Massachusetts is getting a sweeping new “universal health insurance” law that could transform the state’s health finance market.
If implemented as written, the new law would require employers with more than 10 workers to provide health coverage or pay a $295-per-worker tax.
The law also would combine the small group and non-group health insurance markets; penalize employers with 10 or more employees whose workers make heavy use of free medical care; and require individuals with incomes over 300% of the federal poverty level to get health coverage from employers or buy it themselves from private insurers by July 1, 2007.
But the bill also would require health care providers to offer better cost and quality data; permit health maintenance organizations to sell high-deductible HMO plans that are compatible with health savings accounts; and ban the imposition of new health mandates until 2008.
The bill, H.B. 4850, is a conference report, or compromise bill, that combines provisions of House Bill 4479 with Senate Bill 2282. Lawmakers released the final version of the health reform bill the day before members of the state Senate approved it 37-0 and members of the state House approved it 154-2.
Aides to Gov. Mitt Romney, a Republican who is believed to be planning to run for president in 2008, said at press time he will be signing the bill this week.
Business groups and insurance groups have gone to court to block implementation of other, different universal health insurance laws in Massachusetts and other states. In many cases, universal health plan opponents have argued the laws violated the Employee Retirement Income Security Act.
It was not clear at press time whether business groups or other groups would be suing to block implementation of all or part of H.B. 4850.
America’s Health Insurance Plans, Washington, has welcomed passage of the bill but notes that lawmakers left many details to regulators. AHIP says it will be working closely with state regulators on implementation.
At press time, the Massachusetts Association of Health Plans, Boston, was still studying the final text of the bill and not commenting on specific provisions. But Eric Linzer, a vice president at MAHP, says his group was pleased to see lawmakers come up with a compromise reform plan.
“We think the plan is an important step toward improving the quality of the health care system and expanding coverage,” Linzer says.
Meanwhile, the Associated Industries of Massachusetts, Boston, a powerful state business group, and Families USA, Washington, a consumer group, both issued statements celebrating final passage of the reform bill.
The bill is “a forward-looking effort to expand access to health care to residents of the state and to bring health care costs under control,” AIM says.
Implementing the reforms described in the bill will put “Massachusetts at or near the top of the class in providing affordable coverage for the uninsured,” Families USA Executive Director Ron Pollack says in his group’s statement. “Today’s compromise sets a number of important precedents for Massachusetts residents that are truly historic from a national perspective.”
General bill provisions would:
–Combine the Massachusetts small-group and non-group markets in July 2007, in an effort to reduce rates for individuals.
–Give health maintenance organizations the ability to offer high-deductible health plans that are compatible with the health savings account program.
–Create a health care cost and quality council that, among other things, would find ways to publish specific cost and quality data on the Web.
Bill provisions affecting employers would:
–Require employers with more than 10 employees that fail to provide health coverage to pay a $295 “fair share contribution” to the state for each uninsured employee. The state will let employers pro-rate fair share contribution requirements for seasonal and part-time employees.
–Require employers with more than 10 employees and no employer-sponsored health coverage to let employees cut their taxes by purchasing coverage through Section 125 plans.
–Impose a “free rider” surcharge on companies that fail to provide health insurance and whose employees use free care. If Massachusetts implements H.B. 4850 as written, the state could impose the free rider surcharge when five or more employees of a company with more than 10 employees received free care in a year. “The surcharge will range from 10% to 100% of the state’s costs of services provided to the employees, with the first $50,000 per employer exempted,” according to the conference report summary.
Bill provisions affecting individuals and the individual insurance market would:
–Create an agency, the Commonwealth Health Insurance Connector, that would help individuals who have no employer-sponsored coverage buy affordable coverage.
–Provide free health coverage for uninsured residents, including childless residents, who have incomes below the federal poverty level. (Today, childless individuals have a difficult time qualifying for Medicaid or other public health coverage programs, even if their incomes are very low, according to a summary of the H.B. 4850 conference report posted on the Website of the Massachusetts legislature.)
–Require most uninsured individuals with incomes between the federal poverty level, or about $9,600 for an individual, and three times the federal poverty level to pay for subsidized private coverage by July 1, 2007.
–Require most uninsured individuals with incomes over three times the federal poverty level, or about $38,500 for a family of two, to buy private health coverage by July 1, 2007.
–Take state income tax personal exemptions for tax year 2007 away from individuals with incomes over the federal poverty level who fail to buy health coverage.
–Create exceptions to the health insurance purchase requirements for individuals if affordable policies are not available.
–Create exceptions for individuals who do not want to buy health coverage for reasons having to do with “sincerely held religious beliefs.”
–Use Medicaid funding to pay for health coverage for uninsured individuals rather than for direct payments to hospitals.
Bill provisions affecting young adults would:
–Let young adults stay on their parents’ insurance plans for two years past the loss of their dependent status, or until they turn 25, whichever occurs first.
–Create affordable, specially designed products for young adults ages 19 to 26.