The Massachusetts health care insurance reform law, St. 2006, c.58,, enacted in 2006, mandates that nearly every resident of Massachusetts obtain a state-government-regulated minimum level of healthcare insurance coverage and provides free health care insurance for residents earning less than 150% of the federal poverty level (FPL) who are not eligible for Mass Health (Medicaid). The law also partially subsidizes health care insurance for those earning up to 300% of the FPL. These subsidies and FPL-related calculations affect very few of the over 6,000,000 people (see Massachusetts Department of Healthcare Finance and Policy quarterly Key Indicators report) that had healthcare insurance prior to the enactment of the law.
The law established an independent public authority, the Commonwealth Health Insurance Connector Authority, also known as the Health Connector. Among other roles, the Connector acts as an insurance broker to offer private insurance plans to residents. The reform legislation also included tax penalties for failing to obtain an insurance plan. Massachusetts tax filers who failed to enroll in a health insurance plan which was deemed affordable for them lost the $219 personal exemption on their income tax. Beginning in 2008, penalties increased by monthly increments.
The healthcare insurance reform law was enacted as Chapter 58 of the Acts of 2006 of the Massachusetts General Court; its long form title is An Act Providing Access to Affordable, Quality, Accountable Health Care. In October 2006, January 2007, and November 2007, bills were enacted that amended and made technical corrections to the statute (Chapters 324 and 450 of the Acts of 2006, and chapter 205 of the Acts of 2007).
Estimates of the number of Massachusetts residents who were uninsured in 2006 prior to implementation of the reform law was about 6% of the population according to the Massachusetts DHCFP quarterly Key Indicators report (see its website), the most recent of which is dated May 2010 (although it was actually released on August 15, 2010). The number of people insured as of December 2009 is currently 5,473,000 not counting Medicare enrollees (see same report). Depending on population growth, now about 4% of the population is uninsured.
Allegedly because of their lack of health insurance, uninsured Massachusetts residents commonly utilize emergency rooms as a source of primary care. The United States Congress passed the Emergency Medical Treatment and Active Labor Act (EMTALA) in 1986. EMTALA requires hospitals and ambulance services to provide care to anyone needing emergency treatment regardless of citizenship, legal status or ability to pay. EMTALA applies to virtually all hospitals in the U.S but includes no provisions for reimbursement. EMTALA is therefore considered an "unfunded safety net program" for patients seeking care at the nation's emergency rooms. As a result of the 1986 EMTALA legislation, hospitals across the country faced unpaid bills and mounting expenses to care for the uninsured. Data following enactment of mandatory insurance show total emergency visits and spending continued to increase, and low-severity emergency visits decreased less than 2%; researchers concluded, "To the extent that policymakers expected a substantial decrease in overall and low-severity ED visits, this study does not support those expectations."
In Massachusetts, a fund of approximately $700 million, known as the Uncompensated Care Pool (or "free care pool"), was used to partially reimburse hospitals and health centers for these expenses and the expenses of non-residents. The fund was created through an annual assessment on insurance providers and hospitals, plus state and federal contributions. It was predicted that implementation of the Massachusetts health reform law would result in a decrease in expenses incurred in providing services to the uninsured, as the number of covered Massachusetts residents increased. In 2006, an MIT economics professor Jonathan Gruber predicted that the amount of money in the "free care pool" would be sufficient to pay for reform legislation without requiring additional funding or taxes. In fact, the increased cost of subsidized insurance offset the reduction in "free care", while insurance premiums increased faster than the national average and became the highest in the country.
In November 2004, political leaders began advocating for major reforms of the Massachusetts health care insurance system to expand coverage. First, the Senate President Robert Travaglini called for a plan to reduce the number of uninsured by half. A few days later, the Governor, Mitt Romney, announced that he would propose a plan to cover virtually all of the uninsured.
At the same time, the ACT (Affordable Care Today) Coalition introduced a bill that expanded MassHealth (Medicaid and SCHIP) coverage and increased health coverage subsidy programs and required employers to either provide coverage or pay an assessment to the state. The coalition began gathering signatures to place their proposal on the ballot in November 2006 if the legislature did not enact comprehensive health care reform, resulting in the collection of over 75,000 signatures on the MassACT ballot proposal. The Blue Cross Blue Shield Foundation also sponsored a study, "Roadmap to Coverage," to expand coverage to everyone in the Commonwealth.
