September 9, 2006

The activities of the Small Group/Nongroup Market Merger Commission have been flying even lower on the radar than we thought. Turns out the Commission had an “open” meeting on Thursday observed by a only handful of insurance industry reps and attended by six of the nine commission members. We were given no notice despite repeated inquirites to the Division of Insurance on it. (We’re told neither Sen. Wilkerson or Rep. Mariano were there and that Secretary Trimarco assigned a designee, who was not there either.)

Also turns out the membership isn’t quite what we thought either. Here is the corrected list, according to the latest verbal report we’ve received:

Administration Members:
Julie Bowler, Commissioner DOI, Chair
The Secreatary of A&F, who has appointed a designee
Amy Lischko, Commissioner, DHCFP

Senate Appointees:
Katherine Swartz of Harvard School of Public Health as the health economist
Gary Lin from Harvard Pilgrim as the actuary
Sen. Dianne Wilkerson

House Appointees:
Deborah Chollet of Mathematica as the health economist
Rina Vertes from BCBS as the actuary
Rep. Ronald Mariano

We’re told the Commission received three bids from firms wishing to do the study. The Commission will meet again, privately, twice next week to pursue their procurement process. All Commission members who attend will participate in scoring the bids. The Commission may or may not meet again publicly on September 21st. We’ll try to let you know.

Why the activities of the merger commission are such a mystery is a mystery. Seems there’s an assumption of disinterest (a self-fulfilling prophecy). We’ll keep trying to keep you posted.

September 8, 2006

Today the state's Division of Health Care Finance and Policy issued its final regulation defining what constitutes a "fair and reasonable" contribution by an employer to a worker's health insurance premium to avoid the $295 assessment on employers who don't cover their workers. Click here for the DHCFP reg. Click here for the statement by Commissioner Amy Lischko.

And click no further for HCFA's reaction to the final reg:

Statement of HCFA Executive Director John McDonough on the Health Insurance “Fair Share” regulations

“The final regulations issued today by the Division of Health Care Finance and Policy are still unfair and still unreasonable. Employers are exempt from making a “Fair Share Contribution” if just 25 percent of their employees participate in an insurance plan or the employer offers to pay only 33 percent of coverage. The regulations make no attempt to ensure quality coverage. This is not what the legislature intended when it directed firms to pay the minimal $295 assessment if they fail to provide “fair and reasonable” coverage.

“These regulations are another page in the consistent history of the Romney Administration shirking the principle of shared responsibility that was the foundation of health reform. Health reform envisioned individuals and businesses fairly sharing responsibility for quality coverage. Throughout this process, the Romney Administration has only tried to minimize business responsibility.

× The Administration opposed any Employer Fair Share provision while the legislation was under debate.

× When the new law included the provision, Governor Romney vetoed it.

× When the House and Senate overwhelmingly overrode the veto, the Administration proposed the weakest regulations possible.

× Though Senator Richard Moore and Representative Patricia Walrath—cochairs of the health reform conference committee—responded that the draft regulations violated legislative intent, the final regulations were issued in open defiance of the legislature’s wishes.

“While the Administration ignored the recommendations of the Insurance Connector’s Affordability Committee and opted for higher premiums for low income individuals, it ignored express legislative intent and imposed the weakest possible standard on businesses.

“The Romney Administration has done its best to help businesses escape responsibility to provide decent health coverage to workers. While this Governor has had his final say on employer responsibility, for his successor and for the rest of us, this issue is far from over."

September 8, 2006

New and compelling data on numbers of Americans who have difficulty understanding basic health information was released yesterday. Here's a summary from the Kaiser Daily Health Policy Report:

Fewer than one in six U.S. adults have proficient health literacy, according to report released on Wednesday by the National Center for Education Statistics, the AP/San Francisco Chronicle reports. For the report, researchers analyzed data from the 2003 National Assessment of Adult Literacy and determined the relationship between demographic characteristics and literacy. Researchers compared gender, race, age and educational levels of 19,000 U.S. adults who took the series of tests, which had a possible total score of 500 points. According to the report, most participants had intermediate health literacy, which mean that most U.S. adults will find it difficult to use health-related materials accurately and consistently, Rima Rudd of the Harvard School of Public Health said. The report also finds:

>Women had an average score of 248 points on the tests, compared with 242 points for men;
>Participants older than age 65 had lower health literacy levels than younger participants;
>Whites and Asians had higher health literacy levels than blacks, Hispanics and American Indians; and
>Hispanics had lower health literacy levels than any other racial group.

