The New Massachusetts Health Reform: Half a Step Forward and Three Steps Back

Massachusetts runs in regular cycles. Every eighty-six years our Red Sox win the World Series. Once a decade Harvard hires a senior woman scientist. And every twenty years our legislature passes a universal health care bill that the governor hopes to use as a springboard to the White House.

Unfortunately, Governor Mitt Romney's stab at universal coverage looks set to repeat the flop of Michael Dukakis's bill two decades ago. Then as now, our governor crowed about "Health Care for All" in the statehouse rotunda. But Dukakis's plan imploded within two years, and today 250,000 more people are uninsured in Massachusetts than on the day it was signed.

The Structure of the New Bill

The new bill includes two provisions meant to expand coverage. First, it will modestly expand Medicaid eligibility. Second, it requires people with incomes above 100 percent of the poverty line to purchase a private insurance policy. The state will offer partial subsidies for the purchase of this private coverage to families with incomes below 300 percent of the poverty line (about $30,000 for a single person or $60,000 for a family of four). Those above three times the poverty line will have to pay the full cost of their own coverage.

To help make coverage more affordable, a new state agency called "the Connector" will connect people with the private insurance plans that sell the coverage. The Connector is also supposed to help design affordable plans. Massachusetts citizens will be allowed to use pre-tax dollars to purchase coverage (although this tax break mostly helps affluent taxpayers in high tax brackets).

Businesses that employ more than ten people and fail to provide health insurance will be assessed a token fee (not more than $295 annually—about fifteen cents per hour of labor) to help subsidize care. Additionally, hospitals won a rate hike assuring them better payments from state programs, and several provisions were included that are meant to attract additional federal funding to help pay for the Medicaid expansion.

The new plan is half a step forward for Massachusetts. One positive element in it is that all legal Massachusetts residents with incomes below 100 percent of the poverty line will now get publicly paid coverage. However, less than 17 percent of uninsured people in the state have incomes that low. Moreover, new federal Medicaid regulations that require proof of legal status will disenroll undocumented immigrants, as well as some African-Americans who lack birth certificates because they were born at home in the rural south. The bill also includes funds to help a few safety net hospitals keep their doors open. (Disclosure: We work at one such hospital.) However, it phases out the state's free-care pool, which has sustained safety net hospitals and covered many undocumented immigrants.

Unfortunately, the bill also takes three steps back. First, the contention that the bill will generate universal coverage is based on extremely fuzzy math. The politicians assumed that only about 500,000 people in Massachusetts are uninsured. The Census Bureau says that 748,000 are uninsured. Why the difference? The 500,000 figure came from a telephone survey conducted in English and Spanish. Anyone who did not have a telephone or who spoke another language (roughly one-third of immigrant families in Massachusetts) was, in effect, counted as insured—a dubious assumption since nationally 43.9 percent of phoneless adults are uninsured¹ and many non-English speaking immigrants lack coverage. The Census Bureau's 748,000 figure comes from a much more thorough survey, the Current Population Survey, which is carried out in person, door-to-door, with surveyors who speak multiple languages (including Portuguese and Haitian Creole, common in Massachusetts). In sum, the calculations behind the reform plan overlook everyone who lacks a phone or does not speak English or Spanish, nearly half of whom are likely to be uninsured. Hence, the level of funding in the bill for insurance subsidies and Medicaid expansion is grossly inadequate to cover the actual costs.

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