Attention focused on the House when Massachusetts House Speaker Salvatore DiMasi, speaking at a Blue Cross Blue Shield Foundation Roadmap To Coverage forum in October 2005, pledged to pass a bill through the House by the end of the session. At the forum, the Foundation issued a series of reports on reform options, all of which included an individual mandate. At the end of the month, the Joint Committee on Health Care Financing approved a reform proposal crafted by House Speaker DiMasi, Committee co-chair Patricia Walrath and other House members.
Massachusetts also faced pressure from the federal government to make changes to the federal waiver that allows the state to operate an expanded Medicaid program. Under the existing waiver, the state was receiving $385 million in federal funds to reimburse hospitals for services provided to the uninsured. The free care pool had to be restructured so that individuals, rather than institutions, received the funding.
In fall 2005 the House and Senate each passed health care insurance reform bills. The legislature made a number of changes to Governor Romney's original proposal, including expanding MassHealth (Medicaid and SCHIP) coverage to low-income children and restoring funding for public health programs. The most controversial change was the addition of a provision which requires firms with 11 or more workers that do not provide "fair and reasonable" health coverage to their workers to pay an annual penalty. This contribution, initially $295 annually per worker, is intended to equalize the free care pool charges imposed on employers who do and do not cover their workers.
On April 12, 2006, Governor Mitt Romney signed the health legislation. Romney vetoed eight sections of the health care legislation, including the controversial employer assessment. Romney also vetoed provisions providing dental benefits to poor residents on the Medicaid program, and providing health coverage to senior and disabled legal immigrants not eligible for federal Medicaid. The legislature promptly overrode six of the eight gubernatorial section vetoes, on May 4, 2006, and by mid-June 2006 had overridden the remaining two.
The enacted statute, Chapter 58 of the Acts of 2006, established a system to require individuals, with a few exceptions, to obtain health insurance. Chapter 58 has several key provisions: the creation of the Health Connector; the establishment of the subsidized Commonwealth Care Health Insurance Program; the employer Fair Share Contribution and Free Rider Surcharge; and a requirement that each individual must show evidence of coverage on their income tax return or face a tax penalty, unless coverage was deemed unaffordable by the Health Connector. The statute also expands MassHealth (Medicaid and SCHIP) coverage for children of low income parents and restores MassHealth benefits like dental care and eyeglasses.
The legislation included a merger of the individual (non-group) insurance market into the small group market to allow individuals to get lower group insurance rates. The process of merging the two markets also froze the market for such insurance for a short period in April May 2010 as the current government tried to keep the leading non-profit insurers, which insure over 90% of the residents, in the state from raising premiums for small businesses and individuals. Eventually the state's non-partisan insurance board ruled that the government did not have the acturarial data or right to freeze the premiums. Five of the non-profit insurers then settled for slightly lower premium increases than they had initially requested rather than litigate further. The sixth litigated and won the right to implement all its original increases retroactively. These findings only affect 2010 and the premium increase/review/litigation process will have to begin again for the insurance period beginning January 1, 2011.
Payment rates were supposed to be increased to hospitals and physicians under the statute but that has not happened. The statute also formed a "Health Care Quality and Cost Council" to issue quality standards and publicize provider performance. There has been some activity by this council. Chapter 58 also set up a Disparities Council, funds automated prescription ordering in hospitals, and implements changes to the public health council, state insurance laws, mandated benefit requirements, and other health-related programs.
Commonwealth Health Insurance Connector Authority
The Health Connector is designed as a clearinghouse for insurance plans and payments. It performs the following functions:
- It administers the Commonwealth Care program for low-income residents (up to 300% of the FPL) who do not qualify for MassHealth and who meet certain eligibility guidelines.
- It offers for purchase health insurance plans for individuals who:
- are not working
- are employed by a small business (less than 50 employees) that uses the Connector to offer health insurance. These residents will purchase insurance with pre-tax income.