The report indicates that health care providers, health insurers and pharmaceutical companies must improve their communication skills to ensure patients understand basic medical instructions, Rudd said. She added, "They're writing things at a level in the health field that is very difficult for the general public to work with."

Folks who think providing statistical information to consumers is the answer to the health care crisis need to face up to these numbers. Consumer driven health policies, transparency, personal health records, and all the rest have to confront the realities of those who will be left behind.

September 6, 2006

The Commonwealth of Massachusetts Executive Office of Health and Human Services (EOHHS) has issued a Request for Responses (RFR) to solicit grant proposals from qualified community and consumer-focused public and private nonprofit organizations for activities directed at reaching and enrolling potentially eligible Massachusetts residents in MassHealth and Commonwealth Care.

Details of this notification can be found on the Comm-PASS website at The document details are: Title: MassHealth and Commonwealth Care Enrollment Outreach Grants RFR; Document Number: EHS081506001; Comm-PASS Category: Professional Services.

To read the document, follow these instructions: 1) Go to 2) Select the "Search for Solicitations" link mid-way down the page. 3) Enter the Document Number listed above in the Document Number field and select "Open" from the Document Status drop-down menu. 4) Select the "Search" button. 5) Near to top of the page, click the link "Solicitations Found that match your search criteria". 6) Select the "View" icon for the matching record to access all current information.

September 6, 2006

Great set of interviews posted by Commonwealth Magazine with all six gubernatorial candidates on all major issues. Click here for the full set. At the top of each candidate's interview, you can click "health care" and go right to that section.

Here are some selections we found interesting:

Chris Gabrieli:

I don’t believe we’ve called on enough from employers. ... To me, a larger employer being told that $295 a year is all your fair share, a 15th of the cost of a health care plan, doesn’t strike me as right. I don’t understand why if you can afford more if you’re making more as an individual, why can’t you afford more if you’re healthier as a company? So maybe it’s true some small employers probably can’t afford even the $295, but there are others who can. ...

I will say, on the most positive note, the private sector, nonprofit players — whether it’s the insurers, the hospitals, physicians, the health care advocacy groups — are really united in a desire to make this work. I don’t think I’ve ever seen Massachusetts more united from the government side and the nonprofit side, the academic side, to make something work that I have on this. As much as I’ve shared my concerns, my number one goal is to harness all that and make this really work.

Kerry Healey:

If you’re going to mandate that every individual needs to buy insurance, it’s then our responsibility to make sure that it is truly affordable. Even on a sliding scale, if the product itself is too expensive, then we will have lost the spirit of this reform. ... So, for example, if a single young man in his 20s who is likely to engage in dangerous activities like rock climbing wanted to buy a policy that focused on catastrophic medical coverage and didn’t include in vitro fertilization, I think that should be an option for that individual. ...

I think that we also have to be very aware of what happens with the employer mandate, that cost that is now estimated at $295 per employee for businesses that don’t choose to provide health care insurance. That is the camel’s nose under the tent. That number could grow remarkably if the cost of these policies is not controlled. ... My sense is that what we wanted was a program that focused on individual responsibility. This was not supposed to be about employer mandates in any way. This was supposed to be something that followed the individual from job to job, that gave part-time employers the ability to contribute to the health care costs of their employees but did not mandate them to do so.

Christy Mihos:

I am thinking that, by the time the special interests and the insurance companies and all get a hold of this bill, it may not work to the benefit of the Commonwealth. That we may need more in terms of price controls to really rein in the cost aspect of this, such that small business, and there are 350,000 of us small business owners here in the Commonwealth can afford to insure their workers and provide their workers with an affordable, accessible health care plan that does the job as opposed to leaving someone out there.

