Health Care Reform Proposals Moving in Massachusetts

In 2005, Massachusetts experienced a renewed interest in health care reform with several different approaches being discussed and each legislative chamber passing a different proposal. Given the activity in Massachusetts, it seems likely that an expansion in insurance coverage will be enacted.

Governor Mitt Romney (R) opened the debate with a proposal featuring an individual mandate, an insur­ance exchange, and state subsidies for low-income unin­sured. The insurance exchange allows the payment of pre­miums from individuals to be paid on a pre-tax basis and allows for more affordable, portable products to be sold to individuals and small employers. Romney’s bill requires no new taxes, but uses money from the existing uncompen­sated care pool, general state revenues, and current federal funding streams. Additional dollars flow into the system from health insurance premiums paid either on a sliding scale basis for those at or below 300 percent of the federal poverty level (FPL) or straight premium payments for those above 300 percent FPL.

The Massachusetts House and Senate finished their 2005 formal sessions with each passing a different health care reform bill. The House bill incorporates a number of the governor's ideas. The two chambers have begun their work to reconcile the differences between the bills, with each naming three members to a conference committee.

The House Bill

The House version combines a “pay or play” proposal with an individual mandate to achieve universal coverage. The bill would impose a five percent payroll tax on employ­ers with 11 – 99 employees and a seven percent payroll tax on those with 100 or more employees. Businesses that currently offer coverage would receive a credit for the amount they currently spend on health insurance and/or health care for their employees.

All Massachusetts residents would be required to purchase health insurance if they could afford it. The legislation states that those individuals who cannot find affordable products will not be penalized. However, the proposal also states that, starting in 2007, residents in the state will have to confirm health in­surance coverage by reporting on state income tax forms. The Department of Revenue will enforce this provision and penalize those who can afford to pay a premium but have not purchased coverage. To fill the gap between Medicaid and employer-sponsored coverage, the House would create a subsidized health in­surance product. In addition, the House version proposes a Medicaid expansion for all adults up to 100 percent FPL, for children from 200 to 300 percent FPL, and for parents from 150 to 200 percent FPL.

The Senate Bill

The Senate version aims to insure one-half of the state’s uninsured in the next two years, and does not include ei­ther a payroll tax or an individual mandate. The legislation would expand Medicaid eligibility for children from 200 to 300 percent FPL, for parents from 150 to 200 percent FPL, and for documented immigrants. In addition, the Senate bill looks to increase enrollment in the Insurance Partnership Program, a premium assistance program that provides subsidies to small employers and their workers. Changes to this program include expanding eligibility from 200 to 300 percent FPL, increasing the allowable firm size from 50 to 75, and increasing the subsidies to employers.