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Hope for the dispirited, however, might be found in Massachusetts, where — by an overwhelming majority — the legislature recently passed health care reform legislation that is designed to cover 90 to 95 percent of the state's uninsured citizens over the next three years. Legislators achieved success by embracing ideas from the right, the left, and the center and because of the active engagement of businesses, hospitals, insurers, and a sophisticated advocacy community.
The legislation is built on the concept of shared responsibility; it requires more of people who are uninsured, businesses that do not provide coverage to their employees, and the government. In addition, a portion of the funds in the "free care pool" that are now spent on care provided by hospitals to the uninsured will be used to help subsidize insurance for low-income persons. Massachusetts will require everyone who can afford health insurance to buy it — an individual mandate. To make this coverage affordable, it will essentially require persons who are less likely to need care and who are now uninsured to help support currently uninsured persons who do need care. The justification is that if persons are permitted to wait until they need care to buy coverage, the concept of insurance will be destroyed. Similarly, businesses with more than 10 employees will be required to pay an assessment of $295 per employee per year if they do not provide insurance for their workers. Although this section of the legislation was vetoed by Governor Romney, the legislators overrode his veto. To do otherwise would destabilize the delicate balance — in which business is required to contribute to the solution — that permitted consumer groups to support the individual mandate. It is estimated that this employer mandate would bring in about the same amount of money as the state now spends on health care for uninsured low-income workers.
The legislation includes a number of measures designed to make insurance more affordable. The state's Medicaid program will cover all children in families with incomes of up to 300 percent of the poverty level — about $60,000 per year for a family of four. Adults with incomes up to 100 percent of the poverty level will also be covered. Subsidies will be available to help people with incomes between 100 percent and 300 percent of the poverty level to buy coverage. A new state marketplace will allow residents to purchase approved health insurance with pretax dollars.
The devil, as always, is in the details, and some aspects of the plan could well prove problematic. The first question is whether the current financing package will generate enough funds to sustain the program. Equally important is whether the premiums will be too expensive for moderate-income persons, given that the legislation requires the fairly generous benefits usually found in most private health insurance plans but restricts the inclusion of high levels of patient cost sharing. The plan does, however, permit the use of high-deductible plans if they are part of a health savings account plan. The law also takes some, albeit very limited, steps to reduce the cost of privately provided health insurance. State Medicaid payments to hospitals and physicians will increase by $90 million each year over the next three years, which will bring them more into line with private insurance payments. Currently, private payers are indirectly taxed to make up for the shortfall in Medicaid payments.
Many of the details of the Massachusetts plan still need to be worked out. We don't know exactly what the new insurance plans will look like, how much they will cost, and whether government subsidies will prove adequate. The cost of the reform will be contingent on the actual price of available plans and subsidy levels, which will not be known until regulations are drafted and insurers and health plans offer new products for this market. Although the new law represents a monumental change that will alter people's lives, it is not perfect, and refinements will have to be made — both in Massachusetts and in the many states that are studying similar options.
No state will copy Massachusetts's approach exactly, but many are already taking a serious look at its new plan. Some states may want to test the broader use of lower-cost high-deductible plans, thereby stretching existing funds to cover more people. Others may move more aggressively to require employers to offer health insurance or pay a greater portion of the costs. This "play or pay" approach would create greater parity between companies that provide health insurance and those that do not.
Greater experimentation is needed to find realistic ways to control health care costs. States could, for example, provide reinsurance for high-cost cases, requiring better management of the care given to patients who need the most expensive interventions. This tactic would spread the cost of such cases broadly over the state's population, which is how insurance should function. It would make private insurance less expensive and could reduce overall health care spending.
Although we will no doubt continue to argue about the details of insurance reform, some lessons are already clear. Hospitals, physicians, and other health care providers need to be part of the discussion. They need to lead a broader political coalition that includes patients. The business community, as employers and purchasers of insurance, needs to be engaged actively in reform, or at least not opposed to it. In Massachusetts, consumers and strong grassroots organization put pressure on the political system to act directly. Just as important, advocates of expanded coverage need to focus on the goal and not be rigid about how to achieve it. Far too often, holding out for the best plan kills efforts to make real gains. No one thinks the Massachusetts plan is perfect, but all agree that it represents considerable progress. Advocates were not happy with an individual mandate, and the business community was not happy with an employer mandate. All sides, however, believe they can live with the compromise, and the result will be increased coverage for the uninsured.
Progress on seemingly intractable problems must start somewhere. In 1991, Pennsylvania voters elected Harris Wofford to the Senate on a platform of universal health care, sending a message to politicians that the public supported action on health care. This message catalyzed action but ultimately ended with the failure of the perhaps overambitious Clinton health care plan. Massachusetts has now sent a new message to the rest of the country: providing health care to the uninsured is possible. This move will embolden leaders in other states. One day, Washington may follow suit.
Source Information
Dr. Altman is dean of the Heller School for Social Policy and Management, and Dr. Doonan is the executive director of the Massachusetts Health Policy Forum — both at Brandeis University, Waltham, Mass.
An interview with Dr. Altman can be heard at www.nejm.org.
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