Making Universal Health Insurance Work in Massachusetts

H.5210, Chapter 23 of the Acts of 1988, enacted 13 April and signed 21 April.

Some in Massachusetts call this the Universal Health Insurance law, the Health Care for All act, or the Health Security act. Because these ignore the hospital financing provisions, the neutral terms, “Chapter 23” or “the law” are used in this paper.

Office of the Governor, The Massachusetts Health Security Act of 1988, fact sheet #2: Hospital financing and cost-containment provisions, April 1988. Hospital fiscal years begin on 1 October; state fiscal years begin on 1 July. State fiscal year 1990, for example, begins on 1 July 1989.

Massachusetts General Laws, Chapter 118F, section 6(i).

Massachusetts General Laws, Chapter 118F, section 9.

Roble DT Nicholson ST , “Legal Issues Raised by Subcommittee Proposals,” Memorandum to the Subcommittee on Access for the Uninsured/Underinsured, Study Commission on Health Care Financing and Delivery Reform, Commonwealth of Massachusetts, 26 September 1986.

“First Phase of Universal Health Plan Is Hailed,” Boston Globe, 30 August 1988; CommonHealth, Department of Public Welfare, Commonwealth of Massachusetts, CommonHealth Training Manual, Boston: The Department, June 1988.

The pool is simple to administer. A uniform surcharge is added to the bill of each non-Medicare, non-Medicaid patient. If a hospital provides uncompensated care at the statewide average rate, it simply keeps this money. It neither pays into the pool nor draws from it. If a hospital provides less than the statewide average, it pays into the pool a sum equal to the difference between its uncompensated care cost and the cost it would have incurred had it provided uncompensated care at the statewide average. It does the reverse if it provides more than the average.

“Hospital Workers Rally against Health Proposal,” Boston Globe, 17 September 1987.

Massachusetts General Laws, Chapter 118F, section 9.

The Nation's Health, February 1988.

Danielson DA Mazer A , “Results of the Massachusetts Referendum for a National Health Program,” Journal of Public Health Policy 1987, 8(2): 28–35.

U.S. Bureau of the Census, Government Finance in 1986-87, Series GF-87-5, Washington: U.S. Government Printing Office, 1988.

Calculated from Regional Economic Measurement Division, State personal income, 1985–87, Survey of Current Business 1988, 68(8):28–41.

Chollet D , Uninsured in the United States: The Nonelderly Population without Health Insurance, Washington: Employee Benefit Research Institute, 1987.

Levit KR , “Personal Health Care Expenditures by State, Selected Years 1966–1978,” Health Care Financing Review 1982, 4(2):1–46; Levit KR , “Personal Health Care Expenditures by State: 1966-82,” Health Care Financing Review 1985, 6(4):1–49.

American Medical Association, Physician characteristics and distribution of physicians in the United States, 1987, Chicago: The Association, 1987; Sager A , The Sky Is Falling: The Massachusetts Medical Society Reports on the “Physician Shortage,” Boston: Boston University School of Public Health, 7 September 1988.

Massachusetts hospital cost per capita in 1975 was 50 percent above the U.S. average. American Hospital Association, Hospital Statistics, 1976, Chicago: The Association, 1976.

For a valuable discussion, see Bergthold LA , “Purchasing Power: Business and Health Policy Change in Massachusetts,” Journal of Health Politics, Policy, and Law 1988, 13 (3):435–451.

Maryland Hospital Association, A Guide to Rate Review in Maryland Hospitals, Lutherville: The Association, 1978.

Massachusetts Rate Setting Commission, Key Trends in Massachusetts Acute Care Hospitals, 1981–1987, Boston: The Commission, May 1987; Sager A , “Changes in financing uncompensated hospital care in Massachusetts, 1982-1987: Motives, mechanisms, and meanings for access,” prepared for Pew Fellows Conference 29 May 1987.

“Understanding Massachusetts' New Hospital Law,” Staying Alive, February 1983.

Beginning in 1985, Massachusetts prospective payment legislation protected institutions providing disproportionate shares of uncompensated care by a pooling arrangement. See note 8.

Plough AL Korda H Delbanco T , Boston at Risk: A report from the Boston Foundation Primary Health Care Seminar, Boston: The Foundation, 1985.

Friedman DJ Swartz K , “The Uninsured in Massachusetts,” Massachusetts Journal of Community Health, 1985, 2: 10–15.

“Panel Decides to Write Health Reform Proposal,” Boston Globe, 16 April 1987.

Kuttner R , “A Limited Health Care Proposal,” Boston Globe, 22 June 1987.

Lehigh S , “Talking Politics: Double Trouble on the Home Front,” Boston Phoenix, 3 July 1987.

