Massachusetts Health Care Subsidy Program Cost, Enrollment Could Double

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Commonwealth Care, Massachusetts' subsidized health insuranceprogram, is expected to double in enrollment and cost by June 2011, which"would far outstrip the original plans" for the program "largelybecause state officials underestimated the number of uninsured residents,"the Boston Globe reports. Commonwealth Care providesno-cost or subsidized health care coverage to state residents who do notqualify for MassHealth, the state's Medicaid program, anddo not have access to employer-sponsored health insurance.

About 169,000 residents are enrolled in the program, which is expected to cost$618 million for the current fiscal year. The state Legislature in 2006, whenthe program was authorized, projected total eventual enrollment of 215,000people at a cost of $725 million annually. State officials in late 2006 reducedthe estimate to between 140,000 and 160,000. However, state projections obtainedby the Globe estimate enrollment of 342,000 people at a cost of$1.35 billion annually within three years. According to the Globe,the "unexpected level of growth ... could cost state taxpayers hundreds ofmillions of dollars or force the state to scale back its ambitions."

Total spending on the state's health care initiative will equal $1.95 billionthis year, with just less than half being funded by the federal government. Twounforeseen problems have contributed to the funding shortfall: The state hadexpected to shift money from no-cost care for the uninsured to insurancesubsidies, but the decline in charity care has been slower than expected; andthe state had expected to collect tens of millions of dollars from the penaltyon businesses that do not offer health coverage to workers, but it expects tocollect about $5 million this year.

Negotiations

The state has requestedthat the federal government pay for half of the program's costs between 2009and 2011, but that funding is not guaranteed. Gov. Deval Patrick (D) is seekingabout $1.5 billion in federal funds over three years, and funding negotiationsbetween Patrick's administration and federal officials are expected to concludeby July 1. So far, the federal government has supported the state's health careinitiative and has contributed about $300 million to Commonwealth Care sinceits inception in October 2006, the Globe reports.

Beyond funding for Commonwealth Care, the state also is seeking federal fundingto expand MassHealth. However, the "Bush administration has also beentrying to curb federal spending in the Medicaid program, which would be thesource of the new money Massachusettsis requesting," according to the Globe. If Massachusetts"doesn't get all of the federal funds it is seeking, policymakers couldface difficult choices: spend more state money or cut back the two programs byreducing enrollment, cutting subsidies or eliminating benefits," the Globereports.

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Comments

Patrick spokesperson JosephLandolfi in a statement said, "It is clear that paying for health carereform will pose a much greater fiscal challenge than was anticipated by theprevious administration," adding, "We are committed to making healthreform a success by aggressively pursuing cost savings and efficiencies in thehealth care system, as well as working with legislative leaders to reviewoptions for additional state revenues so that we can continue to afford thisimportant initiative."

Alan Sager, a professor at Boston University who specializes in health carecosts, said that even with federal support, the state might not be able toafford the program as it is designed because the state's health insurance lawdid nothing to reduce wasteful spending.

"I wouldn't say there's an imminent danger that the whole thing is goingto collapse," Robert Seifert, a senior associate at the Center for HealthLaw and Economics at the University of Massachusetts Medical School, said. He added, "It's challenging, butif it's a priority for the administration, then I think it's doable. There arebenefits that don't appear in the budget numbers," including healthierresidents, who contribute less to health care costs in the long run.

Romney Discusses HealthCare Initiative

Republican presidentialcandidate and former Massachusetts Gov. Mitt Romney on Wednesday during aRepublican debate defended the law, saying, "The bill that I submitted tothe Legislature didn't cost one dollar more than what we were alreadyspending," adding, "However, the Legislature and now the newDemocratic governor have added some bells and whistles." According to the Globe,Romney signed the modified legislation, "approving most of the changes butvetoing a few provisions that were overridden."

Lawmakers estimated the costs for the new provisions would be low. The Globereports that now it is "apparent that both Romney and lawmakersunderestimated the cost of insurance subsidies as well as other parts of theinitiative, largely because they based their projections on low estimates ofthe number of uninsured and the rising price of insurance," adding,"When the law was passed, neither Romney nor the Legislature estimated thecosts beyond next year because they believed the enrollment growth would be allbut complete" (Dembner, Boston Globe, 2/3).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.

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