Deval Patrick:

I support the law. I supported the proposal on the basis of which the compromise came, and I support the compromise. But I don’t think it’s the final word. I think what we got is a framework for reform and, to your point, the devil is indeed in the details. ... I think we do owe ourselves a serious debate around single payer. I’m not ready for that debate. I used to say we aren’t ready for that debate, but I think I’m not ready for that debate. ...

Q: Are you concerned that we may not be asking employers to carry enough of the load?

I just don’t know. I just don’t know yet. I haven’t been a part of those conversations. I’m going to get briefed next week, actually, by some of the people are who are participating in that discussion right now. And I’d want to hear more of the perspective from different quarters before I come to rest. You’re right, the number is somewhere between zero and 100 percent, but I don’t know what it is yet.

Tom Reilly:

I do support the new law. I will take office committed to making the new law work. I do believe that there are certainly major challenges. I did not support some of the earlier proposals, particularly the one with the significant payroll tax. I did not support that. This law, I believe, is a balanced approach that obviously will increase access. I’m committed to making it work.

Grace Ross:

Q: Do you support the new health care law?


John McDonough

September 5, 2006

Believe it or not, there’s more going on with health reform than Commonwealth Care premiums and benefits. Other aspects have been moving ahead without noticed.

One such item is the merger of the non-group (individual) and small group insurance markets, due to take effect July 1, 2007. Chapter 58 mandates the merger of these markets to make insurance private market coverage more affordable for people who buy insurance on their own. (Blue Cross Blue Shield estimates post-merger nongroup premiums may drop by as much as 25%.) The merger didn’t pass without controversy. Some insurers worry about the merger’s effect on small group rates, estimated to jump by 2-8%. So Chapter 58 created a special Commission to report on the issue.

The Commission includes nine members: the Commissioner of Insurance, Julie Bowler, chair; the Secretary of Administration and Finance, Tom Trimarco; the Commissioner of DHCFP, Amy Lischko; three members appointed by the House Speaker and three members appointed by the Senate President.

Both legislative leaders recently made their appointments. The President appointed Katherine Swartz from the Harvard School of Public Health as the health economist, Irena Burdes of Blue Cross Blue Shield as the actuary, and Sen. Dianne Wilkerson as the Senate designee. The Speaker appointed Deborah Chollet of Mathematica Policy Research as the health economist, Rita Vertes as the actuary and Rep. Ron Mariano, House Chair of the Financial Services Committee.

The Commission, through Commissioner Bowler’s office, has issued a Request for Proposals to solicit bids for the study, which is due on December 31st. The bids were due September 1, and the Commission expects to choose a firm by the end of September. The goal is to meet the December 31 deadline. However, there are no Commission meetings scheduled and no meetings to date have been open to the public.

The RFP tracks the statute in requiring the study to consider the effect of the merger on rates for individuals and small groups. The study must take into account the individual mandate, the availability of Commonwealth Care, the availability of plans through the Connector and the employer responsibility provisions.

At this point, all parties assume the merger will go forward July 1. If the report projects a significant increase in small group premiums from the merger, the legislature may consider measures to soften the blow, such as reinsurance. The House has never been crazy about that idea and no one feels there is money for more health reform ideas, so we’ll have to see. This is one of many items we at HCFA are keeping an eye on, as best we can, given the relatively secret nature of this Commission’s activities.

Melissa Shannon

September 4, 2006

Last Friday’s vote by the Board of the Insurance Connector to establish a premium schedule for subsidized coverage for potential enrollees with incomes between 100 and 300% of poverty is the first hard indication of how this entity will function. Their decision to back a higher set of premiums than recommended two weeks ago has substantive and process significance. Here are some thoughts and reflections.

First on substance:

In setting a premium schedule, the Board acknowledges the tension between setting them so high that potential enrollees will not sign up and setting them so low that workers and employers will drop existing coverage to join the connector (this phenomenon is also known as “crowd-out” or “substitution”). Crowd-out concerns won out over broader enrollment. We think this is a mistake for health reform and for the Connector. The success or failure of both will be judged by how many people get into affordable coverage, not by how many people are kept out.

