Health Care

Expanding Health Insurance Coverage

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:

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. Insurance coverage is high for Massachusetts residents at all income levels, ranging from 95 percent for those with family incomes under 300 percent of the federal poverty level to nearly all of those with incomes above 500 percent of the federal poverty level. Nearly all elderly adults (>99 percent) and children (>98 percent) are insured, as are more than 96 percent of non-elderly adults ages 19 to 64.

More than 440,000 people are newly insured in Massachusetts with over 42 percent in private health insurance, the first significant increase in commercial insurance in Massachusetts in decades.

Number of Members as of June 30, 2008 (rounded to the nearest 1,000) 30-Jun-06 31-Dec-06 30-Jun-07 31-Dec-07 30-Jun-08 changes since 6/30/06
Private Group 4,274,000 4,338,000 4,378,000 4,406,000 4,421,000 147,000
Individual Purchase 40,000 39,000 36,000 65,000 80,000 40,000
MassHealth 705,000 741,000 732,000 765,000 785,000 80,000
Commonwealth Care - 18,000 80,000 158,000 176,000 176,000
Total 5,020,000 5,136,000 5,226,000 5,394,000 5,462,000 442,000
Source: Division of Health Care Finance and Policy, Health Care in Massachusetts: Key Indicators, 4th Edition, November 2008.

Note: Excludes Medicare enrollees and certain other insured individuals. Moreover, MassHealth total enrollment is over 1.1 million; the number in the above chart reflects only members with MassHealth as primary insurance.

The most recent national health insurance survey results from the U.S. Census Bureau indicate that Massachusetts has the lowest rate of uninsured residents in the country. Importantly, employer-sponsored coverage is holding steady with nearly three-quarters of Massachusetts employers offering health insurance to their employees, while the employer offer rate has declined nationally from 68 percent to 60 percent between 2001 and 2007.

The pie chart visually demonstrates the 97.4% insurance rate among residents in the Commonwealth.
Source: Division of Health Care Finance and Policy, Health Care in Massachusetts: Key Indicators, 4th Edition, November 2008.

Recent insurance reform has made health coverage more affordable. Before reform, a healthy 37-year-old living in Boston - the median age for uninsured adults in Massachusetts - paid $335 per month in premiums and had few market options. Post-reform, that 37-year-old had a broad range of options, including at least one plan for a little over half that price with twice the benefits.

These expansions in health insurance coverage are breaking down barriers to needed care. More people (including racial and ethnic minorities) report having a regular medical provider, and individuals are accessing more preventive care and other services such as dental care.

This graph demonstrates the percentage of employers that offer health insurance in Massachusetts.  In 2007, 72% of employers offered health insurance.

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

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 health insurance. The program is designed as a mixed Medicaid/commercial model, with full subsidies for individuals at or below 100 percent of the federal poverty level and a progressive scale of increasing cost-sharing for individuals above 100 percent of federal poverty level but at or below 300 percent of the federal poverty level. As of January 1, 2009, there were over 163,000 adults enrolled in Commonwealth Care.

This chart demonstrates the variance in percentage of low-income adults that had primary care and dental visits between fall of 2006 and fall of 2007.

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 (see chart below). Cost trends have recently begun to moderate as enrollment and per-member price increases have leveled. Commonwealth Care is a fully-capitated program, in which the Connector Authority employs commercial-like processes to contract with participating health plans.

This chart demonstrates enrollment in Commonwealth Care on monthly intervals from July 2007 through January 2009.

Fiscal year 2007: Commonwealth Care was launched in November of 2006. The program cost $133 million in fiscal year 2007, with almost 80,000 people enrolled by the end of the fiscal year.

Fiscal year 2008: Commonwealth Care cost $628 million, $146 million over originally budgeted amounts. This cost increase was entirely due to faster-than-expected enrollment: year-end enrollment totaled over 175,000, compared to original projections of 135,000.