H. 6000, introduced 14 September 1987.

Mass. Fair Share, Mass. Senior Action, Health Care for All, Local 285 (Service Employees International Union), “Health Care Workers vs. Consumers? The Mass. Hospital Association Invents a Crisis,” Boston: 14 September 1987.

“The Governor and his Defeat on Health Care,” Boston Globe, 11 October 1987.

Kinzer D Hegarty S , “Mandated Coverage: Massachusetts' Ordeal,” Hospitals, 20 July 1988: 66–73.

Blendon RJ Altman DE , “Public Attitudes about Health Care Costs,” New England Journal of Medicine, 1984, 311(9): 613–16.

Other elements that contributed to the defeat of this approach were the new agency's independence from both civil service and annual legislative appropriation.

Sager A , The Sky Is Falling: The Massachusetts Medical Society Reports on the “Physician Shortage,” Boston: Boston University School of Public Health, 7 September 1988.

Glaser WA , “Paying the Hospital in Europe,” Health Care Financing Review, 1983, 4(4): 99–110.

Access and Affordability Monitoring Project, Promise and Performance, First Monitoring Report on “An Act to Make Health Security Available to All Citizens of the Commonwealth and to Improve Hospital Financing,” Boston: Boston University School of Public Health, 9 April 1989.

“Scrap the Health Law,” editorial, Boston Herald, 23 January 1989.

Ott AF Gray WB , The Massachusetts Health Plan: The Right Prescription? Boston: Pioneer Institute for Public Policy Research, 1988.

This relies on an estimate of $9.9 billion in total health spending on some 4.8 million insured residents of Massachusetts aged below 65. Excluded from the spending numerator are roughly $4.7 billion in health spending on persons aged 65 and above and $300 million in hospital uncompensated care. Excluded from the denominator are roughly 600,000 citizens aged 65 and above and about 600,000 uninsured citizens. Sources: Spending projections from Office of Health Policy, Executive Office of Human Services, Report on Massachusetts Health Expenditures, Boston: The Office, February 1986; uninsured citizen estimates from Chollet Deborah , Uninsured in the United States: The Nonelderly Population without Health Insurance, Washington: Employee Benefit Research Institute, 1987.

Pauly MV Wilson P , “Hospital Output Forecasts and the Cost of Empty Hospital Beds,” Health Services Research, 1986, 21(3): 403–28.

Shepard DS , “Estimating the Effect of Hospital Closure on Area wide Inpatient Costs: A Preliminary Model and Application,” Health Services Research, 1983, 18(4): 513–50.

Ware JE , “Comparison of Health Outcomes at a Health Maintenance Organization with Those of Fee-for-Service Care,” The Lancet, 1986: 1017–22, 3 May.

McLaughlin CG , “Market Responses to HMOs: Price Competition or Rivalry,” Inquiry, 1988, 25(2): 207–18; Robinson JC Luft HS , “Competition and the Cost of Hospital Care,” Journal of the American Medical Association, 1987, 257 (23): 3241–45.

Health Market Survey , 1987 HMO Industry Membership Guide and National HMO Census, Washington: The Survey, 1987.

Prospective Payment Assessment Commission, Medicare Prospective Payment and the American Health Care System, Report to the Congress, Washington: ProPAC, 1988.

Rabkin M , Dear Doctor, 19 April 1987.

The share of GNP going to health care nationally is expected to rise from about 11.2 percent in 1986 to 15.0 percent in 2000, without any changes in current law. Division of National Cost Estimates, Office of the Actuary, Health Care Financing Administration, “National Health Expenditures, 1986–2000,” Health Care Financing Review, 1987, 8(4): 1–36.

“Health Insurance Rates May Soar Again in 1989,” Health Week, 8 August 1988.

Organisation for Economic Cooperation and Development, Measuring Health Care, 1960–1983, Paris: OECD, 1985.

Similarly, currently high hospital employment per capita and per admission in Massachusetts may be seen as a resource. Those currently employed may be needed to provide universal access.

Wennberg JE Freeman JL Culp WJ , “Are Hospital Services Rationed in New Haven or Over-Utilised in Boston,” The Lancet, 1987: 1185–89, 3 May.

“‘Boston Death’ Accounts for High Health-Care Costs,” Boston Herald, 25 January 1989.

Blendon RJ Aiken LH Freeman HE Kirkman-Liff BL Murphy JW , “Uncompensated Care by Hospitals or Pubic Insurance for the Poor: Does It Make a Difference?” New England Journal of Medicine 1986, 314(18): 1160–63.

Sager A , “Health Care for All on $1.5 Billion Daily,” Health/PAC Bulletin, 1988, 18 (1): 21–26.