- are not qualified under their large employer plan
- are self-employed, part-time workers, or work for multiple employers
- It sets premium subsidy levels for Commonwealth Care.
- It defines "affordability" for purposes of the individual mandate
Commonwealth Care Health Insurance Program
Commonwealth Care is one of the newest subsidized health insurance programs offered by the Commonwealth, and is a key part of Health Care Insurance Reform in Massachusetts. It is designed primarily for income-eligible Massachusetts adult residents who are not otherwise eligible for MassHealth (Medicaid), who either do not work or who work for employers that do not offer health insurance. Specifically, it allows eligible residents access to certain subsidized private insurance health plans currently a choice of five plans for individuals without health insurance who make below 300% of the federal poverty level. There are no deductibles. For individuals below 150% of the federal poverty level, no premiums will be charged; for those below the poverty level, dental insurance is also provided. For those above 150% of the federal poverty level, a sliding scale premium schedule based on income is used to determine the amount of money a person contributes to their policy. Commonwealth Care for those below poverty has been available through the Connector since October 1, 2006. Plans for those between 100% and 300% of the poverty line have been available since January 1, 2007. As of June 2009, 177,000 people had enrolled in Commonwealth Care according to the Massachusetts Department of Healthcare Finance and Policy. The five Massachusetts health plans contracted with the state to serve the Commonwealth Care population as of April 2010 include: Boston Medical Center HealthNet Plan, CeltiCare, Fallon Community Health Plan, Neighborhood Health Plan, and Network Health. Celticare is offered by a for-profit insurance company, Centene, of St. Louis, MO and the rest are offered by Massachusetts-based non-profits.
Employers with more than ten full-time equivalent employees (FTEs) must provide a "fair and reasonable contribution" to the premium of health insurance for employees. Employers who do not will be assessed an annual fair share contribution that will not exceed $295 per employee per year. The fair share contribution will be paid into the Commonwealth Care Trust Fund to fund Commonwealth Care and other health reform programs. The Division of Health Care Finance and Policy defined by regulation what contribution level meets the "fair and reasonable" test in the statute. The regulation imposes two tests. First, employers are deemed to have offered "fair and reasonable" coverage if at least 25% of their full-time workers are enrolled in the firm's health plan. Alternatively, a company meets the standard if it offers to pay at least 33% of the premium cost of an individual health plan. For employers with 50 or more FTEs, both standards must be met, or 75% of full-time workers must be enrolled in the firm's health plan. Regulatory and analytic information is available on the Division's website.
There is an additional Free Rider Surcharge that can be assessed to the employer. This surcharge is different from the fair share contribution. The surcharge is applied when an employer does not arrange for a pre-tax payroll deduction system for health insurance (a Section 125 plan, or a "cafeteria plan"), and has employees who receive care that is paid from the uncompensated care pool, renamed in October 2007 as the Health Safety Net.
Residents of Massachusetts must have health insurance coverage under Chapter 58. Residents must indicate on their tax forms if they had insurance on December 31 of that tax year, had a waiver for religious reasons, or had a waiver from the Connector. The Connector waiver can be obtained if the resident demonstrates that there is no available coverage that is defined by the Connector as affordable. In March 2007, the Connector adopted an affordability schedule that allows residents to seek a waiver. If a resident does not have coverage and does not have a waiver, the Department of Revenue will enforce the insurance requirement by imposing a penalty. In 2007, the penalty was the loss of the personal exemption. Beginning in 2008, the penalty will be up to half the cost of the lowest available yearly premium which will be enforced as an assessed addition to the individual's income tax, up to $912 a year.
Young adult coverage
Beginning in July 2007, the Connector offers reduced benefit plans for young adults up to age 26 who do not have access to employer-based coverage.
