Employer--Provided Coverage Expands In Massachusetts, As Do Costs

As I think most of us are aware, the Massachusetts health reform initiative, begun in 2006, has become a model for our federal legislators currently crafting national health reform. Previous posts in April, May, June, and July have discussed varied issues with that initiative.

Depending on what source you use, it appears that the Massachusetts reform has been successful to a great extent. A September report from Blue Cross and Blue Shield of Massachusetts and two national non-profit organizations found that the rate of working-age adults who were uninsured in the state dropped from 13% to 4%.

The report also found that, since reform, employer-sponsored coverage remains strong: it rose from 66.5% to 71.4% among all adults, and from 37.4% to 43.5% for lower-income adults. The report noted that "with [employer-sponsored insurance] coverage higher under health reform, there continues to be no evidence that any expansion in public insurance coverage under health reform is 'crowding out' or replacing [employer-sponsored insurance] coverage, as is often the case in reform efforts that focus on public expansions."

A new study published in the October 1 online issue of Health Affairs confirms the positive effect of Massachusetts health reform on employer-provided coverage. At least as of the fall 2008 and as reported by workers, the rate of coverage through employers had risen and the scope and quality of coverage improved, too, even among small employers with 50 or fewer workers, noted the article, “Massachusetts Health Reform: Employer Coverage From Employees’ Perspective.” However, workers’ premiums and out-of-pocket costs have become an issue for workers at small firms, although it does not seem to have negatively affected participants’ access to needed medical care.

Yet, rapidly growing health care costs remain a challenge and a barrier both to coverage and care for many people, just as it does for the rest of the nation, The Access Project, a Boston-based nonprofit, has observed. One of the two groups that are still having difficulty paying for health care are lower-income workers covered by employer-sponsored health insurance. Because these workers have access to other insurance, they are not eligible for Commonwealth Care. And, though their incomes are similar to those of people covered by Commonwealth Care, unlike Commonwealth Care plans, employer-sponsored plans can have high deductibles and out-of-pocket costs, and premiums that are not based on income.

Employers in Massachusetts are watching the national health reform process with trepidation, as Jon Hurst, the president of the Massachusetts Retailers Association, noted in a post on the Boston public radio station blog, Commonhealth.

Mr. Hurst advised federal law makers to “learn from the Bay State and not penalize employers in the rush toward reform.” Double digit cost growth continued for small employers and their employees, due not only to the merger of the individual and small group health insurance markets, but also to the lack of negotiating ability for non-taxpayer subsidized plans.

Furthermore, business leaders complain that the Massachusetts health reform rules are so confusing that many employers are having a hard time understanding what is required of them, the Boston Globe reported in conjunction with the results of an audit that revealed that 40% of audited employers were not making the required contributions for employees’ health insurance premiums. Many of the audited firms were restaurants, temporary help firms, and providers of home health care or janitorial services and they faced substantial penalties for noncompliance.

Rising health care costs combined with the current economic recession could undermine some of the law's successes, acknowledged the Urban Institute in its third annual Update on Health Reform in Massachusetts.

So, dear (very dear) federal legislators, take note and learn from Massachusetts’ experience.