The passage of healthcare reform legislation in Massachusetts promises to expand Medicaid coverage to some of the poorest of the state's estimated 700,000 uninsured residents who now are falling through holes in the safety net.
But it doesn't solve a growing burden on the state's hospitals for care of an increasing number of indigent patients, according to hospital industry representatives.
The law, enacted in the final days of the state's legislative session that ended July 31, also extends access to basic healthcare to about 160,000 children and will help relieve the cost burden on senior citizens who need prescription drugs for chronic illnesses.
"The good news is that Massachusetts has taken a concrete step to expand coverage," said Andrew Dreyfus, spokesman for the Massachusetts Hospital Association. "The bad news is that the bill doesn't face the immediate problem of the uncompensated-care pool."
That state-operated pool collects about $330 million annually from assessments on hospital bills.
Through several years of transition from fee-based reimbursement to negotiated payments for health services, hospitals say they have effectively been left holding the bag for the pool's funding (April 29, p. 56). As it is, the pool still falls at least $150 million short of the mark, the association said.
In implementing improved healthcare access under a Medicaid demonstration approved by HHS last year, the Democratic-controlled Legislature steamrolled a plan by Republican Gov. William Weld to tap the pool for much of the extra funding needed to expand Medicaid coverage.
Instead, the plan will rely on about $100 million annually in new taxes on tobacco products to pay for the expanded coverage for children and the elderly, along with an expected increase in federal Medicaid matching funds to cover all people whose incomes are less than 133% of the federal poverty level.
Weld vetoed the bill because of its tax increase, but the veto was overridden by a vote of 117-40 in the House and 32-7 in the Senate.
The governor had secured a waiver from standard Medicaid eligibility and coverage guidelines by proposing tax breaks to encourage businesses to insure their workers, offsetting the tax losses by transferring $200 million from the pool to the state's general fund.
The Democratic plan thwarted that transfer, but the hospital association couldn't gain support for another legislative measure that would have required healthcare insurers to contribute $200 million annually to the pool.
Instead, the healthcare reform law calls for a commission to study ways to revamp funding responsibility and make recommendations by year-end.
The additional Medicaid coverage of now-uninsured residents is expected to reduce demand on the pool by about $60 million a year, Dreyfus said. But that may serve merely to offset new increases in uncompensated care, he said.
The state must file to amend the HHS waiver because of the differences between the law and Weld's original proposal. That may put in play an estimated $70 million in additional annual funding originally granted by HHS to aid two hospitals relying heavily on the uncompensated-care fund: Boston City Hospital, now part of a new healthcare system called Boston Medical Center, and Cambridge (Mass.) Hospital.
Those funds were granted on the premise that the uncompensated-care pool would bankroll much of the Medicaid expansion, said Tammy O'Donnell, budget director of the state Division of Medical Assistance, which administers the Medicaid program.
It was a way to ensure that the two hospitals would continue to be compensated for their high indigent-care load and make the balance of the depleted pool available for other hospitals in the state, O'Donnell said.
The health reform law officially retired 1988-era legislation seeking "universal" healthcare insurance coverage in Massachusetts, partly by requiring businesses to pay 80% of premiums for their workers or pay into a state pool to purchase coverage.
The effective date for that "employer mandate" had been postponed habitually during the past several years while state politicians wrestled over measures to replace it. The new law repeals all remaining traces of that earlier mandate.
The successor legislation is expected to affect only about half the state's uninsured population. "It's an incremental step, and that's why we will have a huge group of people relying on hospitals for a safety net," Dreyfus said>