Challenging Dogma - Fall 2007

...Using the social and behavioral sciences to improve the practice of public health.

Tuesday, December 11, 2007

Massachusetts Health Care Reform Bill Requiring Everyone to Obtain Health Insurance- Not So Universal-Shanelle County

Within recent years there has been heavy discussion around the concept of a Universal health care system that will ensure access, quality of care, and affordability for all US residents. It is an idea that can potentially be brought to fruition with reasonable planning and provisions. State Governor Mitt Romney along with leaders of the Senate and House of Representatives, have initiated one such system in Massachusetts that has yet to be proven flawless. Prior to its implementation, Massachusetts had a relatively low uninsurance rate because of broad employer coverage and an extensive Medicaid program (1). Additional coverage was supplemented by the state’s Uncompensated Care Pool providing funds to hospitals and community health centers that provide care to those without insurance coverage. With the rising number of uninsured residents, however, financial pressures were placed on those hospitals that provided the bulk of uncompensated care. This in turn threatened to raise assessments on hospitals and insurers to support the pool (1). Since these assessments are passed on to purchasers in the form of higher insurance premiums, businesses that provide health insurance coverage to their employees were becoming increasingly concerned with the trend toward increased uncompensated care. At the same time, rising health care costs in the US also contributed to the weakness of pool financing. These factors joined together to ignite an intense debate over health reform (1).
On April 12, 2006, Chapter 58 of the Acts 2006- “An Act Providing Access to Affordable, Quality, Accountable Health Care” became law in Massachusetts. It reformed the health care system in an attempt to reduce the number of uninsured Massachusetts residents (2). Now fully implemented, as of July 1, 2007, the reforms should represent a meaningful advance against the problem of the medically uninsured in Massachusetts (3). The Massachusetts Health Care Reform Plan requires all adults in the state to purchase health insurance, and threatens to impose financial penalties of up to fifty percent of the cost of a health insurance plan on those who do not via income tax filings (4). Employers with ten or more employees are required to provide health insurance coverage or pay a “Fair Share” contribution of up to $295 annually per employee. In addition, these employers are required to offer a plan the permits workers to purchase health care with pre-tax dollars or face a “free-rider” surcharge if employees make excessive use of uncompensated care (4). The plan creates the Commonwealth Health Insurance Connector Authority to link individuals to insurance by offering affordable, quality insurance products. The Connector Board approved plans offered by seven of the state’s health insurers that provide a range of coverage options, including a specially designed, lower-cost product for 19-26 year olds (4). A central piece of the plan is the provision of government-funded subsidies to low-income individuals to assist with the purchase of health insurance. The Commonwealth Care Health Insurance Program provides sliding-scale subsidies to individuals with incomes up to three-hundred percent of the federal poverty level for the purchase of health insurance. Individuals with incomes less than 150 percent of the federal poverty level are not required to pay any premiums. Plans offered through Commonwealth Care do not have deductibles, and are offered by the managed care organizations that participate in the Medicaid program (4). The bipartisan legislation combines the concept of individual responsibility through an individual mandate on the purchase of health insurance with government subsidies to ensure affordability (4), with a goal to cover ninety-five percent of the state’s uninsured residents within three years. By May 2007, over 100,000 previously uninsured people had gained coverage (4).

