On The Road To Universal Coverage:
Impacts Of Reform In Massachusetts At One Year
By Sharon K. Long, principal research associate at the Urban Institute
Health Affairs
June 3, 2008
In roughly the first year under reform, uninsurance among working-age adults was reduced by almost half among those surveyed, dropping from 13 percent in fall 2006 to 7 percent in fall 2007.
Although coverage at a point in time is important, continuity of coverage over time helps ensure that health care is available to people when it is needed. In step with the drop in uninsurance at the time of the survey, the share of adults who were ever uninsured during the prior year also fell during the first year of health reform. For all adults, the share ever uninsured during the year dropped by four percentage points (to 14.5 percent), while the share of ever-uninsured low-income adults fell ten percentage points (to 24 percent). For higher-income adults (family income over 300 percent of poverty), there was not a significant change in the share reporting that they were ever uninsured during the year (from 7.2 percent to 7.3 percent).
Altogether, 80 percent of those who were uninsured in 2007 reported that it would be difficult to come up with the funds that would be needed to purchase insurance. With 41 percent reporting problems paying other bills, purchasing health insurance is likely to be a hardship for at least some of the remaining uninsured population.
Among low-income adults, there was also a decline in the share reporting very high out-of-pocket spending (more than $3,000 per year), which fell to about 8 percent under reform. Note that $3,000 in out-of-pocket spending represents a sizable share of income for low-income families: nearly 20 percent of family income for a family of three at 100 percent of poverty and 6 percent for a similar family at 300 percent of poverty. (Also for low-income adults, 37 percent had out-of-pocket spending of over $500, and for 24 percent it was over $1000.)
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.4.w270v1
Comment:
By Don McCanne, MD
Numerous media reports have covered the success of the Massachusetts health reform program, citing this Urban Institute report released this week. Reducing the numbers of uninsured by almost one-half is certainly a significant accomplishment. As to whether the Massachusetts plan has been a success or a failure, we should look at the accomplishments as contrasted with the goals.
Everyone remembers the accolades on Gov. Romney’s signing of the first universal insurance program in the United States (a label they share with many other failures). This was a program that was supposed to provide everyone in the state with access to comprehensive insurance programs with subsidies for lower-income individuals, and affordable premiums for everyone else so that they could comply with the individual mandate to purchase insurance. Based on this report, this seems to have worked for close to half of the uninsured, but not the other half. What went right and what went wrong?
Those who followed the process will remember that there was great urgency in this legislation. Massachusetts was going to lose federal funds designated for health programs for low-income populations. In the complex negotiations that followed (simplified here), it was decided that, by including everyone, health care financing for the state could become a shared responsibility, accomplishing both goals of covering everyone, and, most urgently, covering the health programs for the poor. Massachusetts received its federal Medicaid and SCHIP financing, and shifted funds from the free-care pool into these programs. For those with higher incomes, employer-sponsored coverage would still be available, or they could purchase affordable plans under the mandate. For those forced to buy their own coverage, actually there really wasn’t much shared responsibility since the mandated employer contribution was negligible, which brought into question whether the plans were really affordable.
At any rate, this program did provide some sort of coverage for a great many low-income individuals (under 300 percent poverty), and thus was a partial success in covering this more vulnerable group. For various reasons, 13 percent of low-income individuals still have no coverage. Also, for those that do, many are faced with unaffordable out-of-pocket expenses, whereas more traditional Medicaid and SCHIP programs lessen that exposure. More may be covered, but for many this coverage is not insurance but is underinsurance. Thus the Massachusetts program was successful in covering more low-income individuals, but with tradeoffs: still leaving many out, and leaving many others exposed to excessive out-of-pocket costs.
What about the other goal of covering everyone? Although the welfare programs fell short, could this legislation result in otherwise universal coverage? After all, a highly lauded component of the program was a mandate for all higher-income individuals to purchase insurance which allegedly they certainly could afford. Not only would everyone have coverage, but it would end the problems of free riders and adverse selection. This report shows that the uninsured tend to be concentrated amongst the young and healthy adults. Leaving these free riders out of the risk pools results in adverse selection, thus the Massachusetts program has not successfully addressed these perversities.
Furthermore, just how successful has this program been in mandating higher-income individuals to purchase insurance? At the beginning, 7.2 percent (of those over 300 percent poverty level) were uninsured for some portion of the year, and at the end of the study it was 7.3 percent. Success rate? Zip. (Technically, there was a 1.8 percent regression-adjusted decline in uninsurance rates in high-income individuals that could be due to increases in other coverage, though those increases did not reach statistical significance.)
Many still contend that the Massachusetts program should serve as a model for the nation. But it certainly doesn’t seem to be a model that we would want to emulate. The welfare component falls short because too many are left without coverage, and many others are exposed to unaffordable cost sharing. The individual mandate is a miserable failure, and that may be the most important lesson for the nation. Reform based on our fragmented system of public programs and private plans is the most expensive model of reform, and it will always fall short of our goals.
Massachusetts considered a single payer system but rejected it for purely political reasons. Where would they be now if they had adopted it? Financial barriers to care would have been removed for everyone. The legislators could have then turned their attention to another very urgent problem they face: reinforcing the primary care infrastructure. Having insurance is of limited value if the primary care professionals are not there when you need them.
