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Massachusetts' trailblazing health insurance exchange programs authorized under the state's 2006 health care reform law have reduced its uninsured rate to the lowest in the nation and provided a new source of coverage for other individuals and small employers.
Nearly 200,000 uninsured state residents with incomes up to 300% of the federal poverty level, $70,550 for a family of four in 2013, now receive state premium subsidies to buy coverage from five insurers — Boston Medical Center HealthNet Plan, Network Health, Fallon Community Health Plan, CeltiCare and Neighborhood Health Plan — through the Commonwealth Care exchange program.
Those same five insurers, plus four others — Blue Cross and Blue Shield of Massachusetts, Harvard Pilgrim Health Care, Tufts Health Plan and Health New England — offer nonsubsidized coverage through the Commonwealth Choice program to individuals and employers with up to 50 employees.
In all, just more than 43,000 people have coverage through Commonwealth Choice, including about 4,700 employees and dependents working for small firms.
While the uninsured rate in most states has increased or shown little change since 2006, according to annual surveys by the U.S. Census Bureau, Massachusetts has gone in the opposite direction due to the subsidized coverage and expanding its Medicaid program.
In 2006, 9.6% of Massachusetts residents were uninsured. In 2011, the most recent year available, 3.4% of the Massachusetts' population lacked coverage, the lowest uninsured rate of any U.S. state and far less than the national uninsured rate of 15.7% in 2011, according to the Census Bureau.
Success extends beyond reducing the uninsured rate.
For example, according to a survey by the Connector Authority, which administers the exchange programs, 77% of state residents were satisfied or extremely satisfied with Commonwealth Care and 80% rated the exchange's choice of providers as excellent.
Massachusetts' success made it a closely watched model when federal lawmakers crafted health care reform legislation in 2009.
The exchange concept is a key element of what became the Patient Protection and Affordable Care Act. That law authorizes states to set up insurance exchanges where lower-income uninsured — those with incomes up to 400% of the federal poverty level, which is $94,200 for a family of four in 2013 — can use federal premium subsidies to purchase coverage starting in 2014. Small employers also will be able to buy coverage through the exchanges.
It will be some time, though, before it is known if those exchanges will be as successful as Massachusetts in reducing the number of uninsured.
The Massachusetts exchange programs have “made insurance available to small groups and to individuals. That has been its primary mission, and that mission has been a success,” said Philip Edmundson, chairman and CEO of William Gallagher Associates Insurance Brokers Inc. in Boston.
Experts say there are several lessons that other states and the federal government can learn from Massachusetts' success, including not interfering with coverage offered by employers.
“That is one of the positive attributes of the law. It built on the current system. It did not disrupt what employers had been doing,” said Richard Lord, president and CEO of Associated Industries of Massachusetts, an employer association based in Boston.
But Massachusetts had an advantage in that its uninsured rate was among the nation's lowest when it began setting up its exchange programs.
“The gap was much smaller than other states. It will be a bigger challenge in other states,” Mr. Edmundson said.
Still, the exchanges have not solved all of the state's health insurance problems. Provider cost-shifting continues chiefly because the state's Medicaid program does not adequately compensate providers, experts say.
“That still is a significant problem,” said AIM's Mr. Lord.
Despite increased costs and opposition to the health care reform law, the overwhelming majority of employers intend to keep providing health care coverage for their employees, according to a Business Insurance survey.