It’s not fatal. If our conclusion is wrong, the results will be quickly evident. If we’re right, the Board can revisit and alter the premium schedule. At any rate, they will need to do so for the second year of Connector policies commencing in October 2007.

While the differences in proposals – 1/1.5/1.7% of income – seem small, the dollar differences matter a lot for folks living on the edge of poverty in one of the most expensive areas in the nation. A married couple making about $33K, just at 250% of poverty, will have to pay about 7.7% of income for health coverage. Families with kids have the MassHealth children's premiums stacked on top of too-high Commonwealth Care premiums (unlike MassHealth, which adjusts premiums when both adults and kids have to pay). This is just too much and we fear they're not going to sign up.

As our friends at Greater Boston Interfaith Organization point out, these premium levels would be fine for a voluntary program such as those in Minnesota and Washington. Looming behind this discussion, though, is the Individual Mandate, and next spring’s decision regarding who will be subject to its penalties. We know some folks expect the mandate to fall on everyone, including below 300% fpl. We disagree and expect the Legislature to weigh in heavily. Under the statute, the mandate penalties are to fall on those for whom “affordable” coverage is available. For many folks under 300%, these premiums are unaffordable, period.

If the Connector Board thinks they’re going to punish folks for being near-poor, they’re in for a surprise.

Second on process:

In June, the Connector Board established an Affordability Committee to develop recommendations in this sensitive and complex area. The Committee came up with compromise recommendations it presented at the 8/17 Board meeting. The ACT Coalition supported these recommendations (higher than we wanted) in the interest of compromise. At the meeting, Romney officials complained they were not consulted and demanded more process. The committee compromise then became the low-water mark for premiums and a new negotiating process ensued. Bad form, bad process. Let’s hope they’ve learned and that this poor precedent is not repeated.

By the way, there's still a required public hearing on these regulations setting premiums. No date as of now for when that will occur. We'll let you know.

It’s worth keeping in mind – in less than 120 days, the makeup of the Connector board may change dramatically with the inauguration of a new governor. These decisions are just the warm up act for what’s to come.

John McDonough

September 1, 2006

Today the Connector Board took its most momentous decision so far, setting premium levels for Commonwealth Care plans for low income uninsured. However, the Board did not produce a unanimous decision as desired by Board Chair and Administration and Finance Secretary Tom Trimarco. The debate exposed fissures in the Board based on differing priorities and views.

Despite being the Friday before Labor Day, the room (larger than ususal) as always, was packed, with several people forced to stand in the back.

The Board discussion of premium levels began with Executive Director Jon Kingsdale’s presentation of his recommendation, developed earlier this week in consultation with members of the Affordability Committee and Secretary Trimarco (see blog entry below for the basics, and Kingsdale’s report for the details). His recommended premiums were higher than the consensus reached by the Affordability Committee presented 2 weeks earlier to the Board.

Chip’s Proposal
Chip Joffe-Halperin immediately spoke afterwards, proposing that the levels be reduced just slightly for the middle ranges. Chip advocated for lowering the premium for individuals 150%-200% of poverty (fpl) from $40 to $38, and lowering the premium for those 200%-250% fpl from $70 to $68. Chip argued that a slight decrease in the proposed levels would motivate more people to participate since the numbers are less daunting, mirroring the psychology that retailers using in pricing items below multiples of 10.

General Discussion
Other Board members offered their opinions. Beth Waldman said that lots of MassHealth members pay their premiums every month, even though MassHealth doesn’t make it easy for them to pay. Only 300 people don’t pay each month, out of some 50,000 families with premium obligations. Dolores Mitchell expressed solidarity with a colleague executive director and urged the Board to support the recommendation. Rick Lord, echoed by Tom, mentioned that too generous benefits would encourage struggling small employers to drop coverage.