The implementation of healthcare insurance reform began in June, 2006, with the appointment of members of the Connector board and the naming of Jon Kingsdale, a Tufts Health Plan official, as executive director of the Connector. On July 1, MassHealth began covering dental care and other benefits, and began enrolling children between 200% and 300% of the poverty level. The federal Centers for Medicare and Medicaid Services approved the state's waiver application on July 26, 2006, allowing the state to begin enrolling 10,500 people from the waitlist for the MassHealth Essential program, which provides Medicaid coverage to long-term unemployed adults below the poverty line. In 2006, the Division of Health Care Finance and Policy issued regulations defining "fair and reasonable" for the fair share assessment. The regulations provide that companies with 11 or more full-time equivalent employees will meet the fair and reasonable test if at least 25 percent of those employees are enrolled in that firm s health plan and the company is making a contribution toward it. A business that fails that test may still be deemed to offer a "fair and reasonable" contribution if the company offers to pay at least 33 percent of an individual s health insurance premium. Also in 2006, the Connector Board set premium levels and copayments for the state subsidized Commonwealth Care plans. Premiums will vary from $18 per month, for individuals with incomes 100%-150% of the poverty line, to $106 per month for individuals with incomes 250%-300% of poverty. The Connector approved two copayment schemes for plans for people 200%-300% of poverty. One plan will have higher premiums and lower copayments, while a second choice will have lower premiums and higher copayments. Four managed care plans began offering Commonwealth Care on November 1, 2006. Coverage for people above 100% of poverty up to 300% of poverty began on February 1, 2007. As of December 1, 2007, around 158,000 people were enrolled in Commonwealth Care plans. Initial bids received by the Connector showed a likely cost for the minimum insurance plan of about $380 per month. The Connector rejected those bids, and asked insurers to propose less expensive plans. New bids were announced on March 3, 2007. The Governor announced that "the average uninsured Massachusetts resident will be able to purchase health insurance for $175 per month." But plan costs will vary greatly depending on the plan selected, age and geographic location, ranging from just over $100 per month for plans for young adults with high copayments and deductibles to nearly $900 per month for comprehensive plans for older adults with low deductibles and copayments. Copayments, deductibles and out-of-pocket contributions may vary among plans. The proposed minimum creditable coverage plan would have a deductible no higher than $2,000 per individual, $4,000 per family, and would limit out-of-pocket expenses to a $5,000 maximum for an individual and $7,500 for a family. Before the deductible applies, the proposed plan includes preventive office visits with higher copayments, but would not include emergency room visits if the person was not admitted.
Composition of Newly Covered as of 1/1/08
Drop in Uninsurance Significant Across Income Strata
Detail of Uninsured Taxpayers
From 2006, the number of uninsured Massachusetts residents dropped from about 6% to 5.4%-5.7% in fall 2007, depending on the methodology used, to about 3% in June 2009 and back to 4% by December 2009 according to the Massachusetts Department of Healthcare Finance and Policy (DHCFP). Approximately 3% of taxpayers were determined by the Commonwealth to have had access to affordable insurance but paid an income tax penalty instead. Approximately 2% of those eligible were determined not to have had access to affordable insurance, and a small number opted for a religious exemption to the mandate.
Comparing the first half of 2007 to the first half of 2009, spending from the Health Safety Net Fund dropped 38%-40% as more people became insured. The Fund which replaced the Uncompensated Care Pool or Free Care pays for medically necessary health care for those who do not have access to health insurance, and the underinsured. It is not clear if this was the result of healthcare reform law because the amount spent is limited by the money appropriated and other accounting issues. The reduced state payments anticipated that by reducing the number of uninsured people Commonwealth Care would reduce the amount of charity care provided by hospitals. In a subsequent story that same month the Globe reported that Commonwealth Care faced a short-term funding gap of $100 million and the need to obtain a new three-year funding commitment from the federal government of $1.5 billion. By June 2011 enrollment is projected to grow to 342,000 people at an annual expense of $1.35 billion. The original projections were for the program to ultimately cover approximately 215,000 people at a cost of $725 million.
Enrollment in the Commonwealth Choice Plans, offered through the Commonwealth Health Insurance Connector, fluctuates between 15,000-20000 according to the state.. According to the DHCFP's quarterly Key Indicator reports, 89,000 people bought healthcare insurance directly as of June 2009, up from 40,000 in June 2006. The number of people with group insurance in Massachusetts has held steady at around 4,400,000 since passage of the health care reform law, according to the DHCFP's quarterly Key Indicators reports available on its website. One outcome has been the unavailability of coverage by many insurers previously doing business in Massachusetts and the inability of anyone who has been uninsured for more than 62 days except in a short window in part of August and September each year. It is possible to be refused insurance by any carrier in the State's Connector plans for up to 11 months, leaving some people uninsured for extensive periods of time.
