Governor Deval Patrick FY10 General Appropriation Act
Issues in Brief
Deval L. Patrick, Governor
Timothy P. Murray, Lt. Governor

Health Care


With the enactment of Chapter 58 of the Acts of 2006, Massachusetts embarked on a historic, first-in-the-nation initiative to expand health insurance coverage to virtually all of its residents. Health care reform expands health insurance coverage by:

  • requiring individuals who can afford health insurance to enroll in coverage;
  • offering individuals a greater choice of affordable private health coverage plans through insurance reform and the creation of the Commonwealth Health Insurance Connector Authority;
  • providing low-income individuals with new opportunities for affordable, government-subsidized coverage through Commonwealth Care and expanded Medicaid coverage; and
  • obliging employers to do their "fair share" by offering health insurance to their employees or otherwise contributing to the cost of covering their employees through state health programs.

Health care reform has already been a dramatic success. The most recent state survey results indicate that over 97 percent of our state's residents were enrolled in health insurance in 2008, and numerous surveys confirm improvements in access to needed care.

The pie chart visually demonstrates the 97.4% insurance rate among residents in the Commonwealth.

This bar chart compares the type of insurance coverage by age group. Types include Medicare, employer-sponsored insurance and public or other coverage.



Despite growing fiscal and enrollment pressures rooted in a severe economic downturn, the Administration is signing into law a fiscal year 2010 budget that reflects a continuing commitment to health care reform and the recognition that MassHealth and Commonwealth Care are core components of the safety net for low-income residents of our state. While MassHealth and Commonwealth Care are not exempt from the types of difficult budget choices forced by declining tax revenues, this budget - with one exception that Governor Patrick is proposing to remedy - maintains eligibility for all adults and children who are currently qualified and maintains dental coverage. While the conference committee budget eliminates Commonwealth Care health insurance coverage for Aliens with Special Status (legal, documented immigrants who are currently ineligible for federal reimbursement), the Governor is proposing $70 million in additional funding to maintain state-subsidized health insurance for these individuals.

Commonwealth Care

Commonwealth Care was created by the enactment of health care reform. It offers subsidized health insurance to adults whose incomes are at or below 300 percent of the federal poverty level and who are not eligible for other government-subsidized or employer-sponsored coverage.

After over a year of stable or slightly declining membership, enrollment in Commonwealth Care has begun to increase significantly in the past three months. As of June 1, 2009, there are approximately 177,000 adults estimated to be enrolled in Commonwealth Care.

This is a monthly enrollment chart for CommCare that begins in December 2007 (158,194 members) and ends in June 2009 (177,000 members).

Source: The Commonwealth Connector Authority, June 2009.

The fiscal year 2010 budget signed by Governor Patrick includes $723 million for Commonwealth Care (prior to additional funding for health insurance coverage for Aliens with Special Status). The budget envisions a series of prudent and careful cost savings and resource initiatives to help the program stay within tight overall funding constraints while managing escalating enrollment pressures. The principal cost-savings measure is a policy change to suppress automatic assignment and automatic reenrollment of Plan Type I members in health plans. These changes do not limit eligibility for Commonwealth Care. Adults who are eligible for Commonwealth Care will continue to be able to enroll by self-selecting a health plan. Other initiatives include recalibrating other resources to support fiscal year 2010 enrollment ( e.g., using approximately $10 million in contributions from the Connector's administrative budget).

The conference committee budget eliminated Commonwealth Care health insurance coverage for Aliens with Special Status, approximately 30,000 legal immigrants who do not currently qualify for federal reimbursement. Governor Patrick is committed to maintaining comprehensive health insurance coverage for all Massachusetts residents and ensuring that our state continues to lead the nation in offering high-quality, affordable health care. In order to minimize a gap in coverage for these legal immigrants, the Governor is instead proposing a temporary intervention to allocate $70 million to continue state-subsidized coverage for this population in fiscal year 2010.

