Massachusetts Universal Health Insurance Takes Bold New Step

By Susan E. Cancelosi, J.D., LL.M.

secancel@central.uh.edu

Massachusetts in early April 2006 became the first state in the United States to require

every individual in the state to maintain health insurance, making headlines across the

country and reflecting intensifying state efforts to find creative local solutions to the

problems of their uninsured residents. Chapter 58 of the Massachusetts Acts of 2006,

“An Act Providing Access to Affordable, Quality, Accountable Health Care” (the “Act”)1

represented a remarkable compromise between the state’s Republican governor, heavily

Democratic legislature, private industry, and consumer advocacy groups.2 “An

achievement like this comes around once in a generation, and it proves that government

can work when people of both parties reach across the aisle for the common good,”

Governor Mitt Romney said.3 The Massachusetts House of Representatives approved the

bill with a 154-2 vote, and the state Senate approved it with a 37-0 vote.4 Governor Mitt

Romney signed the Act into law barely more than a week later.

The new Massachusetts statute adapts the model of car insurance and applies it to health

insurance, but with a unique public/private partnership twist. Under the new law, every

individual in the state must purchase health insurance by July 1, 2007. The state

estimates that approximately 500,000 individuals in Massachusetts currently do not have

any form of health insurance.5 These individuals – the target of the new law – will all

receive some form of direct or indirect state assistance to help them satisfy the

requirements of the Act. Approximately 100,000 are eligible for Medicaid; another

200,000 with incomes below 300% of federal poverty level (but above Medicaid

eligibility limits) will receive sliding-scale premium assistance and will be eligible for

no-deductible policies; and the remaining 200,000 (those with higher incomes) will be

eligible for special private market low-cost policies.6 After 2007, the Act will begin

imposing penalties on individuals who do not maintain health insurance in accordance

with the statute.

1 2006 Mass. Acts Ch. 58, available at http://www.mass.gov/legis/laws/seslaw06/sl060058.htm (last visited

May 8, 2006).

2 See, e.g., Scott Helman, Mass. Bill Requires Health Insurance, BOSTON GLOBE, Apr. 4, 2006, at A1,

available at

http://www.boston.com/news/local/articles/2006/04/04/mass_bill_requires_health_insurance?mode=PF

(last visited May 8, 2006). See also Pam Belluck, Massachusetts Sets Health Plan for Nearly All, N.Y.

TIMES, Apr. 5, 2006, at A1, and Pam Belluck, On Health Care, Massachusetts Leaders Invoke Action, Not

Talk, N.Y. TIMES, Apr. 6, 2006, at A16.

3 Commonwealth of Massachusetts Executive Department, Press Release: Romney Signs Landmark Health

Insurance Reform Bill (Apr. 12, 2006) available at

http://www.mass.gov/?pageID=pressreleases&agId=Agov2&prModName=gov2pressrelease&prFile=gov_

pr_060412_Healthcare_signing.xml (last visited May 8, 2006).

4 Id.

5 Id.

6 Id.

State dollars previously directed at coverage for the uninsured will be used to support the

program, and the state is pursuing an amendment to its existing Section 1115 Medicaid

waiver that will allow it to use federal Medicaid reimbursements to support the program.7

In fact, part of the impetus for Massachusetts’ efforts to enact this legislation was a threat

in September 2005 from the Centers for Medicare & Medicaid Services (“CMS”), which

oversees the federal Medicaid program, that it would withhold as much as $385 million

in federal Medicaid funds from Massachusetts for each of the next two fiscal years unless

the state took action to reduce its numbers of uninsured individuals.8 CMS gave the state

a deadline of January 15, 2006, to propose a plan that would resolve CMS’ concerns.9

The state missed the deadline because the Act was not signed into law until April, but

appears comfortable that CMS will approve the new plan and continue federal funding.10

With help from the Medicaid waiver, the state not merely provides benefits to those

previously eligible for Medicaid, but also leverages the federal Medicaid dollars to

support the broader goal of insurance for all of the state’s uninsured.

