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When the individual mandate to obtain health insurance took effect July 1, the Massachusetts health care reform plan reached another important milestone.

Because there is a five-month grace period before the financial penalty applies, Health Insurance Connector Authority Chairwoman Leslie A. Kirwan said that the July 1 deadline is more of “a call to action.”[1] Massachusetts residents have until December 31 to find health insurance coverage before financial penalties are imposed. When residents file their state tax returns next year, they must certify that they had creditable coverage as of the end of 2007, or lose the personal exemption on their income tax, worth roughly $219. The tax penalty grows steeper in future years, up to 50 percent of the cost of a health insurance plan.

The real success of the program depends on whether people sign up in the coming months and years, according to officials and healthcare analysts.[2]

One of the biggest challenges with the insurance mandate is enrolling uninsured individuals who make too much money to receive state subsidies. Roughly 200,000 uninsured residents are above 300 percent of the federal poverty level, making them ineligible for public subsidies.[3] Motivating these individuals to buy health insurance coverage is challenging, especially because those with income below 400 percent FPL can currently receive “free care” through the Uncompensated Care Pool.

However, as the uninsured gain health insurance coverage, funds from the existing Uncompensated Care Pool will be diverted away from reimbursing uncompensated care and toward the health insurance subsidy program. To deter Massachusetts residents from utilizing the Uncompensated Care Pool, the Division of Health Care Finance and Policy has proposed regulations that would increase cost-sharing for residents who use the free care pool. By increasing deductibles and copayments for free care services – and making them comparable to the premiums and cost-sharing in the Commonwealth Care program – the state is hoping to make the Uncompensated Care Pool a less attractive option for individuals otherwise eligible for the state’s Medicaid program, Commonwealth Care, or employer-sponsored insurance.

The proposed rules are subject to a public hearing, which is scheduled for August 22; the regulations may be revised before they go into effect on October 1, 2007.

How quickly Massachusetts can divert funds from the Uncompensated Care Pool to the health insurance subsidy program remains to be seen. Motivating the uninsured population to obtain health insurance is critical to the program’s financing mechanism and the overall success of the health reform effort.

Even before the change in free care pool rules has gone into effect, the state has seen a significant reduction in free care pool usage and costs. The number of people using the Uncompensated Care Pool has dropped 20 percent this year compared to last, mostly because many former pool users were automatically enrolled in Commonwealth Care or signed up voluntarily.[4]

In an effort to inform the public about the health insurance mandate and to motivate people to obtain health insurance, the Commonwealth Health Insurance Connector Authority began a major advertising campaign on May 28. The Connector is especially interested in educating young, healthy persons about the health insurance mandate.

Young adults have higher uninsurance rates than any other age category. In 2004, 25.4 percent of Massachusetts’ population between 19 and 24 years of age were uninsured.[5] Since young people tend to be healthier than other population groups, adding these individuals to the insurance pool would mitigate adverse risk selection, broaden the pool of insured people, and lower the average cost of insurance. Therefore, the Connector is encouraging this age group to buy specially-designed, lower-cost insurance products through Commonwealth Choice.

One strategy for reaching this demographic is teaming with the Boston Red Sox. Throughout the regular season, the Connector will operate an information booth at Fenway Park; additionally, the Sox are donating advertising spots, a full-page article in its September program about health care reform, and regular interviews with Connector spokespeople on New England Sports Network, the Red Sox cable network.[6]

Several other organizations are helping to inform the public about the health insurance mandate and coverage options:

• The Massachusetts Health Care Reform Coalition, which includes health care providers and insurers, is running a complementary advertising campaign.
• The Greater Boston Interfaith Organization is informing churches, mosques, and synagogues about health reform. Additionally, members are going door-to-door urging the uninsured to sign up for coverage.
• The Connector co-sponsored educational seminars with the Associated Industries of Massachusetts, the Retailers Association of Massachusetts, the National Federation of Independent Business, Health Care for All, the Massachusetts Business Association, the Massachusetts Hospital Association, local chambers of commerce, health access groups, and state legislators.
• CVS will display window signage in its stores and will offer information about health care reform at pharmacy counters.
• Comcast is donating advertising.
• Shaw’s and Star Markets are printing Connector messaging on register receipts and circulars.
• Bank of America will host educational sessions for small businesses.
• The Massachusetts Bay Transportation Authority has donated advertising space in buses and subway cars.[7]

State officials hope that the health insurance mandate will encourage all uninsured people to find health insurance coverage. However, as many as 60,000 uninsured individuals (or roughly one to two percent of Massachusetts’ population) are expected to be exempted from the health insurance mandate because they do not meet affordability standards. To help people ascertain if they meet the affordability standards, the Connector offers an interactive calculator.

While the Commonwealth’s health care reform effort is still in its infancy, the state has already enrolled more than 90,000 previously uninsured in Commonwealth Care.  In addition, initial estimates from commercial insurers indicate that over 15,000 new members were added to the commercial insurance rolls during the May and June open enrollment period, as health insurers across the state engaged in a marketing blitz to attract new members.