Road Trip

Massachusetts: What Universal Coverage Could Look Like

The Bay State can boast of the lowest uninsured rate, but the high costs give even proponents pause.

Massachusetts
% in the individual market: 5%
% uninsured: 4%
Per capita health expenditures (rank): $9,278 (2)
Rankings include the District of Columbia
Source for all data: Kaiser Family Foundation

These details will seem familiar: an individual and employer mandate, guaranteed issue, community rating, a health insurance marketplace, and government subsidies for those who can’t afford coverage.

They were the ingredients of Massachusetts health care reform legislation that former Gov. Mitt Romney signed into law in 2006. Romney, working closely with the leaders of a state legislature firmly in the control of Democrats, crafted a scheme that hewed to market-based ideas that the conservative Heritage Foundation had long espoused. And the Massachusetts law was, of course, the mini-me of the ACA that passed four years later.

AHCA consequences

Politically, “Romneycare” turned out not to be such a good thing for Romney and may have helped doom his 2012 presidential bid. But from a policy perspective, it was effective in reducing the percentage of Massachusetts residents without health insurance from 11% in 2006 to 2.8% today, the lowest rate in the nation. Jonathan Gruber, an MIT economist and one of the architects of the Massachusetts law and the ACA, notes that an uninsured rate of 3% is close to what you’ll see in countries with universal health coverage.

Premium prices and the individual mandate have fueled some of the animus toward the ACA. But in Massachusetts, among the bluest of the blue states, there have been few complaints about these issues, particularly the mandate, according to Gruber, one of the ACA’s stoutest defenders. “The mandate is accepted widely as an element of the social contract,” he says.

Massachusetts also expanded its Medicaid program, called MassHealth, under the ACA. Today, almost 400,000 state residents have health insurance under the Medicaid expansion, according to Families USA.

Big spenders

But the state’s health care reform law—like the ACA—did not fix the problem of rising health care costs—and Massachusetts health care spending and prices are among the highest in the country. The high cost of living is a factor in the price of health care. So is the clout of the state’s large prestigious heath care systems, especially Partners Healthcare in Boston, which includes Harvard-affiliated Massachusetts General Hospital, and Brigham and Women’s hospitals. In negotiations with the state’s not-for-profit health insurers—Tufts Health Plan, Harvard Pilgrim, and Blue Cross Blue Shield of Massachusetts—the health care systems can, and have, driven a hard bargain.

“In Massachusetts and elsewhere, the intense market concentration is widely considered to have more of an impact on health care costs rising above the rate of economic growth,” notes John E. McDonough, a health policy professor at the Harvard T. H. Chan School of Public Health, who, like Gruber, had a hand in crafting the Massachusetts law and the ACA. McDonough was head of a group that pushed for passage of the Massachusetts law and was an adviser to the U.S. Senate’s health, education, labor and pensions committee during the drafting of the ACA.

Six years after the initial law went into effect, the Massachusetts state legislature passed a law that is supposed to tie health care cost increases to the state’s economic growth, which has been robust partly because these are boom times for the state’s biotech and pharmaceutical industries. In response, the Health Policy Commission set a health care cost growth benchmark of 3.6% annually, and then this year lowered that rate to 3.1%. To date, however, the commission has taken no enforcement action.

AHCA consequences

So what would happen in Massachusetts if Congress passes a law similar to the AHCA? About 450,000 Massachusetts residents—90,000 covered through policies purchased through the ACA exchange and 355,000 covered by Medicaid—would lose coverage in about five years, according to an analysis by the Urban Institute and Blue Cross Foundation of Massachusetts. McDonough predicts that the un­insured rate would return to a level of more than 10%.

Massachusetts has more generous premium subsidies than what the ACA provides, notes Gruber. If the AHCA passes, then low-income residents would get much smaller tax credits, forcing the state to make up the difference and perhaps make other changes in the health care law. Can a Republican governor—this time, it would be Charlie Baker—and the state’s Democratic legislature catch health care reform lightning in a bottle as Romney and the legislators did in 2006?

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