AcademyHealth Stateside - 04/18/2006 (Plain Text Version)In this issue: Massachusetts Passes Landmark Bill
Two weeks ago, the Health Insurance Connector: In order to improve the availability and affordability of coverage, the bill creates the Commonwealth Health Insurance Connector, which will be a vehicle to help individuals and small businesses find affordable health coverage. The Connector allows individuals to purchase health insurance using pre-tax dollars which is estimated to reduce the cost of premiums by up to 25 percent. Part-time and seasonal workers can combine employer contributions in the Connector as well. One of the unique features of the Connector is that it allows individuals to keep their policy, even if they switch employers. Insurance Market Reforms: The health care reform bill also includes a number of insurance market reform provisions. Starting in July 2007, the non- and small-group markets will be merged, although a study of this merger must be completed before that date to assist insurers in planning for the transition. Policymakers estimate that this action will reduce premiums for people currently purchasing in the individual market by nearly a quarter of their current cost. The bill also will allow HMOs to offer coverage plans that are linked to health savings accounts. In addition, under the bill, young adults may remain on their parents’ policy for two years past the loss of their dependent status, or until they turn 25, whichever occurs first. Individual Mandate: Probably the most unique feature is a provision that requires all individuals to obtain health insurance by July 1, 2007. Individuals who cannot afford insurance, as determined by the Connector, are not penalized. Income tax forms will include a question about an individual’s insurance status for the tax year. For tax year 2007, penalties for not having insurance will include the loss of the personal exemption. In subsequent tax years, the penalty will include a fine equaling 50 percent of the monthly cost of health insurance for each month without insurance. Employer Requirements: Under the bill that passed the legislature, employers in the state with 11 or more employees and that do not make a “fair and reasonable” contribution towards their employees’ health insurance coverage will be required to make a per-worker contribution, estimated to be approximately $295 per full-time employee (employers with seasonal or part-time employees would pay a pro-rated amount). When the Governor signed the bill, he line-item vetoed the $295 per employee fee. The legislature has not yet acted to override or sustain his veto. Another provision related to employers requires that, by Jan.1, 2007, all employers with 11 or more workers must adopt a Section 125 “cafeteria plan” as defined in federal law, which permits workers to purchase health care with pre-tax dollars. Finally, employers with 11 or more employees who do not “offer to contribute toward, or arrange for the purchase of health insurance” may be assessed a “free rider” surcharge if their employees access free care a total of five times per year in the aggregate or one employee accesses free care more than three times. The surcharge will exempt the first $50,000 of free care that the employees use but, after that threshold is met, the employer will be charged between 10 percent and 100 percent of the cost to the state of the free care, as determined by Division of Health Care Finance and Policy Subsidies: The reform also addresses uninsured low-income populations by establishing the Commonwealth Care Health Insurance Program, which will provide sliding scale subsidies to individuals with incomes below 300 percent of the federal poverty level (FPL). No premiums will be imposed on those individuals with incomes below 100 percent FPL. Additionally, an existing premium assistance program, the Insurance Partnership, will raise eligibility for employee participation from 200 percent to 300 percent FPL. Uncompensated Care Pool: by October 1, 2007, the current Uncompensated Care Pool will be replaced by a new Safety Net Care Fund. Administered by the Safety Net Office within the Medicaid agency, a new standard fee schedule for hospital reimbursements will be developed to reimburse uncompensated care. The intent is that as free care use declines with the implementation of the new coverage programs, the Fund will be able to transfer money to subsidize the Commonwealth Care program. Medicaid Program: Finally, legislators included measures to expand the state’s Medicaid program, MassHealth. Eligibility for children was increased from 200 percent to 300 percent FPL, and enrollment caps on several programs were raised in hope of enrolling more adults that are eligible for these programs. Funding: The new plan will be funded through several revenue sources including currently available surplus state general funds, federal matching dollars, required individual premiums, employer assessments, and pre-existing Uncompensated Care Pool funds. |