Governor Signs Historic Health Reform Bill

April 14, 2006

It was truly an honor and privilege to have been invited to yesterday’s historic Health Care Reform Bill signing at Faneuil Hall. For all of us working on the front lines of advocating and caring for the uninsured, it was great to see the bi-partisan support for the idea of universal care. You know it is truly a special day when Sen. Edward Kennedy calls Gov. Mitt Romney “my collaborator and friend.”

Yesterday, Massachusetts became the first state in the nation to require its residents to purchase health insurance under legislation signed by Gov. Mitt Romney. The law, which was overwhelmingly approved by the House and Senate last week, aims to cover 95 percent of the Commonwealth’s 550,000 residents currently without health insurance within three years through a combination of new insurance products, entitlement program expansions, public subsidies, and cost control initiatives.

However, the work is not done. Before the ink was dry on the bill, word circulated about the governor’s vetoes on certain aspects of the bill that:

• Assessed an annual ''Fair Share Assessment" charge of $295 per worker on employers with 11 or more workers who don't provide health insurance.
• Aimed to restore dental and vision benefits, previously cut in 2002, for residents on MassHealth Essential, a program for long-term unemployed adults.
• Revamps and increases the Public Health Council to advise the state public health commissioner.
• Allowed ''special status aliens"-- legal immigrants who have been here less than five years or those who don't have permanent status -- to receive Medicaid benefits without regard to the income of their sponsor.
• Required a member of the legislature to participate in negotiations with the federal government for special Medicaid funding.
• Eliminates a prohibition on the administration that makes changes to the financing, regulation of, or operation of mental health benefits for Medicaid recipients unless it first submits its reasons to the Legislature.

Concerns About True Cost

The overall cost of the new plan, pegged at $1.2 billion by lawmakers in the first year, is also a question on the minds of many. An analysis of the legislation estimates that the groundbreaking healthcare plan would start losing money in two to three years, which could put pressure on lawmakers to spend more tax money, increase the fee on businesses or scale back the coverage of the sweeping bill. The analysis projects that the plan will be about $160 million short of its estimated cost of $1.56 billion in the fiscal year that starts July 1, 2008.

In their projections, legislative staff members assume that medical costs will grow 10 percent annually in the first three years of the plan. They estimate that the subsidies that help pay insurance premiums for low-income people will cost $725 million by the budget year that starts July 1, 2008. But if medical costs continue to grow at 10 percent a year, the cost of the subsidies could reach nearly $800 million by 2010, unless the state opts to provide lower subsidies.

Rising healthcare costs could easily outstrip the money raised by the bill through state and federal contributions and the employer assessment, observers said. Some lawmakers, conceding they may have to revise the new law as it is implemented, said they are counting on a number of factors breaking their way for the plan to continue without more state spending, including being able to control medical costs and negotiate more federal aid.

Health Insurance Costs

Other concerns have surfaced, as well. Some legislators and insurers say the premiums on new private health policies will be about $325 a month for individuals, more than originally envisioned by Romney.

Concocting insurance plans by July 2007 that meet the quality and affordability standards promulgated by the state will prove difficult but feasible, said James Roosevelt, CEO of Tufts Health Plan, noting “very limited flexibility” permitted by the legislation.

Federal Funding

The plan is heavily dependent on a special pool of federal money, which the federal government was threatening to withdraw if the state did not pass a healthcare bill. An estimated $610 million annually is guaranteed into 2008 under a so-called Medicaid waiver. At that point, Massachusetts officials must renegotiate the contract with the federal government. Legislators are hoping that despite the federal deficit, the state will negotiate an increase in funding beyond the $610 million to help close the health plan's revenue gap.

But in the way of the federal aid is “a host of thorny issues,” said John McDonough, executive director of Health Care for All; a group pushing expanded affordable coverage. “It’s awfully hard to see at the end of the day how they’re going to have anything up and running by July 1,” McDonough said. “So it’s a question of how much leeway the feds give the state without penalizing the state financially.”

Given the fiscal and other constraints now confronting the healthcare community, perhaps Senate President Robert Travaglini said it best when he said, “Let me be the first to sound a word of caution. This is just the blueprint. We must still implement the reforms, educate the public, and establish the guidelines and regulations that will make this legislation a reality. Everyone must stay committed. In the end, all individuals will be mandated to obtain coverage. And the legislature will have… to evaluate the progress we're making and step in with the revisions whenever necessary.”

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