The Administration and Connector will work together to develop an expedited action plan for continuing state-subsidized coverage for this population for the challenging fiscal year that lies ahead. That plan could include -- among other options -- alternative health insurance benefit designs or plans, new contracting arrangements, or securing a change in federal policies so that the state receives increased federal matching funds. The Administration intends to quickly engage the Legislature, stakeholders and advocates in our efforts to identify strategies for continuing coverage for this group of legal immigrants.

The affected group of legal immigrants will keep their Commonwealth Care coverage, in accordance with the fiscal year 2010 budget, through the month of July. The Administration and Connector would work to create a new mechanism for coverage in September. The Health Safety Net and MassHealth Limited would provide interim coverage in August for emergency and certain other services. No tax penalty would result for a one-month gap in health insurance coverage. The Administration will continue to work with all parties to develop a permanent and lasting solution to covering this group.

MassHealth

The Massachusetts Medicaid (MassHealth) program provides health insurance to more than one million low- and moderate-income Massachusetts children, adults, seniors and people with disabilities. Health care reform expanded MassHealth eligibility coverage to children with incomes up to 300 percent of the federal poverty level and broadened eligibility for the Insurance Partnership Program to individuals up to 300 percent of the federal poverty level. It also restored certain benefits that had previously been cut.

The fiscal year 2010 budget that the Governor has signed into law includes $8.922 billion for MassHealth (a 4.5% increase over fiscal year 2009 estimated spending). Excluding spending that was previously off-budget, MassHealth's fiscal year 2010 budget totals $8.632 billion (1% percent over estimated fiscal year 2009 on-budget spending). Through eligibility expansions and enrollment of eligible individuals through the Virtual Gateway, a more streamlined member-tracking system, MassHealth has seen caseload increases in recent years. The fiscal year 2010 budget continues to fund projected enrollment growth in the MassHealth program. The Administration has approved funding for adult dental coverage, which was previously eliminated in its revised House 1 proposal. Maintaining dental coverage costs slightly over $100 million - a very significant investment in a highly constricted overall budget. The budget also continues funding for the Essential Community Provider Trust Fund at $20 million and invests in care management and proactive, coordinated primary care based on the "Medical Home" model.

MassHealth Average Enrollment
FY06FY07FY08FY09FY10

HMO

329,723

349,407

373,684

403,381

426,580

PCC

290,351

294,035

303,623

315,197

324,462

TPL

150,463

158,556

161,185

164,174

166,203

SENIORS

121,946

124,607

125,690

127,439

128,541

FFS

149,862

168,238

174,542

180,732

185,991

Total

1,042,345

1,094,844

1,138,725

1,190,923

1,231,777

% Change

5.5%

5.0%

4.0%

4.6%

3.4%

The 2010 MassHealth budget reflects a total of $416 million in gross savings ($208 million in net savings). With the help of additional federal matching funds for state Medicaid spending under the federal recovery act, the fiscal year 2010 budget largely maintains MassHealth spending anticipated in the initial House 1 filing. The budget also includes $13 million in gross ($7.5 million net) targeted investments needed to achieve many of these savings. When accounting for off-budget reductions, gross savings total $433 million ($217 million net). Categories of savings include limiting rate increases, expanding pay-for-performance, service program changes (providing coordinated care in appropriate settings), utilization management ( e.g., expedited claims review), pharmacy savings, adult dental benefit reduction, and other savings ( e.g., elimination of Community First, certain grants and other pilot programs).

