Grace Franz Assignment 5

Healthcare Economics 11/26/2020

XHAD 6230 500

In 2006 Mitt Romney, the republican governor of the State of Massachusetts worked across the
aisle with the democratic state legislature to reform the state’s healthcare system. The bill,
officially known as “Chapter 58 of the Acts of 2006”, but often dubbed Romneycare, was
prompted in response to several issues within the state’s healthcare system which can be
summarized by the following: many individuals losing, or at risk of losing, insurance coverage,
and the price of care impacting the state’s bottom line.

The main features of the law are built on “the principle of shared responsibility among
individuals, government, and business.” (Doonan and Tull 2010) With this bill, the state
government started chipping in for the coverage of a much greater portion of the
population. MassHealth, the Medicaid, and SCHIP program increased coverage to include
children and families with 300% of FPL. For those below this 300% FPL but without other
insurance options, the law created the Commonwealth Care program giving individuals access to
subsidized insurance plans. Additional, non-subsidized insurance options are available to
individuals and small businesses through the Commonwealth Choice program. The bill also
allows the state to offer subsidized insurance plans for adults under 26 without access to
insurance through their employer. 

While the government bears a great amount of the burden to increase access to insurance for
residents, the bill also requires employers and individuals to participate. Employers with ten or
more employees must contribute a specified amount to their employee’s health benefits. If the
employer does not comply with this, they are required to pay an additional tax to the state to help
fund subsidies needed to cover these employees. As a bonus to employers, the state began
subsidizing insurance costs for those employees who would otherwise receive state-subsidized
insurance. All residents of the state are required to carry health insurance or pay a penalty. With
the increased subsidies from the state and the mandates for employee and individual coverage,
the bill created a health insurance coverage landscape where shared responsibility is the guiding
principle. 

Besides these basic principles of the Massachusetts healthcare reform, another key piece of the
legislation is the establishment of the Commonwealth Health Insurance Connector Authority.
The body, led by the Connector Board, defines the details of how the statutes will be carried out.
The Connector Board is made up of a diverse body of stakeholders, including customers,
laborers, and policymakers. The board is responsible for defining what section of the population
should be subsidized and what must be covered to be considered insurance, While having such
diverse input into important decisions can prove difficult in the short-run, the benefit of having
buy-in from all stakeholders will lead to a more successful implementation in the long-run.
(Doonan and Tull 2010)

Chapter 58 of the Acts of 2006 was successful at increasing access to health insurance and
decreasing the cost. The rates of uninsured residents in Massachusetts dropped almost 5% from
2004 (7.4%) to 2008 (2.6%). While insurance rates in the small-group pool rose from the
enactment until 2009, the rates in the individual market dropped significantly. Premiums for
individual coverage rose across the United States by 14% from 2006 to 2009, but in
Massachusetts costs were reduced by 40%. Due to the mandate for individuals to carry health
insurance, an additional 336,000 individuals were insured by the end of 2007. (Anthony 2017)

A 2010 study by Kolstad and Kowalski found impacts beyond increasing access to health
insurance in Massachusetts. The first impact was that the state-subsidized insurance programs
were responsible for pushing out the private competition in those markets. None the less, the
increased access to care led to a decreased length of stay in the hospital and decreased
admissions from the ED to the hospital. There was also evidence that individuals sought more
primary and preventative care. (Kolstad and Kowalski 2010) However, by 2015 one-third of
fully insured individuals reported issues getting appointments for needed care. Between 2005
and 2014 insurance premiums in the state increased by 50%. In 2015, one in five adults in
Massachusetts reported that even with the insurance coverage they could not afford needed care
and one out of six had trouble paying their medical bills. (Syrop 2016) (Long et al. 2016)
These disparities in access and affordability make it clear that universal insurance coverage does
not fully solve the problems of cost, quality, and access. First, access to insurance does not
guarantee access to health care. In fact, until equilibrium within the market is reached, the
increased demand for care is sure to create bottlenecks within the system. Second, if state-run
programs decrease competition from private insurance costs it will reduce the supply of
insurance and therefore costs will increase. The Henderson text notes that as we create bills that
increase demand for healthcare, we must consider how we will increase supply. The author
suggests increasing the use of Nurse Practitioners as PCP providers, but there are many options
that could be considered. Finally, from a political standpoint, Massachusetts is an example of
how lawmakers can work together to enact reform. Including perspectives from across the
government, industry, and individuals in this conversation, as Massachusetts did with the
Connector Board, may prove helpful with adoption on at all levels of reform. Since 2006 the
state has enacted several additional laws to help achieve a better balance within the healthcare
market and increase the quality of care to patients. It is imperative that as we look at reforms to
solve our problems, that we realize that one law will not solve all issues. We must continue to
refine and reform until a better balance is reached within the market.
 References

Anthony, Barbara. “Beyond Obamacare.” Harvard Kennedy School, 2017,

www.hks.harvard.edu/centers/mrcbg/publications/awp/awp82. 

Doonan, M. T., & Tull, K. R. (2010). Health care reform in Massachusetts: implementation of
coverage expansions and a health insurance mandate. The Milbank Quarterly, 88(1), 54–80.
https://doi.org/10.1111/j.1468-0009.2010.00589.x

Henderson, James W. Health Economics and Policy. Cengage, 2018. 

Long, Sharon K, et al. “Massachusetts Health Reform At Ten Years: Great Progress, But
Coverage

Gaps Remain.” HEALTH AFFAIRS, vol. 35, no. 9, 2016.

Kolstad, Jonathan T., and Amanda E. Kowalski. The Impact of Health Care Reform On Hospital
and Preventive Care: Evidence from Massachusetts. 20 May 2010,
www.nber.org/papers/w16012. 

Syrop, Jacke. “Massachusetts Healthcare Reform, 10 Years Later.” American Journal of

Managed Care, 2016.