Nearly 46.6 million Americans were without health insurance last year, up from 45.3 million in 2004, according to an August report from the U.S. Census Bureau (http://www.census.gov/prod/2006pubs/p60-231.pdf). But national efforts to improve access to health care seem forever stalled on Capitol Hill. Some states have taken things into their own hands, so to speak, and are exploring ways of providing health insurance to their uninsured residents. Massachusetts is the first state to implement sweeping legislation that, while not perfect, is surely a step in the right direction.

THE PLAN

In April the Massachusetts legislature overwhelmingly approved the Health Care Access and Affordability Act, ambitious legislation designed to insure 90% to 95% of the state's uninsured-nearly 515,000 people-within the next three years. The new law is the first in the country requiring employers to provide health insurance to their employees and individuals to purchase insurance for themselves and their families. Full implementation is expected by July 1, 2007.1 The new law

* requires employers with 11 or more employees to either provide health insurance for their employees or pay $295 per employee per year to the state.

* requires individuals to purchase health insurance if a comprehensive plan is available at an affordable price or face tax penalties.

* preserves Medicaid coverage and benefits and expands them to cover more low-income unemployed people, immigrants, people with disabilities, and children and families. In addition, adult dental care for Medicaid recipients, which was eliminated several years ago during a budget crisis, has been restored.

* makes health insurance more affordable for uninsured working people through the new Commonwealth Care Health Insurance Program, which will provide sliding-scale subsidies for adults earning up to 300% of the poverty level ($49,800 for a family of three) to purchase insurance and not have to pay deductibles.1 Coverage will be provided through Medicaid managed care plans.

* reduces the cost of individual insurance by combining small and nongroup insurance markets; this is expected to reduce the cost of premiums for individuals by 24%.1

* requires insurers to cover young people up to the age of 25 under their parents' family health plans and creates a new low-benefit plan for young adults.

* increases Medicaid payments to providers, maintains funding for safety net hospitals, and requires providers to meet certain quality-improvement goals and reduce racial and ethnic health care disparities.

BACKGROUND

The campaign for health care reform in Massachusetts launched in November 2004, with the release of the first Blue Cross Blue Shield Foundation of Massachusetts Roadmap to Coverage series.2 The report outlined the costs of the uninsured in Massachusetts-at least $1.1 billion annually. Because so much was already being spent on the uninsured and the state had a relatively low proportion of uninsured residents, it made sense to redirect money to providing health insurance.

A major sticking point was the initial opposition of Senate leaders and some business owners to the "employer mandate"-the requirement that employers provide health insurance to their employees or be assessed a fee. While the small business community opposed the employer requirement, other business leaders supported it. Under Massachusetts law, businesses that provided health insurance had been assessed a fee that helps pay for the state's "uncompensated care pool," while businesses that didn't provide health insurance paid no fee. To some in the business community, it seemed only fair that the "good guys" shouldn't have to pay twice. They supported the proposal requiring employers to more fairly share responsibility for the state's uninsured. Finally, influential business leaders accepted the idea of a much lower penalty for those businesses that didn't provide health insurance. The original plan was to assess employers a percentage of their payroll, which would have cost them much more and generated more money. The compromise was to charge only $295 per employee per year.

RESPONSES TO THE LEGISLATION

Critics continue to argue against the employer requirement, predicting that businesses will leave the state for more favorable business climates. Governor Romney vetoed the provision, but the veto was quickly overridden by the legislature.

Others have charged that the penalty employers have to pay for not providing insurance is too weak a disincentive. Some have worried that it'll be too easy for employers to drop coverage. But while a large coalition of advocates had originally pushed for more substantial penalties, the $295 was a compromise that enabled the legislation to move forward. Besides, employers have been able to drop coverage for any reason in the past without a penalty, and many see offering health insurance to employees as a way of attracting and retaining workers. Advocates also view the new law as establishing the important principle that employers are responsible for the health insurance of their employees, even though the penalty for not doing so is low.

While the new law requires individuals have health insurance or face a tax penalty, it also includes an "affordability clause," which says that an individual won't be penalized if there isn't an "affordable" insurance product on the market. Both critics and supporters agree that the success of the new law may rest at least partially on the ability of a new state agency, the Commonwealth Health Insurance Connector, to define "affordable" insurance for different income levels and to sell policies that are of value.

If an affordable product is available and a person doesn't carry health insurance, he will lose his personal tax exemption for the following year. If he doesn't have health insurance for the next tax year, a fine will be imposed equal to half of the monthly premium for affordable insurance for each of the months he is uninsured.3

If an affordable product isn't available, people earning above 300% of the poverty level will not be penalized and those below 300% of poverty will be eligible for a state subsidy through the Commonwealth Health Insurance Program.

Critics argue that the law only adds new layers of bureaucracy onto a system already crippled by complexity. To them, real health care reform would require a more radical restructuring in favor of a single-payer, Canadian-style system.

Supporters argue that it's a pragmatic approach to expanding coverage to more than half a million Massachusetts residents, combining liberal (employer responsibility and public funding) and conservative (individual responsibility) approaches.

The Massachusetts effort has revived the health care reform debate, as other states consider how they might improve health care access for their residents. For more information, see http://www.hcfama.org.

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