Lou Malzone raised serious objections to the recommended premium schedule. He said he would have preferred to vote on the Committee’s proposal from two weeks earlier, and that the goal of broad enrollment will not be met by this level of premiums. Talking about his experience with low income families, Lou said they need to think in terms of pennies per week.

Celia Wcislo commented that she has been a hero to some and their worst nightmare to others. She said the recommendation is the best compromise we can all live with, though she expressed doubts on enrollment. She urged the Board to review enrollment after 6 months and reassess premiums in the light of enrollment. She also emphasized that these premiums levels should not necessarily become the enforcement standards defining affordability for the individual mandate. Chip also made this point during the discussion, calling the mandate issue the “elephant in the room.”

Jon Gruber reminded everyone that the program is radical departure from anything tried in other states, and that it would have to be constantly evaluated. He hoped that refinements in IT capacity will allow the Board to create finer income distinctions next year, rather than the 50% of poverty increments being proposed.

Family Premiums
Dolores raised the issue of family premiums, saying they were “a tad on the high side,” and higher than GIC charges for family coverage. Under the proposal, 2 adults at the high bracket of the income scale pay $212 monthly, as much as 7.7% of income. MassHealth kids’ premiums are then stacked on top. A married couple with 3 kids would pay $296 monthly, or $3,552 a year, far more than the median family premium paid by those with employer coverage of $2,880.

Beth replied that MassHealth currently adjusts premiums when both the child and adult are enrolled. Though it would be feasible, it would be difficult operationally for MassHealth to take Connector premiums into account. In any case, no adjustments should be made until we had experience, to see if the premiums are a barrier to enrollment. Dolores asked Beth to put the issue on her agenda.

When the time care to vote, Chip reiterated his motion to lower premiums by .01% for the two middle income groups. Jon Gruber questioned why those numbers and not others were targeted, but Celia replied that those two groups had the largest increase from the original proposal. Beth and Rick questioned the need to make changes, and Tom said the success of the program can’t rest on a minor tweaking of the premiums.

The vote on Chip’s proposal was 7-3, with the 3 AG appointees (Chip, Celia and Lou) voting as a bloc. Then the vote was called on the recommended premiums, which passed 9-1, with only Lou voting no.

Other Business
Deputy Director Rosemary Day presented the terms of the contract being negotiated with Maximus for a customer service call center. After Celia was reassured that the firm provides comprehensive health care to its employees, and that they have extensive language capability, the Board approved the terms.

There also was a proto-discussion of the issue of granting waivers to allow low-income people with access to employer-based coverage into Commonwealth Care plans. Celia raised the issue, but no one (but maybe Jon Gruber) was willing to begin to think about the thorny issue (under the statute, the Connector can allow employed people with access to employer coverage into Commonwealth Care, with the employer's standard per-worker contribution being made to the Connector).

August 29, 2006

The question we are asked most often by the press and the public, "How many uninsured people are there in Massachusetts?"

It's a simple question, but there's no simple answer.

Counting the uninsured is tricky. This CBO study goes into some of the difficulties - do you mean uninsured all year, part of the year, or at a specific point in time? Survey methodologies make a difference - for example, a phone survey misses some very poor people without phones.

Today and yesterday we got an example of the complexity.

Today the Census Bureau released its annual study of Income, Poverty and Health Insurance Coverage, for 2005. The Massachusetts Budget and Policy Center summarized the health insurance findings for Massachusetts, as well as the poverty and income data which are also included (headline: "although 2005 marked the fourth full year of growth in the national economy since the end of the 2001 recession, poverty in Massachusetts did not significantly decline and median household incomes did not make any real gains").

Looking at the raw data for Massachusetts, the percent uninsured fell from 11.7% in 2004, to 9.8% in 2005. The numbers dropped from 745,000 to 618,000.

This drop is parallel to the numbers rushed out yesterday by the Commonwealth, which showed a drop from 460,000 uninsured in 2004 to 372,000 in 2006. The Division of Health Care Finance and Policy estimated the 2006 percentage of uninsured at 6%. EOHHS Secretary Tim Murphy issued a statement noted the similar downward trends between the state and federal numbers, saying it was "very encouraging as we move deeper into the important implementation phase of healthcare reform."

