Groundbreaking Health Care Law

Massachusetts’ groundbreaking health care law provides for near universal coverage. The law requires uninsured residents to have health care insurance, expands affordable coverage options, and penalizes employers who do not offer insurance. The state legislature passed the bill on April 4. Gov. Mitt Romney signed it into law on April 12.

Mandatory Coverage

Massachusetts is the first state to require all of its residents to have health insurance. Uninsured residents must purchase health care coverage by July 1, 2007, or face penalties of about $150 in the first year and up to $1,200 in subsequent years. Those who are unable to find affordable coverage may obtain a waiver to avoid a penalty. Hospitals will continue to treat the uninsured.

Expanded Coverage

To enable the uninsured to afford coverage, the state will expand public programs and work with private insurance companies to offer subsidized plans.

The state’s Medicaid program, MassHealth, will cover an estimated 92,500 uninsured people by making more children eligible and enrolling more adults already eligible. Residents below 100 percent of the federal poverty level will be eligible to purchase subsidized policies with no premiums and small copayments, while those between 100 percent and 300 percent of the federal poverty level would get state-subsidized coverage with sliding scale premiums through Commonwealth Care. Rates for these policies have yet to be decided; they are estimated to be between $200 and $250 a month. This will cover 207,000 more uninsured residents. A provision allowing businesses and individuals to purchase affordable policies with pretax dollars will cover some 215,000 more people.

Employer Provisions

The bill required companies with 11 or more workers to provide insurance or pay $295 per year for each employee. This fee would bring in $45 million a year to help fund the subsidized plans. Governor Romney line-item-vetoed this provision. Legislative leaders critical of his decision are likely to try to override his veto. Employers will be responsible for 10 percent to 100 percent of their uninsured employees’ medical bills of over $50,000. The legislation also encourages employers to cover workers by allowing them to use pretax dollars to purchase insurance.

Governor Romney has been critical of a payroll tax on employers. Whether he will use a line-item veto to eliminate the employer fee, or leave the provision unchanged, is uncertain.

Funding

The law requires $125 million in new spending and will cost a total of $1 billion a year. Funding will come from penalties on the uninsured, $45 million in employer fees, existing programs, and $650 million in federal Medicaid funds.
Legislators expect 90 percent to 95 percent of the state’s 550,000 uninsured to take up coverage in the next three years.