The Issues and Drawbacks
The Massachusetts health care reform bill was enacted with an intention to make health care accessible and affordable to all residents. The plan is not realistic; it is highly unlikely that every resident of Massachusetts will ever be covered, especially within the next three years. The bill relies too heavily on the Health Belief Model and its variants, which in themselves have many flaws. In essence, the plan’s dependency on the Health Belief Model will cause it to become a temporary treatment for the bigger illness of the lack of single payer universal health care system in the United States. The plan set forth by Governor Mitt Romney forces individuals to obtain health insurance, regardless of their socioeconomic abilities to do so. Through its economic sanctions and accommodations, it assumes that all residents will be able to obtain health insurance, and will find it necessary. Many advocates for a universal health care system state that the new health reform law will serve as a pilot program for the nation as it will drastically decrease annual health care costs, ensure access, and improve quality of care (5). However, Massachusetts’ mini-system can only ensure access, but is still not guaranteed for all residents. These factors, or the lack thereof, defeat the purpose of Massachusetts moving toward becoming the first state to offer a comprehensive health system to its residents.
Social psychologist Godfrey Hochbaum defined the Health Belief Model (HBM) as health seeking and health behavior motivated by four factors: 1.Perceived susceptibility, 2.Perceived severity, 3.Perceived benefits of an action, and 4.Perceived barriers to taking that action (6). Susceptibility is the degree to which a person feels at risk for a health problem and severity is the believed degree to which the consequences of the health problem will be severe. Benefits are the positive outcomes believed will result from the action, whereas barriers are the perceived negative outcomes. Perceived susceptibility and severity are weighed against the perceived barriers and benefits to action, and together, all four predict intention. Furthermore, the model asserts that intention predicts behavior. The HBM focuses primarily on individual decisions, and does not address social and environmental factors. Additionally, it assumes that everyone has equal access to, and an equivalent level of, information from which to make the rational calculation (6).
While it is not possible to exhaust all the flaws of the health care reform bill within this paper, it is significant to highlight three arguments for its downfall as a result of its trust in the Health Belief Model. First, most people understand the susceptibility and severity of not having or obtaining health insurance, but the bill fails to consider that socioeconomic status remains a huge barrier and preventative measure to acquiring health insurance. Second, while it may be mandatory, the plan is not cost effective for small businesses as the perceived benefits to its employees do not outweigh the economic losses of the business, which in turn, will place higher economic burdens on individual employees. Finally, the bill has good intentions, but it does not necessarily mean that in the long-run the desired behavior or the outcome will be reciprocated as well, a false assumption of the Health Belief Model.

Affordability
To begin, let us make the assumption that the majority of Massachusetts residents without health insurance do not have it simply because they cannot afford it. Governor Mitt Romney must have made the same assumption and insisted that the cost of basic health insurance is a minute amount of $2,400 a year. However, minimally decent coverage costs about $4,000 for an individual and double that for a family (7). Any policy that costs merely $2,400 has excessive out-of-pocket payments, shifting medical costs from providers to patients, and defeats the purpose of trying to make quality health care affordable for all state residents.
For an individual mandate to be fair and acceptable, it must make coverage affordable (1). The Massachusetts legislation does not define affordability, nor does it specify the subsidy schedule that will be offered to low-income residents (8). Ideally, the subsidy schedule would be directly linked to the affordability standard. In that way, each family would be subsidized to an extent that would allow them to purchase coverage within the standard of affordability. Nothing in the Massachusetts legislation requires such linkage, however, and revenue constraints could make doing so difficult (8). In particular, the purchase of subsidized coverage is limited in the legislation to those with household incomes at or below three-hundred percent of the poverty line. This implies that a number of individuals and families with incomes higher than this target will find appropriate coverage affordable. Appropriate coverage is defined as coverage with premiums and cost-sharing requirements at reasonable levels relative to income (1). On the contrary, making above three-hundred percent of the poverty line does not make an individual exempt from other daily living expenses and coverage necessary and affordable. In addition, depending on the level of demand for subsidized coverage and the premiums negotiated with subsidized plans, allocated subsidy funds might be insufficient to cover all of those who are eligible. The legislation suggests that in such an event, caps on enrollment in the subsidized Commonwealth Care Health Insurance Plan would be put in place (8).
The Health Belief Model assumes that individuals are responsible for their actions, and does not draw upon social and environmental factors that may influence behavior. It fails to realize that there will remain a percentage of the Massachusetts population who will not be able to afford health insurance because they do not qualify as individuals or households at or below the poverty line. If these people did not have health insurance before it was mandated, it would not automatically change the norms and priorities for this socioeconomic class once it was passed. The HBM assumes that the severity of not obtaining health care outweigh the benefits of taking a risk and spending the money on more immediate expenses. Approximately 748,000 people were uninsured in Massachusetts before the bill was enacted with very few being wealthy or young and healthy (9). Additionally, the census taken prior to the bill’s endorsement only recorded 500,000 uninsured residents in Massachusetts. The phone survey was conducted in English and Spanish, overlooking anyone without a phone, those who spoke another language or those reluctant to participate in fear of their illegal status being discovered (9). The requirement that most of the uninsured purchase coverage will either oblige them to pay money they do not have, or buy nearly worthless stripped down policies that represent coverage in name only. Even though these individuals are aware of the benefits of obtaining health insurance, other expenses have remained the same and therefore, health insurance will linger at the middle to bottom of the list of priorities.