We agree, but . . .: The Census urges us not to look at the raw numbers. Because of the small sample sizes, the Bureau's statisticians maintain that to be accurate, one must average at least two years of data. Also, one must take into account the "confidence interval" - the range with a 90% likelihood that the results are accurate. That's how they present the numbers in their report.

Viewed this way, the Massachusetts uninsured rate as determined by the Census Bureau went from 11.2% for 2003-2004 to 10.7% in 2004-2005, with a confidence interval of 0.7%. Their bottom line: no statistically significant change in the uninsured rate in Massachusetts. In the Census map of states' uninsurance rates (p. 26 of the report), Massachusetts doesn't show an increase or a decrease, but simply no significant change.

So, how many uninsured are there? Probably more than 372,000, and certainly less than 618,000. Last year, Blue Cross Blue Shield Foundation's Roadmap to Coverage project issued a report on the uninsured that used state figures to adjust the census numbers to come up with a consensus number (532,000 uninsured) that was used by the legislature and the administration. That's probably the most accurate count we can get.

August 28, 2006

A new state survey released today shows that the number of MA uninsured dropped from 460,000 in 2004 to 372,000 in 2006, a 19% decrease, giving the state a six percent uninsurance rate, among the nation's best. Click here for the state press release.

The survey shows a substantial drop for adults (10.6 to 8.7%) and kids (3.2 to 2.5%). Every region of the state showed a drop: Northeast 9.7 to 5.7%; Worcester 7.0 to 5.6%; Greater Boston 7.8 to 6.6%; Southeast 8.9 to 8.5%; and Western Mass 7.8 to 7.7%. Results based on ethnicity were mixed: Whites down 6.3 to 5.1%; Hispanics down 15.1 to 12.8%; Asians down 4.0 to 3.1%, and African Americans up 7.5 to 13.4%. This last number is an eye-popping puzzle that may relate to a small sample size. Unfortunately, back up details won't be made available by the state until the fall.

State officials estimate that 50,000 of the lower number of uninsured got coverage through MassHealth. This rings true to us. They estimate the other 38,000 got coverage as new jobs were added and workers got employer based coverage (our economy added about 40,000 new jobs during the 2-year period). This may be true, but seems less solid to us than the Medicaid estimate.

Some quick observations:

1. Why did the state release these numbers when the backup was not ready? Because tomorrow the US Census Bureau releases national and state-by-state estimates of the uninsured. These numbers are always higher than state surveys. Last year's Current Population Survey (CPS) estimate for MA was about 750,000 uninsured. Seems like the Romney Administration wanted to rush its own numbers out just before the less rosy federal estimates arrived.

2. We agree with the Romney Administration that the state survey is probably closer to the truth than the CPS numbers because the CPS survey is well known for undercounting folks enrolled in state Medicaid programs. The CPS number is useful for setting a national estimate, and for allowing states to compare their rates relative to each other. It's less helpful in providing a real number and real rate of uninsured in any single state.

3. We're not sold that 372,000 is the real number. The Urban Institute in 2005 did their own analysis comparing the 2004 State survey and the CPS data and came up with their own estimate of 532,000 uninsured in 2004. Our sense is that the UI number is probably the most reliable, and that would indicate the 372,000 may be somewhat low.

4. Low or not as the absolute number, the trend represents good news. A lower number of uninsured means the challenge of implementing Chapter 58, the new health reform law, will be less expensive than anticipated or feared. For everyone who wants the new law to work, it's undeniably good news.

5. These numbers are the proof: the Romney Administration deserves credit for doing a good job enrolling folks in MassHealth -- through the Virtual Gateway, by requiring determination of MassHealth eligibility before getting care through the Uncompensated Care Pool, and more. This validates the strategy of using MassHealth as a key tool in reducing the uninsurance rate.

6. Regardless of the actual number, if the CPS numbers tomorrow show a downward trend in uninsured numbers in MA, that is important confirmation of the validity of these state numbers. If the CPS numbers are trending upward, it's time for head scratching.

John McDonough


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