The less-than-smooth launch of the Affordable Care Act (ACA) exchanges, coupled with the recent revelations that many who purchase health insurance on the individual market are receiving cancellation notices, have some Americans wondering if the new law can work. President Barack Obama points to the success of Massachusetts’ health reform as evidence that, despite a rocky start, the law will work to provide near universal coverage to the citizens of the nation.
“…the worst predictions about health care reform in Massachusetts never came true. They're the same arguments that you're hearing now… and it’s because you guys had a proven model that we built the Affordable Care Act on this template of proven, bipartisan success. Your law was the model for the nation’s law.” – President Barack Obama speaking at Faneuil Hall in Boston on October 30, 2013
The Massachusetts law was enacted in 2006 under then Governor Mitt Romney. Prior to the law, which was dubbed “Romneycare” during Romney’s unsuccessful presidential campaign, more than seven percent of Massachusetts residents lacked health insurance. According to the Blue Cross Blue Shield of Massachusetts Foundation’s 2011 five-year progress report on the Massachusetts reform, the percent of uninsured in the state has dropped to less than two percent. During the same period, the average rate of uninsured in the nation rose to more than 16 percent.
Is the ACA truly modeled after the Massachusetts law? Can the nation expect to see the same positive results across the country as was seen in Massachusetts?
How are the laws similar
- State-based exchanges – Both laws create exchange authorities charged with operating health insurance marketplaces. The exchanges are internet websites where residents may compare and purchase private insurance policies that meet minimum levels of coverage. The objective of these exchanges is to drive down premium costs by increasing competition, and provide policies with similar levels of coverage for ease of comparison. Both laws also require guarantee issue, meaning consumers cannot be denied coverage due to pre-existing health conditions.
- Subsidies for lower-income households – While the amount of individual subsides vary, and the income levels for eligibility differ, both laws provide financial assistance to lower-income households so that health insurance is affordable. Massachusetts subsidizes private health coverage for families and individuals with incomes up to 300 percent of the Federal Poverty Level (FPL). The ACA provides subsidies for those earning up to 400 percent of the FPL.
- The individual and business mandates – Both laws require that individuals who can afford insurance to purchase insurance or face a financial penalty. The Massachusetts law required businesses with more than 10 employees provide health benefits to their workers or pay a $295 per employee “Fair Share” contribution. This provision was repealed in July 2013 in anticipation of the ACA business mandate. Under the ACA, businesses with 50 or more full-time employees must offer health insurance or pay a $2,000 per employee penalty, which excludes the first 30 employees. The ACA business mandate takes effect January 1, 2015.
How are the laws different
- Size and scope – The Massachusetts law applies to the 6.5 million residents of the commonwealth. The ACA covers more than 300 million people spread across 50 diverse states. Massachusetts began its reform with a rate of uninsured that was half that of the nation as a whole, and it was written to meet the unique needs of state residents. These differences led Governor Mitt Romney to oppose the ACA. While Romney’s health reform is working in Massachusetts, he believes one model cannot meet the needs of all 50 states. In addition, the ACA has a much broader scope in that it includes provisions to address healthcare provider shortages, increase wellness and nutrition programs, bolster community health centers, and adjust Medicaid and Medicare.
- Cost sharing for preventative services – The ACA requires insurance policies cover preventative services, such as cancer screenings, with no co-pays or deductibles. This provision is designed to promote wellness and diagnose disease in its earliest stages. The Massachusetts law allowed insurers to require co-pays for these services.
- Medicaid expansion – In Massachusetts, Medicaid was expanded for children, parents, pregnant women and the long-term unemployed. Under the ACA, states have the option of expanding the Medicaid program to all families and Individuals with incomes up to 138 percent* of the FPL. The District of Columbia and 25 states are currently planning to exercise this option.
*133 percent, plus a 5 percent automatic income disregard
Gillian Burdett is a freelance writer covering all things home and living. Her work can be found on Examiner.com.
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