of that
expense over the long term is through
universal responsibility, spreading the cost
broadly among all sectors of society:
individuals, government, and employers.”
Bruce Bodaken
President and CEO, Blue Shield of California

23. Measuring Shared Responsibility
Change in Health Care Spending by Payer, Before and After Reform, 2005-2007
30% 28%
25%
25% 21% 22%
20%
15%
10%
5%
0%
Employers and Union Individuals State Government Federal Government
Plans

24. Measuring Shared Responsibility
Change in Health Care Spending by Payer, Before and After Reform, 2005-2007
30% 28%
25%
25% 21% 22%
20%
15%
10%
5%
0%
Employers and Union Individuals State Government Federal Government
Plans
Increase in Health Care Spending After Reform as a Percentage of Family
Income, by Income Quintiles, 2005-2007
5% 4.6%
as Percentage of Household
Incearse in Health Spending
4%
3%
2%
1.7% 1.4%
0.4%
Income
1%
0%
-1%
-2% -1.5%
Bottom 20% Second 20% Middle 20% Fourth 20% Top 20%
($0 - $20k) ($20k - $41k) ($41k - $66k) ($66k - $111k) ($111k+)
Income Quintiles: Bottom to Top 20% of Income Earners

25. Mass. Health Reform Has Had
Positive Impacts, But Is
Unsustainable
“If we have double-digit increases (annually in
costs), health reform is not sustainable.”
Jon Kingsdale
Executive Director, Commonwealth Connector
“If we do not constrain healthcare costs, the
system we worked so hard to create and
implement will collapse..”
Therese Murray
Senate President, Massachusetts Legislature

26. 20%
40%
60%
0%
CommCare Enrollment
100000
120000
140000
160000
180000
200000
0
20000
60000
80000
0%
Q2 '07
Nov '06
5%
40000 3,654
Dec '06
8%
Q3 '07
Jan '07
Feb '07
Mar '07 Q4 '07
25%
Apr '07
May '07
Jun '07 Q1 '08 20%
Jul '07
Aug '07
Sep '07 Q2 '08
23%
Oct '07
Nov '07
Dec '07 Q3 '08
28%
Jan '08
5%
Feb '08
177,136
Mar '08 Q4 '08
29%
Apr '08
May '08
Q1 '09
33%
Jun '08
Jul '08
Aug '08
Q2 '09
32%
Sep '08
Oct '08
Commonwealth Care Enrollment
Nov '08
Q3 '09
31%
Dec '08
Jan '09
Feb '09
Q4 '09
31%
Mar '09
Apr '09
May '09
Q1 '10
43%
Jun '09
Jul '09
Aug '09
178,686
Q2 '10
42%
Share of Commonwealth Care Enrollees Paying Premiums
Sep '09
Oct '09
% Unemployed
Nov '09 Q3 '10
42%
Dec '09
Jan '10
Feb '10
Commonwealth Care Enrollment and Mass. Unemployment Rate
152,571
Q4 '10
9%
42%
Mar '10
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Q1 '11
50%
Back Coverage to Control Costs
Massachusetts
State Has Been Gradually Rolling
Q2 '11
49%
Unemployment

27. Individual Mandate Also
Unsustainable, Mass. Has Raised
Affordability Thresholds
Percent of Income Deemed Affordable for Health Premiums
(Families of Three, 2007-2011)
12.0%
11.0%
10.0% 9.5%
8.0%
8.0% 7.5%
7.0%
5.9% 6.0%
6.0% 5.6%
4.9% 5.0%
2007
2011
4.0% 3.3% 3.4%
2.0%
0.0%
151% of 201% of 251% of 301% of 401% of 500% of
Poverty Poverty Poverty Poverty Poverty Poverty

28. Takeaway Points for National
Health Reform (PPACA)
1. Mass. reform affected the insurance status of about 4-5% of the
population (half the previously uninsured), and improved access for
about half of those. The impact in other states will vary depending on
their existing safety net programs, but focus on access outcomes – not
insurance coverage!
2. National reform is unlikely to have a significant impact on outcomes that
predominantly afflict the insured population, including emergency
department visits, medical debt, and health-related bankruptcy.
3. While safety net providers handle most of the increased demand for care
that results from reform, Massachusetts and national reform rely on cuts
to public health care programs that can threaten the viability of those
providers. This increased demand will also increase strain on primary
care provider networks.
4. Most of the population will be relatively unaffected by health reform,
but will continue to experience the health care crisis of unaffordable
premiums and high barriers to care. (They also vote!)
5. This model of reform defers serious action on cost control. Without
addressing the systemic causes of our high costs – which has thus far
proven politically impossible – access gains will face retrenchment, or
will force us to sacrifice spending on other basic social goods.