Fiscal year 2009: Commonwealth Care is currently projected to cost $820 million, over 30 percent above fiscal year 2008 levels (due largely to increased total member months for the year compared to fiscal year 2008) but also slightly lower than budgeted amounts. Cost reductions relative to the fiscal year 2009 budget and earlier estimates are due to lower-than-projected enrollment for the fiscal year. Total enrollment has slightly declined to date in fiscal year 2009, as new sign-ups have been fully offset by members leaving the program on their own and due to newly instituted eligibility verification processes.

Fiscal year 2010: The Administration's fiscal year 2010 budget proposal 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, on account of additional sign-ups due to negative economic conditions and a slight decrease in people leaving the program. Under a new payment methodology, rate increases have been limited well below medical inflation.

In addition to general state revenues and federal matching funds, Commonwealth Care is supported by a number of dedicated revenue sources in fiscal year 2010.

Health Care Tax Penalties per Individual
Income (% FPL) 0-150% 150.1-200% 200.1-250% 250.1-300% Above 300% Age 18-26 Above 300% Age 27+
2008 Penalty $0 $17.50/month $210/year $35/month $420/year $52.50/month $630/year $56/month $672/year $76/month $912/year
2007 Penalty $219


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. MassHealth is the second largest health insurer in the state. Health care reform expanded MassHealth eligibility coverage to children with incomes up to 300 percent of the federal poverty level (from 200 percent). It likewise broadened eligibility for the Insurance Partnership Program (which makes health insurance more affordable for small businesses and their employees) to individuals up to 300 percent of the federal poverty level (also up from 200 percent). Health care reform also restored benefits that had previously been cut, such as adult dental coverage and eyewear.

MassHealth program spending for fiscal year 2010 will grow by approximately 3 percent. This includes anticipated enrollment growth in the program as described below, and reflects anticipated savings and costs from new initiatives and investments. It does not include moving $290 million in previously off-budget spending on budget (including the Essential Community Provider Trust Fund, certain hospital and physician rate payments, and pay-for-performance payouts). Including that formerly off-budget spending, MassHealth program spending will grow by approximately 6.6 percent.

MassHealth's slim 3 percent increase is made possible by a number of factors. One is MassHealth's administrative and overhead costs of 2.9 percent, including employee benefits, overhead and outreach. Another reason for the slim increase are limits that MassHealth has put on provider and health plan rates for both fiscal year 2009 and fiscal year 2010. At the same time, MassHealth has examined their hospital rate structure and made improvements to reward providing the right care in the right setting, which has resulted in some overdue rate increases to some cost-efficient hospitals. Through these and numerous other measures, MassHealth is leading the way in controlling health care cost growth

FY09 Estimated Spending * FY10 Total** % growth from FY09 Estimated Spending Total off-budget spending coming on-budget New Total FY10*** % growth from FY09 Estimated Spending
$8,415,822,272 8,970,235,518 6.6% $(290,100,000) $8,680,135,518 3.14%

* FY09 estimated spending reflects emergency spending reductions as well as a deficiency within the MassHealth program.
** This FY10 total includes off-budget spending that will be moved on-budget in FY10.
*** This FY10 total excludes off-budget spending that will be moved on-budget in FY10.

MassHealth Average Enrollment
  FY06 FY07 FY08 FY09 FY10
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%
Source: Massachusetts Office of Medicaid, December 2008.

This chart shows the variance between budgeted and actual Commonwealth Care Spending from fiscal year 2007 through fiscal year 2010.

Health Safety Net

The Health Safety Net is the successor to the state's Uncompensated Care Pool, effective October 1, 2007. Overseen by the state's Division of Health Care Finance and Policy (DHCFP), it 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.

The transition of the Uncompensated Care Pool to the Health Safety Net included several initiatives to promote health insurance and align policies with those of state health insurance programs (MassHealth and Commonwealth Care), most notably:

As intended under health care reform, our efforts to promote enrollment in health insurance coverage have resulted in decreased Health Safety Net utilization and payments. Notably, 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 line graph documents MassHealth enrollment from January 2001 to expected enrollment in June 2011.  There is a rise in enrollment upon the inception of health care reform.

