MANDATORY HEALTH INSURANCE - THE FIRST YEAR - Progress and perils - Thousands more in state have coverage under ambitious program, but challenges lie ahead over funding and getting message out to all

By Alice Dembner
Boston Globe
April 22, 2007

Massachusetts has made a strong start toward ensuring that all state residents have health insurance, but it faces major obstacles as it seeks to achieve the full promise of landmark legislation signed into law a year ago, according to more than a dozen analysts, policy makers, and advocates.

More than 110,000 people -- one-fifth to one-quarter of the state's uninsured -- have been given free or heavily subsidized coverage in the past year. New insurance plans were designed to provide more affordable options for those who have to buy their own coverage. And the use of state money to pay for charity care at hospitals has begun to decline, offering hope that the funds can pay for insurance instead.

Still, the big tests of the universal health insurance law are yet to come. Will insurance be truly affordable? Will individuals revolt when the state starts fining those without coverage next year? Will employers maintain the insurance they now offer? Will there be enough federal and state funding to cover rising costs?

"The nation is watching," said Karen Davis, president of the Commonwealth Fund, a New York-based nonprofit foundation that sponsors research to improve healthcare. "It's inspiring other states to act. But nobody would yet say it was a success."

Policy makers this year laid the building blocks for success, many observers said, reaching compromises on the tough issues of how much people can be expected to pay for insurance, what constitutes real insurance, and who will be exempted from the requirement that everyone have coverage by July 1.

The compromises helped retain support from the alliance of businesses, medical providers, and advocates that formed to get the law passed.

Shaped by former Republican governor Mitt Romney and the Democratic -majority Legislature, the law also gained the full support of the new governor, Deval Patrick.

"It's a matter of quality of life, it's a matter of quality healthcare, and it's an economic matter," Patrick said.

That broad support may help this healthcare initiative succeed where a similar attempt failed nearly a decade ago after being torpedoed by business opposition.

Now, "Massachusetts really has a structure in place and the political support to deal with problems as they emerge," said John Holahan , director of health research at the Urban Institute , a think tank that provided a framework for the law.

The biggest strides so far have been in providing free coverage for the uninsured with low incomes. Nearly half of that group has been signed up for the state Medicaid program or for new fully subsidized plans that offer some of the most comprehensive benefits in the nation. Earlier this month, the state expanded subsidies to provide free insurance for tens of thousands more.

"The very poor are covered very well," said Brother Jack Rathschmidt of Our Lady of Lourdes Catholic Church in Jamaica Plain, a leader of the Greater Boston Interfaith Organization, a coalition of 80 congregations.

A few problems have cropped up in the new subsidized plans. Some individuals were assigned to plans that didn't include doctors they had been seeing or even providers near their homes. Others faced delays in getting appointments. But for the most part, the newly insured seem pleased with their healthcare and relieved to finally have the security of insurance. (See miniprofiles).

The next big question is whether low-income people who have to pay for insurance, even with a substantial subsidy, will sign up. Some advocates suggest that the costs are still too high, particularly for the young and healthy who don't see the need for insurance. So far, most of those enrolling in partially subsidized programs are older and sicker. Without the younger, healthier people, costs will rise rapidly and the plans could quickly become unaffordable for everyone.

In addition, there is widespread public confusion about the many subsidized and unsubsidized insurance plans now being offered. Aggressive recruitment and education through advertising is just beginning. And a broader campaign is about to kick off to alert uninsured middle- and upper-income individuals about the requirements of the new law and new insurance options on sale next month.

"If we don't get that going pretty darn quick, there's real trouble ahead," said John McDonough, executive director of the advocacy group Health Care for All.

The biggest challenge to ensuring insurance coverage for all under the plan is financing, observers said.

The state's plan relies largely on two sources: federal funds that are committed only through June 30, 2008, and the state's free-care pool, now used to pay for charity care at hospitals and health centers.

To guarantee continuation of the federal funds, which total nearly $400 million, the state must renegotiate an agreement with the Bush administration, an uncertain prospect.

Additional federal funds, to cover children, are dependent on Congress overriding President Bush's objections to a broad expansion of insurance for children.

And the state can shift the $605 million from the free-care pool only if many people currently seeking charity care get insurance coverage.

As the state presses forward, healthcare costs continue to rise. That will push up the cost of the insurance initiative, estimated at about $1.6 billion this year, and threaten the delicate balance that keeps it going.

"The legislation . . . is unsustainable tomorrow," said Alan Sager , a professor of health policy at the Boston University School of Public Health, who takes a gloomier position on the financial picture than some others.

"There are no cost controls in the state that has the most expensive healthcare in the world. Premiums are rising rapidly and ...revenues are not adequate to cover the costs of healthcare."