Employer Incentives
Massachusetts state officials realize that employer cooperation is a key to the law’s success. Neither the Massachusetts law nor the proposed regulations mandate a minimum plan design for employers with more than ten employees to avoid paying the annual $295 per employee “Fair Share Contribution” assessment (10). As a result, it appears that any group health plan coverage will satisfy the state’s requirement for coverage. Small firms are already more likely to be on the cusp of offering and not offering coverage because the administrative costs of coverage are much higher for them (1). In most cases it is far more cost effective for small employers to pay the $295 charge to the government rather than paying a “fair share” towards each employee’s health coverage. To the extent that sizable numbers of small employers that offered coverage stop doing so now under the reform, Connector enrollment will increase (1). An increase in the number of people enrolling in the subsidized plans, increases pressure on government to fund the plans and will eventually place limits on the number of newly insured people. Those who are left out of the Connector plan have no employer coverage, are not eligible for public assistance, and are only left with the option to purchase private insurance. Private insurance in many instances is unaffordable and eventually, some people may be left without health care coverage.
Did Governor Romney and his team fail to question why some small employers did not provide insurance to their employees beforehand and why it would all of a sudden be possible for them to do so now? For many small employers, if it not in the company’s best interest to offer insurance policies to their employees because it is simply too much money for them. By forcing an employer to now offer a service that was never financially in their best interests, will end up affecting the employees more than the employers. The contribution that employers have to make towards employees’ health insurance can result in a deduction of employee salary, a minute contribution to a decent health plan, or a plan that provides next to no coverage of health services. The plan’s reliance on the HBM once again re-directs responsibility from the employer to the individual employee.

Skyrocketing Costs
Although the bill is designed to provide health coverage for Massachusetts’ poorest residents and offers a sliding-scale subsidy for residents who earn up to three times the poverty level, low-income residents should be prepared for disappointment because Romney and his crew made too many assumptions and most likely under-funded the bill. The bill raises almost no new funds but promises to cover hundreds of thousands of new people (11). Also, the initial budget fell short in accounting for at least 200,000 residents who were not incorporated in the telephone survey. The reform is not sustainable over the long term because the desired behavior cannot be give in return if US health care costs continue to skyrocket, especially Massachusetts’ which already has the highest expenditures on health care in the US.
At current rates, even if the state is able to cover the proposed contributions to the plan over the three-years, it would not be able to keep up with the soaring US health care costs. The question really is whether revenues are adequate to meet the goals of the reform. By 2009 the legislation allows for about $95 million to finance MassHealth expansions and additional benefits, and it further provides for $725 million for income-related subsidies (1). Whether or not these revenues are adequate to bring the state to near-universal coverage depends upon the number of people who want to enroll in subsidized coverage, their average health care risk, the power of the Connector to hold down premiums, the subsidy schedule, and how the standard of affordability is defined. Taken together, these factors have joint implications for government costs, financial burdens placed on individuals and families, and the number of people covered by the mandate to obtain coverage (1). Another key to the law’s success is making health insurance coverage affordable for all citizens to purchase. For those who ware able to purchase coverage now, it could become unaffordable if costs continue to increase at current rates. Although state subsidies will help low income residents, those subsidies could be cut back in future years when state budget becomes more [strict] (10).
The Health Belief Model automatically assumes that intention leads to behavior, and it does not consider the effects of the behaviors in the long-run. The Massachusetts Government acknowledged the benefits of a comprehensive health care system and they presumed that every resident of the state would as well. Under the mandates of the law, everyone had to be medically insured by July 1, 2007 and Massachusetts would be the first state to offer comprehensive care. Poor budget planning, however, projects that as health care costs continue to rise there still will be a portion of the population who will not be insured because of an exhaustion of funds. Thus far, it appears that the intentions of the behavior will not be fully reciprocated and once again, the responsibility and burden falls upon the individual, strengthening another flaw of the HBM.

