Massachusetts Health Care Reform - Background

Background

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). In 2008 and 2010, much more substantive changes were made to the law, one of the most important of which was to begin an open enrollment period for those receiving subsidized health insurance and anyone buying insurance – even if paying full price – as an individual. The major goal of the proposed 2012 amendments is to introduce price controls.

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." Other analysis concluded that preventable ED visits were reduced 5-8% for non-urgent or primary care ED visits relative to other states. A more complete report released in January 2012 found between 2006 and 2010 emergency department visits and non-urgent visits had dropped 1.9 and 3.8% respectively

In Massachusetts, a fund of over $1 billion in 2004/2005, known as the Uncompensated Care Pool (or "free care pool"), was used to partially reimburse hospitals and health centers for these expenses. The money is funded 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 almost complete elimination of the need for this fund. 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 state still uses about $453 million of its own money, or 1.4% of its annual budget, as of 2011 in order to cover the uncovered costs of the legislation, which total approximately $1 billion per year.