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Home / Washington Business - May/June 2007 / Points of View: A workable plan for health care reform |
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Points of View: A workable plan for health care reform |
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Written On: May/June 2007 |
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Written By: by Richard C. Lord |
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Richard C. Lord is president and CEO of Associated Industries of Massachusetts, a Boston-based statewide employer organization representing 7,600 members, with 680,000 employees in the Commonwealth of Massachusetts.
A year ago, Massachusetts enacted a sweeping health care reform law designed to reduce the number of uninsured persons in the state—then estimated at 532,000—and rationalize a hodgepodge of free and subsidized-care programs. Associated Industries of Massachusetts, the state’s leading employer organization, was deeply engaged in the deliberations that shaped the law, and I am the business representative on the board of the new Commonwealth Health Insurance Connector Authority charged with implementing key aspects of the plan. This is a report from the front line on an initiative that is being touted as a model for other states.
One of the reform’s core principles is shared responsibility. Its most salient feature is an individual mandate, requiring every resident to obtain health insurance coverage or face tax penalties. Employers are not mandated to provide health insurance to their workers, although firms with 11 or more employees will pay a penalty of $295 per worker per year if they do not offer coverage. In addition, employers with 11 or more employees must enable their employees to pay for insurance in pretax dollars by offering a Section 125 plan. State government, of course, plays a number of critical roles in our health care reform efforts.
The other basic principle is an incremental approach, focusing on access to health insurance for three groups:
• Those eligible for Medicaid, addressed by expansion and improved outreach with regard to that program.
• The "working poor" (up to 300 percent of the federal poverty standard), served by Commonwealth Care, a subsidized insurance program administered by The Connector.
• Employed people with higher incomes, who must purchase health insurance in order to comply with the individual mandate.
The first two pieces are in place now. Since October 2006, more than 100,000 Massachusetts residents have either enrolled in Medicaid or signed up for coverage through Commonwealth Care, which covers doctor’s office visits, inpatient hospital care, pharmacy benefits, and emergency care to uninsured residents (with incomes below 300 percent of the poverty level) who are not offered health insurance by their employer. At this point, we presumably have a higher rate of health care coverage than any other state.
The next major milestone on the implementation timeline comes up on July 1, 2007, when the individual mandate takes effect. At that time, The Connector will offer non-subsidized health insurance to individuals with incomes above 300 percent of the federal poverty level who do not have insurance through their employers. There is a spirited discussion going on right now as to whether Massachusetts will adhere to that mandate or back off on requiring the purchase of insurance by relatively low- and middle-income people who do not qualify for subsidies. (Social advocacy groups are suddenly arguing that health insurance costs are too high to mandate that individuals purchase it). Assuming the mandate remains in place, the question will be how individuals subject to it will respond and how burdensome their employers’ share of responsibility will be.
The Associated Industries of Massachusetts was generally successful in advocating for a law that is fair to our members, who already offered health benefits in nearly every case. In a series of nine briefings across the state that we have sponsored in conjunction with The Connector, it has been clear that complying with all of the requirements of the new law is nevertheless a challenge for employers, particularly those with a significant number of seasonal, part-time and temporary workers. Section 125 plans must be extended to employees who are not eligible for their employer’s sponsored coverage, and differential premium contributions for higher compensated individuals are banned. Dependents can now be covered for an additional two years, up until the age of 26. Also, health plan specifications must meet new "minimum creditable coverage" standards adopted by The Connector board.
Beyond the formal employer responsibilities, the greatest challenge may prove to be an informal one—explaining the law and its implications to employees who will turn to their employers as they face the individual mandate.
The employers who have attended our briefings are not there to complain; they are looking for guidance to ensure that they are in compliance with the new law. As we move forward, it is incumbent on The Connector and other state agencies that share responsibility for implementing various components of the law to ensure that there be clear and consistent outreach to the business community and that enforcement is fair and equitable. Employer organizations must hold their feet to the fire and fulfill their responsibility to inform and assist their members.
The bipartisan efforts of government leaders—along with the active participation of providers, insurers, consumers and the employer community—have given Massachusetts a workable plan to extend access to health coverage. The next phase is critical, because that is when new burdens fall on individuals and employers.
Meanwhile, the reform appears to have created a broader constituency for tackling health care costs—the number-one concern of the employer community, addressed only tangentially in this act. The Massachusetts law provides a framework for extending access to health care coverage for all residents, but we must still tackle the issue of rapidly rising health insurance premiums if this is to be successful.
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