One possible drawback of the Act, however, lies in some of the details yet to be resolved.

The success of the Act depends on the existence of low-cost private health insurance

policies, but exactly what constitutes “low cost” for this purpose remains as yet

undetermined.11 Moreover, health insurance policies are generally subject to

Massachusetts’ mandated insurance benefits rules, which establish minimum coverage

that must be offered.12 Whether changes will be made to these rules – either to carve out

exceptions for low-cost policies under the Act or to increase requirements – is as yet

unknown although apparently Massachusetts’ legislators have indicated that they will not

impose new requirements until at least 2008.13

An additional feature of the Act has prompted conflict despite the otherwise broad

support for the new statute. When the Act went to Governor Romney for his signature,

he vetoed a provision in the bills passed by the Massachusetts House and Senate that

would have imposed a $295 per employee tax on any employer with 11 or more full-time

employees if that employer fails to offer and contribute to health insurance for its

employees.14 This tax is similar to the “pay or play” legislation under consideration in

other states. Governor Romney argued that the employer tax was “not necessary to

implement or finance health care reform.”15 By the end of the month, both the House and

Senate had overridden the veto, reinstating the provision.

7 Id. See also COMMONWEALTH OF MASSACHUSETTS EXEC. OFFICE OF HEALTH AND HUMAN SERVICES

OFFICE OF MEDICAID, MASSHEALTH SECTION 1115 WAIVER AMENDMENT (May 1, 2006), available at

http://www.mass.gov/Eeohhs2/docs/eohhs/cms_waiver_2006/amendment.pdf (last visited May 8, 2006).

8 Scott Helman, US Threatens Cutoff of $385M for Medicaid, BOSTON GLOBE, Oct. 4, 2005, at B1.

9 Id. See also Commonwealth of Massachusetts Executive Department, Press Release: Implementation of

Health Care Law Proceeds (May 1, 2006) available at

http://www.mass.gov/?pageID=pressreleases&agId=Agov2&prModName=gov2pressrelease&prFile=gov_

pr_060501_healthcare_waiver.xml (last visited May 8, 2006).

10 Id.

11 See Reed Abelson, Bold Goal Confronts Fine Print, N.Y. TIMES, Apr. 7, 2006, at C1.

12 See generally MASS. GEN. LAWS ch. 175, § 47 et seq. (2006).

13 See Abelson, supra note 11.

14 Romney Signs Landmark Health Insurance Reform Bill, supra note 3.

15 Id.

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Massachusetts is not the first state to attack the problem of the uninsured. For example,

both Hawaii and Maine have statutes in place that strive to make health insurance

available to virtually all residents of those states, neither has succeeded in accomplishing

universal coverage. Hawaii has mandated employer health insurance coverage since

1974,16 with a special exemption from the preemption provisions of the federal Employee

Retirement Income Security Act (which ordinarily bars state regulation of most employee

benefit plans). The Maine statute, which went into effect in January 2005, focuses

primarily on assisting small businesses in offering coverage and on providing premium

support for low-income individuals.17

What makes the Massachusetts statute unique is its direct imposition of a legal

requirement on individuals to purchase health insurance. To the extent that individuals –

with or without government premium support – can now purchase reasonably priced

coverage where they had none, this seems clearly a step forward. On the other hand,

there is always the risk that “you get what you pay for,” and the lower-cost coverage that

many individuals may purchase may prove to offer far less generous benefits than people

expect – and need. Still, Massachusetts must be given credit for a bold attempt to cover

its uninsured residents, certainly more than most states have accomplished.

May 2006

16 HAW. REV. STAT. §393 et seq. (2006).

17 2003 Me. Laws ch. 469, available at http://mainegovimages.

informe.org/governor/baldacci/healthpolicy/DH-Passed-Signed.pdf (last visited May 8, 2006).

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