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

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:

Health Safety Net Trust Fund- Sources
  FY08 FY09 FY10
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
Total Sources $453,600,000 $452,996,382 $390,000,000
Health Safety Net Trust Fund- Uses*
  FY08 FY09 FY10
Hospital Payments $372,600,000 $368,658,801 $346,000,000
CHCs $37,000,000 $31,341,199 $29,000,000
Demos (Admin) $6,000,000 $6,000,000 $6,000,000
Total Uses $415,600,000 $406,000,000 $381,000,000
Sources less Uses $38,000,000** $46,996,382 $9,000,000
* Health 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 th at there is uncertainty around Health Safety Net fiscal year 2009 and fiscal year 2010 program costs, due to our economic downturn, evolving enrollment dynamics in state health insurance programs and lags in available data about Health Safety Net trends.

On that account, 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.

Cost Containment

"Bending the trend" on health care costs is a top priority for the Administration. Cost containment is essential to achieving and sustaining near-universal health insurance coverage under health care reform and enabling government, businesses and families to afford high-quality health care and meet their other needs and priorities.


MassHealth program eligibility has historically been expansive as compared to other states. Meanwhile, over the last decade, Massachusetts has experienced a rate of per capita health care spending that is 25 percent higher than the U.S. average. These factors have forced MassHealth to maximize efficiencies in the program as a standard business practice. As one example, MassHealth led the nation in finding savings in prescription drug utilization, implementing sensible clinical interventions long before other states recognized the need for, and efficacy of, such programs. When compared to yearly spending growth prior to comprehensive clinical and programmatic interventions, the savings within the pharmacy program total $1 billion over the last five years. Likewise, the MassHealth program has developed care management and benefit coordination efforts that focus on high-cost, medically complex populations.

The Administration's fiscal year 2010 budget includes a wide range of cost containment initiatives designed to further restrain state costs, promote higher quality and more cost-effective care, advance reform of our health care payment system and improve coordination of benefits and payments. In addition to savings from limits on provider and health plan rates, key initiatives include:

Group Insurance Commission

The Administration continues to support reforms to improve the fairness and sustainability of health coverage for state employees. Massachusetts state employees' health insurance contributions are currently tied to their dates of hire, with most employees hired before June 30, 2003 contributing 15 percent of the costs of to their health coverage and employees hired after that date contributing 20 percent. As part of its fiscal year 2010 budget, the Administration is proposing to change active state employee contributions to health insurance coverage through the Group Insurance Commission from a system based on dates of hire to a more rational system based on salary levels and affordability.

Furthermore, in fiscal year 2010, more municipalities will take advantage of the option to provide health insurance for their employees through the Group Insurance Commission (GIC). Increases in employee health care costs have placed significant strains on municipal budgets. According to a Massachusetts Municipal Association survey, municipal health care costs rose by a total of 99 percent during the six years from 2001 to 2007 - nearly four times greater than the growth in local budgets over the same period.

This reform, enacted as part of the Administration's Municipal Partnership Act, gives cities and towns more options for cost savings in offering high-quality health insurance to their employees. In the next fiscal year, fifteen additional municipalities plan on joining the GIC, bringing the total number of local participants to 25. The GIC expects to cover over 45,000 people through its partnership with municipalities. This reform has also spurred the creation of more competitively priced health insurance options outside of the GIC for municipalities and their employees.

Commonwealth Care

As part of its ongoing reprocurement of health plans to provide health insurance through Commonwealth Care, the Connector has not only set an aggressive rate ceiling but also adopted a number of innovative incentives to encourage even lower bids. These incentives reward low bidders with more enrollment - by assigning the lowest enrollee premium to the least expensive plan and automatically enrolling certain members who do not select specific plans in the least expensive plan.

The Connector has also reserved a portion of the administrative fees that it pays Commonwealth Care health plans as an incentive pool to leverage improvements in the quality of care provided to members. The incentives encourage health plans to promote stronger relationships between members and primary care physicians through annual comprehensive primary care visits and to report on emergency room visits by members (and thus provide data to help craft policy responses to unneeded emergency room visits).

