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Although health insurance coverage rose dramatically in the past year in Massachusetts, some questioned whether health reforms simply moved people from being uninsured to underinsured. This study explores whether requiring individuals to have health insurance has forced some people, particularly those with modest incomes, into plans that offer little financial protection. The findings suggest, however, that health reform in Massachusetts is both providing new coverage for many of those who were previously uninsured and improving the quality of coverage for those with insurance coverage.
important goal of Massachusetts’ comprehensive health care reform initiative was to ensure the affordability and adequacy of coverage, so that individuals now required to have health insurance would not be forced into plans that offer little financial protection. There was a concern among some that low-income residents would go from uninsured to underinsured under health reform. This policy brief provides an assessment of the extent to which the insurance provided in Massachusetts under health reform in 2007 protects individuals from financial risk in the event of a major illness or injury.
Health reform in Massachusetts led to a substantial drop in the uninsurance rate in the first year after implementation, accompanied
by improvements in access to health care and reductions in the financial burden of obtaining health care (Long 2008). In an attempt to protect individuals from underinsurance, as part of that health reform effort Massachusetts established a standard for “minimum creditable coverage” (MCC) that outlines the key benefits that must be included in an individual’s health insurance plan if it is to satisfy the state’s new individual mandate for health insurance coverage. The required benefits, which are intended to protect those with insurance from high health care costs, include preventive and primary care, prescription drugs, a maximum on the annual deductible and a maximum on out-of-pocket spending, among other things. The Connector Board is currently considering some adjustments to the MCC standards, some of which are technical corrections and some more substantive changes (such as a redefinition of “core services” that cannot have caps or limits and the “broad range of medical benefits” that must be covered but can have limits). Under the proposed new standards, High Deductible Health Plans must be linked with Health Savings Accounts or Health Reserves Accounts to be MCC compliant. The new standards, currently slated to become effective January 1, 2009, are incorporated in the state’s new CommCare and CommChoice programs, and have led to some expansions in benefits under commercial plans in the state in advance of the effective date.
Underinsurance is a concern in the context of Massachusetts’ individual mandate because some people may choose plans with limited benefits and high cost-sharing in order to carry a lower monthly premium cost. Limited benefits and high cost-sharing under health plans place more of the financial risk of high health care costs on the individual and may cause individuals to go without needed care to avoid health care expenditures. While individuals with higher incomes may have the resources to cover the costs of a serious health crisis, low- and moderate-income individuals may find themselves in financial difficulties if the cost of the care they need exceeds the coverage under their health insurance plan. Similarly, individuals with health problems are at greater financial risk if they are underinsured given their higher expected health care costs.
A recent study by Schoen and colleagues (2008) documented a significant increase in the share of Americans who are underinsured. They report that, among working-age adults 18 to 64, 14 percent of all adults and 20 percent of all insured adults were underinsured in 2007, compared to 9 percent and 12 percent, respectively, in 2003. This brief uses a similar measure of underinsurance to examine changes in underinsurance in Massachusetts under health reform.
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