Conclusion
It is easy to predict the desired effects of policy implementation, but more difficult to project how it will affect individuals once it is put into place. Governor Mitt Romney and his administration were more concerned with what they wanted for Massachusetts’ health care system, than what was actually attainable for its residents. It is also important to note that through all of the mandates and provisions, the requirement is for a minimum level of health insurance, not an optimal level. Improving access to medical care for previously uninsured persons will increase the demand for needed services, such as surgery and specialized care, thus improving health but increasing costs (3). The reform makes little difference in many factors that contribute to spending, including the costs of prescription drugs and health care administration. Nonetheless, the overall structure of private health insurance and the payment and delivery of medical care will remain intact, and costs will relentlessly increase.
The Health Belief Model assumes that there exists an internal, rational process where individuals assess their degree of risk and make a cost-benefit calculation about whether or not to engage in health-oriented behavior (6). Therefore the Massachusetts health care reform bill also assumes that all residents equally value the importance of health care and will make financial accommodations to acquire coverage. It neglected, however, to accept that for many, especially those of low socioeconomic status, there are items of more importance on their list of priorities. Items, such as food and shelter, whose costs were not subsidized or accounted for in the plan’s draw up. Governor Romney and his administration attempted to account for those who are uninsured through employee mandates. Although, it is most probable that large employers will continue to offer coverage to their employees, small employers have no incentive to spend thousands of dollars per employee when it is more cost efficient to pay a penalty of a few hundred dollars. Those employees who are not covered under their employers are forced to turn to the Connector which sooner or later will run out of funds to enroll new members because resources are limited. Finally, while Massachusetts pretends that they are nation with their own financial independence, US health care costs are continually rising. Therefore, maintaining a health insured system will not decrease costs, it in fact will most likely increase annual expenditure, and there is no guarantee for improved quality of care. In order for success, a high rate of compliance with the individual mandate is needed in order to further reduce the number if uninsured, spread the insurance risk of expanded coverage among young and old, healthy and sick, and allow for the movement of funds from uncompensated care to subsidized insurance (9). There has to be a strong enough external influence that will help define individuals’, especially those who are uninsured by circumstance and not choice, need to attain health insurance for potential life threatening situations that up to now have always been a risk they were willing to take.
References
1. Holahan J., Blumberg L. Massachusetts Health Care Reform: A Look At the Issues. The Policy Journal of the Health Sphere 2006
2. Frequently Asked Questions. The Implications of Massachusetts Health Care Reform for Rhode Island Employers, Resident, and Providers. Office of the Health Insurance Commissioner of the State of Rhode Island.
3. Steinbrook M. Health Care Reform in Massachusetts –A Work in Progress. New England Journal of Medicine 2006.
4. Kaiser Commission on Key Facts. Massachusetts Health Care Reform Plan: An Update. Washington, DC: Then Henry J. Kaiser Family Foundation. http://www.KFF.org
5. Mahar, M. Massachusetts Health Care Reform: The Canary in the Coal Mine. Boston, MA: iHealthbeat.
6. Edberg M. Individual Health behavior Theories (pp. 35-39). In: Edberg M. Essentials of Health Behavior: Social and Behavioral Theory in Public Health. Sudbury, MA: Jones and Bartlett, 2007.
7. The Boston Globe. Limited Options. Boston, MA: The Boston Globe. http://www.boston.com/news
8. The 185th General Court of the Commonwealth of Massachusetts. Chapter 58 of the Acts of 2006. Massachusetts: Massachusetts Government. http://www.mass.gov/legis/laws/seslaw06/sl060058.htm
9. Woolhandler S., Himmelstein D. Massachusetts Health Reform Bill: A False Promise of Universal Coverage. News Center. www.commondreams.org
10. AON Consulting Alert. Massachusetts Health Care Reform. Alert United States. www.aon.com
11. The New Standard. Critics Blow Holes in Mass. “Universal” Health Plan. Boston, MA: The New Standard 2006.

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