Systemic Cost Containment

The Administration's cost containment agenda encompasses not merely cost-saving innovations in state health insurance programs but, more broadly, comprehensive reform of our state's health care system to improve the affordability and quality of health care.

Payment reform is a centerpiece of the Administration's comprehensive cost containment strategy, consistent with a broad consensus that this is the most effective way to control health care costs. We are committed to replacing outdated payment approaches that reward "too much" or "too little" care with models that promote effective and appropriate treatment. Furthermore, the Administration will continue promoting other components of a comprehensive cost containment agenda, including administrative simplification, advances in e-health technology, greater transparency of health care costs, public education, improved care management and other proven approaches to providing the right care at the right price.

Key initiatives, many of which were included in comprehensive cost containment legislation enacted by the Legislature in 2008, include:


The Administration is dedicated to promoting good health not only by expanding access to health care and coverage but also by promoting healthier lifestyles. Making the right health choices - such as exercising, eating healthy foods and avoiding smoking - yields other important societal benefits as well, including lower health care costs and greater economic productivity.

"Mass in Motion"

The Administration has recently launched "Mass in Motion," the most comprehensive effort to date to address the serious problem of overweight and obesity in the Commonwealth. While Massachusetts compares favorably to other states with respect to overweight and obesity, our rates are increasing more quickly than the nation as a whole. The Commonwealth has seen a 47 percent increase in overweight and obesity over the past two decades, compared to a national increase of 40 percent. Overweight and obesity place individuals at higher risk of serious health conditions, such as heart disease, stroke, diabetes and certain kinds of cancer. Those conditions impose enormous burdens not only on our residents but also on our entire health care system.

"Mass in Motion" is comprised of a number of policy and program elements, including:

Wellness Grants

The Wellness Grants campaign builds upon several other public health initiatives that have begun or been strengthened in the last year. $1 million in new multi-year wellness grants were distributed to 25 different organizations around the state at the start of fiscal year 2009. These grants support a wide array of activities from municipal employee wellness efforts to neighborhood-level walking and exercise groups for the elderly to healthy cooking classes for individuals with diabetes.

Commonwealth Wellness Fund

The Administration is proposing to eliminate existing sales tax exemptions on the purchase of alcohol beverages consumed off-premises, sweetened beverages and candy. This policy initiative aims to encourage healthy lifestyle choices. It will also generate revenues that will help to preserve most funding for public health programs in fiscal year 2010 and provide a dedicated revenue stream for these programs in subsequent years.


While we have made significant progress in curbing alcohol abuse, Massachusetts still ranks in the top ten percent of states with the highest rates of both underage drinking and adult binge drinking. Research has shown that ending sales tax exemptions for off-site consumption of alcohol will decrease underage consumption and frequency of use - and may also delay the first use of alcohol for some teenagers.

Sweetened Beverages and Candy

More than a third of middle- and high-school students and half of the adult population in Massachusetts are overweight, causing dramatic, costly increases in chronic diseases like diabetes. Indeed, the number of adults with diabetes has doubled in a little more than ten years. This emerging public health crisis has been fueled by skyrocketing soda consumption (doubling between 1970 and 1999) and steady increases in candy consumption. Eliminating sales tax exemptions for these products would encourage consumption of healthier alternatives, particularly among young people whom research has shown are particularly price-sensitive. It would also follow the lead of seventeen other states that tax foods of low nutritional value.

Net fiscal year 2010 proceeds from eliminating these sales tax exemptions - projected to be $121.5 million - will be deposited directly into the Commonwealth Wellness Fund and dedicated to support critical public health programs such as alcohol and tobacco addiction services, heath promotion, violence prevention and workforce expansion services.

