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Health Care Reform
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FY2010 House 1 Budget Recommendation:
Deval L. Patrick, Governor
Timothy P. Murray, Lt. Governor
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.
Source: Division of Health Care Finance and Policy, Health Insurance Coverage in Massachusetts: Estimates from the 2008 Massachusetts Health Insurance Survey, December 2008. Prepared by the Urban Institute.
The Administration's fiscal year 2010 budget continues to fully fund expansions in coverage through state health insurance programs for low- and moderate-income families. These investments reflect a continuing commitment to health care reform and the recognition that the MassHealth and Commonwealth Care programs are core components of the safety net for low-income residents of our state, including individuals who may have recently lost their jobs or private health insurance due to the economic downturn. Despite the significant fiscal pressures facing the Commonwealth, the budget does not cap enrollment or cut benefits for state health insurance programs, as has been done in prior fiscal crises.
Commonwealth Care was created by the enactment of the 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. As of January 1, 2009, there were over 163,000 adults enrolled in Commonwealth Care.
Source: The Commonwealth Connector Authority, January 2008.
The Commonwealth had greater-than-expected success in enrolling individuals in Commonwealth Care during fiscal year 2007 and fiscal year 2008, which resulted in corresponding increases in spending. Cost trends have recently begun to moderate as enrollment and per-member price increases have leveled.
The Administration's fiscal year 2010 budget includes $880 million for Commonwealth Care, a 7.3 percent increase over current fiscal year 2009 projections, to provide coverage to approximately 180,000 residents. Enrollment is expected to resume moderate growth in fiscal year 2010; a result of loss of employer-sponsored insurance that typically accompanies negative economic conditions, as well as, a slight decrease in people leaving the program. Under a new payment methodology, rate increases have been limited well below medical inflation.
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 Administration's fiscal year 2010 budget includes $8.97 billion for MassHealth. Excluding spending that was previously off-budget; MassHealth's fiscal year 2010 budget totals $8.68 billion (3.14 percent over estimated fiscal year 2009 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 fiscal year 2010 MassHealth budget also reflects a total of $357 million in gross savings ($178 million in net savings) which includes $25 million in gross ($12.5 million net) targeted investments needed to achieve many of these savings. When accounting for off-budget reductions, the savings total $374 million in gross ($187 million net). Categories of savings include limiting rate increases, expanding pay-for-performance, service program changes (providing coordinated care in appropriate settings), utilization management (e.g., expedited claims review), pharmacy savings and other savings (e.g., elimination of certain grants and pilots).
|Savings Initiative Title||Gross
|Rates||$ (178)||$ (89)|
|Pay-for-Performance (P4P)||$ (62)||$ (31)|
|Service Program changes||$ (38)||$ (19)|
|Payment and Pricing Strategies||$ (43)||$ (22)|
|Utlization Management||$ (31)||$ (16)|
|Pharmacy||$ (20)||$ (10)|
|Other||$ (10)||$ (5)|
|Subtotal On-Budget Savings||$ (382)||$ (191)|
|Specialty Hospital Rate Adjustment||$ 12||$ 6|
|Pay-for-Performance (P4P) Adminstration||$ 3||$ 2|
|Primary Care/Medical Home/Chronic Care Model Rate In||$ 10||$ 5|
|Subtotal On-Budget Investments||$ 25||$ 13|
|Total Savings and Investments On-Budget||$ (357)||$ (178)|
|CCTF Savings||$ (17)||$ (9)|
|Subtotal Off-Budget Savings||$ (17)||$ (9)|
|Total Savings and Investments On- and Off-Budget||$ (374)||$ (187)|
|* 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).
Source: Division of Health Care Finance and Policy, Health Safety Net 2008 Annual Report, December 2008
For current budget planning, Health Safety Net spending assumptions for fiscal year 2009 and fiscal year 2010 are based on spending assumptions submitted in connection with the recent renewal of the Commonwealth's Medicaid waiver for fiscal years 2009-11. Based on these spending assumptions:
- The Health Safety Net would have a $47 million surplus in fiscal year 2009; the previously appropriated general fund contribution of $63 million is larger than needed to fund this spending.
- The fiscal year 2010 budget does not include a general fund contribution to the Health Safety Net, as assessments from insurers and providers and offset funding (totaling $390 million) are sufficient to fund this spending.
|Health Safety Net Trust Fund - Sources|
|Assessments & Offsets||$380,000,000||$390,000,000||$390,000,000|
|General Fund Contribution||$ 49,600,000||$ 62,996,382||$ -|
|Previous Year Balance Transfer||$ 24,000,000|
|Health Safety Net Trust Fund - Uses *|
|CHCs||$ 37,000,000||$ 31,341,199||$ 29,000,000|
|Demos (Admin)||$ 6,000,000||$ 6,000,000||$ 6,000,000|
|Sources less Uses||$38,000,000**||$46,996,382||$9,000,000|
|*Heath Safety Net payments for fiscal years 2009 and 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 Administration does acknowledge that there is uncertainty around Health Safety Net fiscal year 2009 and fiscal year 2010 program costs. Thus, the budget currently retains fiscal year 2009 funding in excess of waiver spending assumptions within the Health Safety Net Trust Fund as a "cushion" that can be applied to support actual spending needs. 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.
Prepared by the Executive Office for Administration and Finance · Rooms 373 & 272 · State House
For more information contact:
Candace Reddy, Kelly Driscoll and Glen Shor
(firstname.lastname@example.org, email@example.com and firstname.lastname@example.org)
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