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Presidential hopeful mines Mass. model

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Presidential hopeful mines Mass. model

WASHINGTON—Massachusetts' landmark health care reform law, which already has helped to shape reform measures in other states, is being incorporated--at least in part--by a major presidential contender.

During a campaign stop in Iowa City, Iowa, Sen. Barack Obama, D-Ill., last week released what he described as his plan to ensure a healthy America. Major chunks of the 15-page position paper clearly are drawn from the 2006 Massachusetts law, which has a central goal of near-universal coverage of Bay State residents within a few years.

Sen. Obama is not the first candidate to unveil a health care reform plan. Former Sen. John Edwards, D-N.C., earlier released his reform plan, but at less than half the length, the Edwards plan is not as detailed as the Obama plan.

Under the Massachusetts law all but the smallest employers must pay an annual fee--up to $295 per employee--if they do not make a "fair and reasonable" health insurance premium contribution. State regulators have defined fair and reasonable to mean that at least 25% of full-time employees are enrolled in an employer's plans or the employer pays at least 33% of premiums for individual coverage.

Similarly, the Obama plan would require employers that "do not offer meaningful coverage or make a meaningful contribution to the cost of quality health coverage for their employees" would have to pay a portion of their payroll to help fund coverage for the uninsured.

Also like Massachusetts, where health insurance premiums are subsidized for low-income state residents who are not covered under employer plans and are ineligible for public programs such as Medicaid, the Obama plan would provide income-related federal subsidies for health insurance premiums.

There are other striking similarities as well. The Massachusetts law established a state agency, the Connector Authority, that set up programs in which private insurers offer plans to state residents eligible for subsidies, individuals who lack group coverage and soon small employers will be added to the program. The Obama plan would create a National Health Insurance Exchange that would enable U.S. residents to purchase both federally subsidized and nonsubsidized coverage from participating, approved private insurers.

"It is kind of a national Connector," said Frank McArdle, a consultant in the Washington office of Hewitt Associates Inc., referring to the similarity of Sen. Obama's Insurance Exchange to Massachusetts' Connector Authority.

Significant differences

Even so, there are significant differences between the Massachusetts law and the presidential hopeful's health care reform proposal.

For example, the Massachusetts law will impose financial penalties starting later this year on state residents who lack health insurance--unless they receive special waivers or coverage is considered unaffordable, but the Obama plan lacks an individual coverage mandate.

In addition, the Obama plan calls for reinsuring employer-sponsored health care plans for a portion of catastrophic costs above a certain level, though employers would have to guarantee that at least some of their savings would be used the lower employees' premium contributions. The Massachusetts law lacks a reinsurance feature.

Bay State sets bar

Still, the similarities between the two plans is striking, experts say, noting that it is not surprising that Sen. Obama's plan has drawn key elements from the Massachusetts law.

"The Massachusetts model has been enacted into law and has enjoyed broad support. It should not come as a surprise that it is the starting point for state initiatives" and from candidates, said Paul Dennett, vp-health policy at the American Benefits Council in Washington.

Implementation of the Massachusetts law has given presidential candidates the political courage to take on comprehensive health care reform, said Krista Donahue, chief of policy for the Illinois Department of Healthcare and Family Services in Springfield. Ms. Donahue spoke last week at a Washington briefing sponsored by the Alliance for Health Reform and the Robert Wood Johnson Foundation.

Like Sen. Obama, other candidates--because of voter interest--are expected to unveil detailed health care reform proposals in the coming months, with Sen. Hillary Rodham Clinton, D-N.Y., expected to be next.

Health care "is one of the top domestic issues on the minds of voters," Mr. Dennett said.

Still, while those upcoming position papers will provide insights into the candidates' health care reform ideas, given the complexity of health care issues, they are not expected to be detailed.

For example, while endorsing an employer health care mandate, the Obama plan did not specify the level of benefits or the share of premium contributions that employers would have to make to avoid being assessed to help fund coverage for the uninsured.

"The devil truly will be in the details. For employers, the question is how much would they have to pay and what kind of benefits they would have to offer," Mr. Dennett said.