Wellness Fund: FY10  
$121.5 Million  
Account Distribution Acct # FY10 Allocation % Wellness Fund % GF Total Wellness Fund Spend
Addiction and Tobacco Control Services 4510-0700 $90,468,857 86% 14% $78,000,000
Health Promotion, Violence Prevention and Workforce Expansion 4510-2500 $49,938,924 87% 13% $43,500,000

MassHealth Wellness Program

Governor Patrick's fiscal year 2010 budget also continues to fund wellness initiatives through the MassHealth program. The MassHealth Wellness Program encourages members to adopt and maintain a healthy lifestyle. In collaboration with our state's Department of Public Health, the Wellness Program designs print materials that help members learn about healthy lifestyle choices and the benefits of those actions. The MassHealth Wellness Program also works with providers to design training programs and forums to promote culturally appropriate communication with members about the importance of regular preventive health care and health risk factors.

The MassHealth Wellness Program, in collaboration with the Department of Public Health, is exploring the viability of developing a reward program for MassHealth members participating in wellness-related activities. The reward would consist of coupons for fruits and vegetables that would be used in participating grocery stores and at farmers' markets. Distribution of reward information educational materials about good nutrition practices would occur through the existing provider (grocery stores and farmers markets') and staff networks for the WIC program.

Long-Term Care Supports/Community First

The Administration's long-term care policy is Community First, a commitment to supporting elders and individuals with disabilities of all ages to live with dignity and independence in the community as a first choice and to assuring ongoing access to skilled nursing and other needed institutional care across the lifespan. Demographic projections regarding expanding numbers of Commonwealth residents likely to be in need of long-term support highlight the importance of this policy commitment.

Community First Initiatives

The Administration's fiscal year 2010 budget includes an investment of $21 million for the "Community First" waiver policy initiative. A demonstration waiver, submitted to the federal Centers for Medicare and Medicaid Services (CMS) in December of 2006, seeks to encourage flexible service options in the community for those who might otherwise need to seek services in a facility setting. The proposed strategies will enable some individuals to continue to live independently in community settings and support others in returning to community settings from institutions.

The Community First 1115 Waiver implementation will be phased in, beginning in fiscal year 2010, initially serving people with disabilities under the age of 60. The waiver will provide participants with access to a range of services, including personal care, residential habilitation, behavioral health services and medication management. Elders, who currently have access to home- and community-based services through an existing MassHealth waiver, will be phased into the new, more expansive waiver beginning in fiscal year 2011.

Other important Administration decisions over the course of the last year will further shift utilization and certain costs into less expensive community-based alternatives. The projected closure of four facility Department of Developmental Services (DDS) intermediate care facilities is projected to result in up to $80 million in savings, most of which are associated with MassHealth facility-based payments. In fiscal year 2010 alone, there are $13 million of savings from facility consolidation projected within the DDS budget. Settlement of the Rolland case will reduce MassHealth liability in nursing facility-based care for over 650 current residents with mental retardation and developmental disabilities, and settlement of the Hutchinson case will expand important community alternatives for brain-injured adults and seniors.

The Administration's fiscal year 2010 budget also permits MassHealth to implement a "cash and counseling" program to allow members the flexibility to get a cash budget to be used to make arrangements for their long-term care that best fits their circumstances, needs, and preferences.

MassHealth Community Long-Term Care Services

The Administration's fiscal year 2010 budget increases Personal Care Attendant (PCA) funding by $73 million over fiscal year 2009 spending. Personal Care Attendants provide important in-home services to people with disabilities and elders. The budget also funds anticipated increased utilization of other community-based services through a $180 million increase over last year's budget, including over $75 million in anticipated growth in adult day health utilization.

Children's Behavioral Health Initiative (CBHI)

Beginning on June 30, 2009, several new services will be implemented as part of the Children's Behavioral Health Initiative (CBHI). This initiative incorporates a broad array of services and supports for youth and their families. CBHI is organized into a coordinated network and integrates care planning and management across multiple levels. It is culturally and linguistically competent and builds meaningful partnerships with youth and their families at service delivery, management and policy levels.

These services promote behavioral health of youth and their families. Behavioral health services are provided through a comprehensive array of accessible formal and informal services and individualized service planning. The services are delivered in ways that actively engage youth and families in the context of their unique cultures and work to ensure the least restrictive and least intrusive community-based services that can meet identified needs. The fiscal year 2010 budget funds anticipated expansion in CBHI.