Massachusetts health care subsidy program cost, enrollment could double over three years

Feb 4 2008

Commonwealth Care, Massachusetts' subsidized health insurance program, is expected to double in enrollment and cost by June 2011, which "would far outstrip the original plans" for the program "largely because state officials underestimated the number of uninsured residents," the Boston Globe reports.

Commonwealth Care provides no-cost or subsidized health care coverage to state residents who do not qualify for MassHealth, the state's Medicaid program, and do 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, when the program was authorized, projected total eventual enrollment of 215,000 people at a cost of $725 million annually. State officials in late 2006 reduced the estimate to between 140,000 and 160,000. However, state projections obtained by 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 of millions of dollars or force the state to scale back its ambitions."

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

Negotiations
The state has requested that the federal government pay for half of the program's costs between 2009 and 2011, but that funding is not guaranteed. Gov. Deval Patrick (D) is seeking about $1.5 billion in federal funds over three years, and funding negotiations between Patrick's administration and federal officials are expected to conclude by July 1. So far, the federal government has supported the state's health care initiative and has contributed about $300 million to Commonwealth Care since its inception in October 2006, the Globe reports.

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

Comments
Patrick spokesperson Joseph Landolfi in a statement said, "It is clear that paying for health care reform will pose a much greater fiscal challenge than was anticipated by the previous administration," adding, "We are committed to making health reform a success by aggressively pursuing cost savings and efficiencies in the health care system, as well as working with legislative leaders to review options for additional state revenues so that we can continue to afford this important initiative."

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

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

Romney Discusses Health Care Initiative
Republican presidential candidate and former Massachusetts Gov. Mitt Romney on Wednesday during a Republican debate defended the law, saying, "The bill that I submitted to the Legislature didn't cost one dollar more than what we were already spending," adding, "However, the Legislature and now the new Democratic governor have added some bells and whistles." According to the Globe, Romney signed the modified legislation, "approving most of the changes but vetoing a few provisions that were overridden."

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

A webcast of Romney discussing the Massachusetts health insurance law during the debate is available online at kaisernetwork.org.