By Bob Semro
The closest real-world example to the Affordable Care Act is the health reform plan implemented in Massachusetts in 2006. Even though the ACA has a 50-state focus, the plans are very much alike. To get an idea of how the ACA might work, it's useful to look at the Massachusetts experiment.
First, an important distinction: The Massachusetts reform plan is less dependent upon taxes and fees than the ACA. This is largely because federal funding has paid for about 64 percent of the cost of the plan, with the state absorbing 18 percent and hospitals and providers picking up the remainder.(1) Also, the provisions in the ACA that address Medicare are absent from the Massachusetts plan. That's because Medicare is a federal program.
As for a comparison, the plans are so similar that it is easiest to first address the differences:
- The minimum penalty for not purchasing insurance coverage under the individual mandate (50 percent of the lowest-cost premium offered through the state's exchange) is higher in Massachusetts on average than the ACA ($1,200 vs. $695 for an individual).(2)
- Both plans impose a penalty on businesses that do not offer affordable coverage to employees who, in turn, receive a subsidy under the individual mandate. (Massachusetts: 11 or more employees, $295 annually per employee; ACA: businesses with more than 49 employees, $2,000 per employee with the first 30 employees exempt.)(3)
- For poor families, Massachusetts subsidizes coverage for those with income up to 300 percent of the federal poverty level; the ACA subsidizes up to 400 percent.
- Both plans assist with paying for preventive services. Massachusetts covers only deductibles; the ACA covers co-pays and deductibles.
- Massachusetts bans only annual benefit caps; as of 2014, the ACA will ban lifetime and annual caps.
- Both plans allow dependent children to stay on their parents' insurance plan (Massachusetts, up to age 25; ACA, age 26).
- Massachusetts does not provide tax credits to small businesses that cover their employees; the ACA does.
Now that we've pointed out the differences, we can explore how the Massachusetts plan has worked so far.
Things that worked in Massachusetts
- Massachusetts has the highest rate of insurance coverage in the country, with 98.1 percent of its residents and 99.8 percent of its children insured (2012).(4) As of March 2011, most of the increase in coverage has come through public programs. Increases in employer-sponsored coverage were much larger when the law was implemented but have slowed during the recession.(5)
- Unmet needs due to cost have fallen between 30 and 40 percent among low-income residents and residents with chronic health conditions. Racial and ethnic disparities in access to and use of care have decreased significantly.(6)
- There is no evidence that subsidized insurance coverage has "crowded out" the purchase of employer-sponsored insurance. The number of employers offering insurance coverage has increased from 70 percent to 77 percent since 2006. The take-up of employer-offered coverage has remained high and the number and percentage of people with employer-based coverage has increased.(7) Private group and employer-sponsored coverage continues to be the most common type of coverage (79 percent) for residents.(8)
- Reforms do not appear to have led to job losses. According to a June 2012 Urban Institute study, employment trends in Massachusetts are comparable to the rest of the country.(9) Between 2006 and 2010, private-sector employment fell by 4.4 percent, compared to the national average of 4.8 percent. The employment ratio in medium-sized companies fell by 1.9 percentage points, compared to 2.2 percentage points for the nation.(10)
- Fewer than 1.2 percent of tax filers who were subject to the individual mandate were assessed a penalty on their 2009 return.(11)
- The plan seems to be very popular. It enjoys a 2-to-1 level of support among the state's adult population.(12) In addition, 88 percent of Massachusetts physicians believe reform either improved or did not affect, care or quality of care.(13)
Things that have not worked as well in Massachusetts
- Per capita health spending is 15 percent higher than the national average, and although premium growth has slowed in recent years, Massachusetts has the highest individual market premiums in the country.(14) In 2004, before the implementation of reforms, Massachusetts ranked No. 1 among all states for the highest per capita health care costs ($6,988). In 2009, Massachusetts still ranked No. 1 ($9,278).(15)
- If no changes are made, per capita health care spending in Massachusetts is projected to nearly double between now and 2020 -- to $17,872.(16)
- Overall, employers have decreased their contributions toward the cost of employee health insurance as premiums have grown.(17)
- 20 percent of non-elderly adults report challenges in finding a physician who will see them.(18)
In summary, the Massachusetts plan has significantly reduced the number of uninsured, has generally increased access to care and has had little or no impact on employment.
The state continues to struggle with rapidly rising health care costs, but that was not entirely unexpected. When Massachusetts implemented reforms in 2006, it chose to focus on expanding coverage and to leave the issue of cost for the future.
This year, Gov. Deval Patrick signed legislation that ties health care cost increases to the growth of the state's economy. The legislation, which is not replicated in the ACA, passed unanimously in the state Senate and 132-20 in the state House.(19)
With the exception of reforms to federal public programs like Medicare and Medicaid, the long-term results of the ACA may be similar to the outcomes achieved in Massachusetts.
On the matter of controlling costs, the drafters of the ACA were aware of the difficulties Massachusetts faced and tried to address some of them in the federal model. As a result, the ACA has a number of provisions designed to reduce costs, many of which can be successfully implemented only at a national level. But how successful and effective those initiatives will be remains to be seen, as will the latest state-based attempt to rein in costs in Massachusetts.
1) Brian C. Mooney, 'RomneyCare' – a revolution that basically worked, The Boston Globe, June 26, 2011.
2) Dzieza Josh, Romneycare and Obamacare Differ Only in Inconsequential Ways, The Daily Beast, March 6, 2012.3) Kaiser family Foundation, Massachusetts Health Care Reform: Six Years Later, May 21, 2012.
4) Blue Cross and Blue Shield Foundation of Massachusetts, Health Reform In Massachusetts, Expanding Access To Health Insurance Coverage, Assessing the Results, May 17, 2012.
6) Blue Cross and Blue Shield, Massachusetts Health Reform: A 5-year Progress Report, May 2011
7) Blue Cross and Blue Shield Foundation of Massachusetts, Health Reform In Massachusetts, Expanding Access To Health Insurance Coverage, Assessing the Results, May 17, 2012.
8) Massachusetts Division of Health Care Finance and Policy, Key Indicators, June 2011.
9) Dubay, Lisa, Long, Sharon K., Lawton, Emily, Will Health Care Reform Lead to Job Losses? Evidence from Massachusetts Says No, The Urban Institute, June 7, 2012.
11) Massachusetts Health Connector and Department of Revenue, Data on the Individual Mandate, Tax Year 2009, November 2011.
12) Blue Cross and Blue Shield Foundation of Massachusetts, Health Reform In Massachusetts, Expanding Access to Health Insurance Coverage, Assessing the Results.
14) Kaiser Family Foundation, Massachusetts Health Care Reform Six Years Later.
15) Kaiser Family Foundation, Health Care Expenditures Per Capita by State of Residence, 2004.
16) Blue Cross and Blue Shield Foundation of Massachusetts, Health Reform In Massachusetts, Expanding Access To Health Insurance Coverage, Assessing the Results; and Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group, 2007. Projections for 2005-2020 by Massachusetts Division of Health Care Finance and Policy.
17) Blue Cross and Blue Shield Foundation of Massachusetts, Health Reform In Massachusetts, Expanding Access to Health Insurance Coverage, Assessing the Results.
19) Martha Bebinger, Massachusetts Passes Health Cost Control Bill, WBUR-Kaiser Health News, July 31, 2012.