A study published in The American Journal of Medicine, Medical Bankruptcy in Massachusetts: Has Health Reform Made a Difference? , compared bankruptcy filers from 2007, before reforms were implemented, to those filing in the post-reform 2009 environment to see what role medical costs played. The study found that: 1) From 2007 to 2009, the total number of medical bankruptcies in Massachusetts increased by more than one third, from 7,504 to 10,093; and 2) Illness and medical costs contributed to 59.3% of bankruptcies in 2007 and 52.9% in 2009. The researchers note that the financial crisis beginning in 2008 likely contributed to the increased number of bankruptcies, and Massachusetts' increase in medical bankruptcies over the 2007-2009 period was nevertheless below the national average rate of increase. Still, the researchers explain that health costs continued to go up over the period in question, and their overall findings are incompatible with claims that health reform has cut medical bankruptcy filings significantly. 
Private health care spending per member in the state increased at an annual rate of 7.5% from 2006 to 2008. Pricing was the largest contributor to the growth rate. However, individually purchased insurance grew more slowly, at an annual rate of 2.0%.
During the week of April 5, 2010, the Boston Globe reported that more than a thousand people in Massachusetts had "gamed" the mandate/penalty provision of the law since implementation by choosing to be insured only a few months a year, typically when in need of a specific medical procedure. On the average, the Globe reported, these part-time enrolees were paying $1200 $1600 in premiums over a few months and receiving $10,000 or more in healthcare services before again dropping coverage.
A study conducted by the Urban Institute and released in December 2010 by the Massachusetts Division of Health Care Finance and Policy stated that as of June 2010, 98.1 percent of state residents had coverage. This compared to 97.3 percent having coverage in the state in 2009 and 83.3 percent having coverage nationwide. Among children and seniors the 2010 coverage rate was even higher, at 99.8 percent and 99.6 percent respectively. The breakdown of insurance coverage consisted of that 65.1 percent of state residents being covered by employers, 16.4 percent by Medicare, and 16.6 percent via public plans such as Commonwealth Care. The state's Secretary of Health and Human Services, JudyAnn Bigby, said, Massachusetts' achievements in health care reform have been nothing short of extraordinary. With employers, government and individuals all sharing the responsibility of reform, we continue to have the highest insurance rate in the nation. 
In June 2011 a Boston Globe review concluded that the healthcare overhaul "has, after five years, worked as well as or better than expected." A study by the fiscally conservative Beacon Hill Institute was of the view that the reform was "responsible for a dramatic increase in health care spending," however.
In March 2012, the National Bureau of Economic research released a working paper claiming "that health care reform in Massachusetts led to better overall self-assessed health... [and] improvements in several determinants of overall health, including physical health, mental health, functional limitations, joint disorders, body mass index, and moderate physical activity." 
Fountas v Dormitzer
A legal challenge was filed in the Superior Court of Essex County, contesting the fine imposed for a citizen's failure to get health insurance as well as the fine imposed for a failure to provide information on a tax return as to whether that citizen had health insurance. The judge dismissed the case upon a motion filed by the assistant to the State Attorney General for failure to state a case upon which relief can be granted. A petition for a writ of mandamus to the Massachusetts Supreme Judicial Court, ordering Essex Superior Court to vacate this dismissal on procedural grounds, the failure to provide trial by jury in a dispute over property as requested by the plaintiff, was denied by Massachusetts Supreme Court Justice J. Spina. An Appeal was then filed with the Massachusetts Appeal Court. A later petition for a writ of mandamus with the Massachusetts Supreme Court was also denied, this time by Justice J. Ireland. The Appeals Court then heard the appeal and declined to send the case back to Essex Superior Court for trial by jury based on their belief that no facts needed to be determined and therefore trial by jury in this case was not a protected right under either the US or Massachusetts Constitutions. The Supreme Judicial Court of Massachusetts declined to hear any further appeals.