Three years ago the Commonwealth of Massachusetts enacted a far-reaching health reform law that politicians and the media hailed as a model for other states and the federal government. That law has become the blueprint for health system change on a national scale, and its advocates have aggressively marketed some variation of the Massachusetts plan as the reform of choice. Until recently, there has been remarkably little analysis of how the law has worked. This is the sixth in an occasional series of posts that will explore the Massachusetts law, with an eye toward helping the press and the public understand the flashpoints as legislation based on the Bay State’s experiment winds its way through Congress. The entire series is archived here.

By now, it should be obvious to everyone that the Massachusetts model was the president’s health reform endgame all along. As articulated last week in his speech to the nation, Obama’s proposal appears to replicate the Massachusetts plan, sans public option. And yet few in the media have taken a good look at the Massachusetts model, and its many shortcomings. With Congress back in session and legislation on the way, now is the time to do so.

The Massachusetts model includes an individual mandate that requires people to carry insurance. The state helps people who can’t afford a policy pay for one. Those with incomes up to 300 percent of the federal poverty level ($66,150 for a family of four and $32,496 for an individual) receive full or partial subsidies. If someone doesn’t qualify for a subsidy, they must purchase insurance on their own. If they want to, they can use the state’s shopping service, called the Connector. Those deemed able to afford a policy must pay a tax penalty if they don’t buy one.

Massachusetts embarked on its reform efforts with several advantages. The state’s number of uninsured residents was lower than most states, and a large percentage of employers offered coverage and still do. Boasting a tradition of strong insurance regulation, the state already required insurers to cover sick people. The state’s Medicaid waiver was up for renewal, and politicians persuaded the federal government to recast the waiver and expand coverage to more poor people.

But recent Census Bureau statistics show that, in 2008, some 352,000 Massachusetts residents did not have coverage, even though the law requires that they do. That’s about 5.5 percent of the state’s population; up from the 2.6 percent who were uninsured in the years after reform took effect. These numbers caused Dr. Steffie Woolhandler, a professor at the Harvard Medical School (and unabashed single-payer advocate), to remark: “Today’s numbers show that plans that require people to buy private insurance don’t work. Obama’s plan to replicate Massachusetts’ reform nationally risks failure on a massive scale.”

The draft bills from the House and the Senate Finance Committee contain many parallels with the Massachusetts law. The y envision making all Americans buy health insurance, and call for penalties if they don’t comply. So we offer a few questions about the Massachusetts law that the press should keep in mind as it starts to report on the national push to copy the Bay State.

Is the state pulling back on the mandate? While the number of uninsured in Massachusetts is lower than other states, the latest rise suggests either that the state is exempting more people from the mandate or that more are taking the tax penalty. The maximum penalty is about $1000 per person, which may be less expensive than buying a policy. In 2007, 60,000 people paid the penalty. The state’s Department of Revenue will release new numbers in early October, but the issue of affordability looms large—perhaps the biggest side effect of reform.

Ironically, as Congress works to compel people to buy insurance, Massachusetts may be whittling away at the mandate and its penalties. In January, it lengthened the time that residents can be without insurance and escape the penalty from sixty-three days to ninety days. Bob Bliss, a spokesperson for the Department of Revenue, said: “We made the decision that the extra month would be helpful.” Bliss said the extension would likely continue for the 2009 tax year. “We’re leaning heavily in that direction.”

Can residents really afford coverage? In August, Boston Globe health reporter Kay Lazar went to Martha’s Vineyard to talk with workers who serve the island’s residents—like the merchants who sometimes work two jobs to help pay their health insurance premiums, which are the highest in the country. Last year, the average family premium in Massachusetts topped $13,788. “It isn’t pretty,” she said. Lazar reported that “some islanders resent being forced to buy coverage.” Michael Hartzband, who owns a general store, told her: “I think it’s good everyone should have health insurance, but to pay a penalty doesn’t seem right.”

After hearing from older readers who complained they were having a tough time with the mandate because they could not afford a policy, Lazar reported on the problems with age rating. Massachusetts may require insurers to cover the sick, but it doesn’t force them to sell affordable policies. Rates for an older person can be twice as much as that for a younger person, requiring them to pay several hundred dollars more.

To fit premiums into tight budgets, some residents have purchased policies with less coverage and more out-of-pocket costs. Some forty-two percent of people buying their policies through the Connector’s shopping service choose policies that generally require more cost sharing. Another irony: State data show that as residents get older they choose cheaper, less comprehensive plans just when they need medical care the most. The Senate Finance Committee draft would allow insurers to charge older people up to five times more than younger people, a provision that will likely mean older people in other states will face the same problems as those in Massachusetts. Will an insurance policy will always give someone a chair in the doctor’s office?

What about cost controls? It’s no secret that Massachusetts’ lack of cost controls, deliberately avoided when reform passed, threatens to undo the law. Ultimately, if the state has no way of paying for subsidies to cover insurance premiums, the law is doomed. Same goes for national reform. Most cost control measures under consideration by Congress and the president are weak or predicated on squeezing savings out of the existing health care order—savings that may or may not materialize.

Massachusetts has now crafted a plan to reduce medical spending by at least $50 billion over the next decade, mostly by scrapping fee-for-service payments to providers in favor of global payments that provide a set amount to cover the cost of care for patients. Aside from sounding like the HMO’s capitation payments of old, draft proposals would give providers five whole years to shift to the new payment methods. What happens in the meantime? The state is looking at interim options, like a set fee for certain procedures.

People I interviewed mentioned the lack of a dedicated funding source, similar to that which exists for Social Security and Medicare, that would pay for the subsidies. Without such a source, financing is always at the whims of politics and competes with other state priorities. As Campaign Desk reported, Philip W. Johnson, chairman of the Blue Cross Blue Shield of Massachusetts Foundation, the organization that laid out the blueprint for reform, has called for such a dedicated tax—an admission that Massachusetts health reform needs a stable source of financing.

It’s not clear there will be a dedicated funding source in the plan Congress passes. It’s way too early to know. Nevertheless, we urge reporters to stay on top of this one, because it will mean the difference between life and death for any health plan politicians try to sell to the American people.

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Trudy Lieberman is a fellow at the Center for Advancing Health and a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR’s healthcare desk, which is part of our United States Project on the coverage of politics and policy. Follow her on Twitter @Trudy_Lieberman.