Savings Initiative Title

Gross Amount FY10 Original
H.1 (January)

Gross Amount FY10 Refile
H.1 (January)

Gross Variance
Between Original
H.1 and H.1 refile

Gross Amount
Signed (June)

Gross Variance
between Signed
Budget (June)
and Original
H.1 (January)

On-Budget Savings

Rates

(178)

(202)

(24)

(202)

(24)

Pay-for-Performance (P4P)

(62)

(62)

-

(62)

Service Program changes

(38)

(38)

-

(38)

Payment and Pricing Strategies

(43)

(43)

-

(43)

Utilization Management

(31)

(31)

-

(31)

Pharmacy

(20)

(20)

-

(20)

Benefits (Adult Dental)

(105)

(105)

0

Other

(10)

(33)

(23)

(33)

(23)

Subtotal On-Budget Savings

(382)

(534)

(152)

(429)

(47)

On-Budget Investments

-

-

Specialty Hospital Rate Adjustment

12

-

(12)

-

(12)

Pay-for-Performance (P4P) Administration

3

3

-

3

-

Primary Care/Medical Home/Care Management

10

10

-

10

-

Sub-total On-Budget Investments

25

13

(12)

13

(12)

Total Savings and Investments On-Budget

(357)

(521)

(164)

(416)

(59)

Off-Budget Savings

-

-

CCTF Savings

(17)

(17)

-

(17)

-

Subtotal Off-Budget Savings

(17)

(17)

-

(17)

-

Total Savings and Investments On- and Off- Budget

(374)

(538)

(164)

(433)

(59)

# dollars in millions


Health Safety Net

Overseen by the state's Division of Health Care Finance and Policy, the Health Safety Net (HSN) ensures access to essential health care services for low- and moderate-income uninsured or underinsured residents, by making payments to hospitals and community health centers for allowable services provided to this population.

Our efforts to promote enrollment in health insurance coverage have resulted in decreased Health Safety Net utilization and payments. As compared to Uncompensated Care Pool fiscal year 2007, Health Safety Net payments decreased dramatically by 38 percent in Health Safety Net 2008 (from $661 million to $410 million).

This graph shows fiscal year 2006 through fiscal year 2008 hospital and community health center payments within the Health Safety Net.

Source: Division of Health Care Finance and Policy, Health Safety Net 2008 Annual Report, December 2008

The Health Safety Net is currently anticipated to have a $36.3 million surplus in fiscal year 2009, as a general fund contribution of $48 million is larger than needed to fund currently projected spending (given surpluses in the Health Safety Net and spending pressures in other health care programs, the fiscal year 2009 general fund contribution will be reduced from its original level of $63 million to $48 million)

The fiscal year 2010 budget does not include a general fund contribution to the Health Safety Net. Assessments from insurers and providers and offset funding will provide $390 million in dedicated funding for the Health Safety Net.

Health Safety Net Trust Fund- Sources

SourceFY08FY09FY10
Assessments Offsets380,000,000390,000,000390,000,000
General Fund Contribution49,600,00048,000,000-
Previous Year Balance Transfer24,000,000
Total Sources453,600,000 438,000,000 390,000,000

Health Safety Net Trust Fund- Uses*

FY08FY09FY10
Hospital Payments372,600,000368,658,801346,000,000
CHCs37,000,00031,341,19929,000,000
Demos (Admin)6,000,0006,000,0006,000,000
Total Uses415,600,000 401,688,113 381,000,000
Sources less Uses38,000,000** 36,311,887 9,000,000

* Health Safety Net payments for fiscal year 2010 based on waiver spending projections.

** Carried as a reversion on state balance sheet for fiscal year 2009 to minimize need for further emergency spending cuts to other health care programs.

The $390 million in dedicated fiscal year 2010 resources for the Health Safety Net is sufficient to meet spending assumptions submitted in connection with the Commonwealth's waiver agreement for fiscal years 2009 through 2011. However, the Administration does acknowledge that there is significant uncertainty around Health Safety Net fiscal year 2010 program costs given the downturn in the economy and lags in data and that demand could exceed waiver spending assumptions. Thus, the budget retains the $36.3 million of fiscal year 2009 funding which exceeds that year's current spending projections within the Health Safety Net Trust Fund as a "cushion" that could be applied to support actual spending needs if needed. We will continue to closely monitor the Health Safety Net and, based on updated information, refine our projections of its fiscal year 2009 and 2010 needs.