Mass. Governor Offers Insurance Reform Plan

Published November 1, 2005

In an effort, he said, to expand access to affordable health insurance, Massachusetts Gov. Mitt Romney (R) has developed a reform plan that requires all residents of the state to have health insurance or possess the means to provide for their own care.

In late September and early October, Romney urged state lawmakers to pass his comprehensive health care legislation by January 15, 2006. That push came in response to an undated letter his administration received during the last week of September from the director of the Centers for Medicare and Medicaid Services, which indicated that hundreds of millions of dollars in federal Medicaid funds are at stake.

On September 27, Romney and U.S. Sen. Edward Kennedy (D-MA) traveled to Washington to speak with Health and Human Services Secretary Michael Leavitt about preserving federal funding for the state.

The letter, from CMS Director Dennis Smith to Massachusetts Health and Human Services Secretary Timothy Murphy, warned the federal government might “stop sending as much as $385 million in Medicaid money” to the state annually if the state failed to reduce the number of uninsured people in Massachusetts, according to an October 4 report in the Boston Globe.

“Throughout our discussions on the renewal of the waiver,” the letter read, “the Commonwealth consistently described its goal as to cover all individuals who are presently uninsured. We strongly urge the Commonwealth to design its SNCP [Safety Net Care Pool] approach in a manner that will best achieve this goal.”

Making Insurance Affordable

Romney’s three-part plan, Commonwealth Care, is designed to insure every resident of his state. “Our program uses the money we already spend on uninsured individuals and offers them the opportunity to have health insurance and get better care,” he said in announcing the measure in July.

The governor began his reform plan in 2004 by signing up individuals who were eligible for Medicaid insurance but not enrolled. There are 460,000 uninsured people in Massachusetts, 106,000 of whom were determined to be eligible for Medicaid but not receiving benefits. The state’s goal was to have 60,000 enrolled by the end of fiscal year 2005 and more in 2006, through an aggressive outreach program.

In April 2005 Romney announced the Commonwealth Care Exchange, which allows insurers to offer lower-cost plans by reducing state requirements on what the plans must cover, such as in vitro fertilization, and facilitates the pre-tax payment of premiums by working people to create a 15 to 30 percent savings on insurance. The plan includes incentive payments to employers to encourage them to register for the program.

When the exchange was introduced, Bill Vernon, state director of the National Federation of Independent Business, said, “Small business owners want access to affordable health care for themselves, their families, and their employees, but cost is a barrier for far too many. Allowing lower-cost products to enter the market will allow small business owners who cannot afford Cadillac coverage to provide health insurance coverage for themselves and their employees.”

Expanding Medicaid

According to the governor’s office, another 36,000 unemployed residents were expected to take advantage of the low-cost policies through the state’s Medical Security Trust, which contributes toward their insurance for 30 weeks and helps cover newly employed people during the waiting period before their employer-provided insurance starts.

In announcing the Medical Security Trust program, Romney said, “This will not be a government-mandated universal coverage program or a plan that requires new taxes. It will be a market-based reform focused on the creation of affordable insurance plans.”

To Council for Affordable Health Insurance Director Merrill Matthews, however, the Romney plan looks like Medicaid expansion. Matthews believes Romney should find ways to get people to transition off of Medicaid: “Imagine a governor who says, ‘While I was governor, I expanded welfare rolls by 30 percent!'”

Brian Wheelan, spokesman for health secretary Murphy, responds, “With respect to increased enrollment, we are not talking about Medicaid expansion. Rather, we are talking about enrolling those who are eligible under today’s laws. This is simply a matter of the executive branch making best efforts to administer the law.”

From Care to Insurance

The third stage of Romney’s reform package, Safety Net Care, was rolled out in July. The proposed legislation would convert the state’s uncompensated care pool into an insurance plan for the state’s 150,000 working poor and long-term unemployed, directing them to a specified network of clinics, community health centers, and hospitals.

The governor’s office said the state spends more than $1 billion on health care for the unemployed but does so inefficiently, with few controls on utilization. Under the plan, the uncompensated care pool funds would be spent instead on premium assistance for the purchase of private health insurance.

Safety Net Care would offer premium assistance to those who earn less than three times the federal poverty level but do not qualify for Medicaid.

“Our legislation allows the private plans to offers HSA-type plans in addition to a traditional plan,” said Wheelan. “It is our view that low-income is not the ideal population through which to drive the adoption of high-deductible plans. Evidence suggests low medical literacy and a propensity to forgo care in order to keep the money.”

According to a statement from the governor’s office, the amount of premium assistance will be based on a sliding income scale. As an individual’s income goes up, so will the monthly premium he or she pays. A single person making $23,925 a year would pay $18.46 per week for health insurance through the Safety Net Care program.

With Safety Net Care in place, Romney said it would be fair to ask all residents to purchase health insurance or have the means to pay for their own care. That personal responsibility principle, he said, means individuals should not expect society to pay for their medical costs if they forego affordable health insurance options.

People who have not purchased health insurance, or cannot show they have the means to pay for their own care, would face losing the personal exemption on their state income tax return.

State Senate President Robert Travaglini (D-Boston), who has filed his own health care bill that also focuses on more affordable health insurance, told the Boston Globe he was optimistic legislators would pass a bill before recessing on November 16. Richard Powers, spokesperson for the executive department of Massachusetts Health and Human Services, said Travaglini’s statement was “very encouraging.”

Susan Konig ([email protected]) is managing editor of Health Care News.

For more information …

A summary of Gov. Mitt Romney’s Commonwealth Care proposal appears on page 10 of this issue of Health Care News.