Health care reform study: Massachusetts health insurance exchange fails to cut costs

Health care reform

The Massachusetts health care reform law has been successful in reducing the ranks of the uninsured, but the benefit exchange set up by the landmark 2006 legislation has failed in its mission to reduce costs and faces serious hurdles from federal health care reform changes, according to a Boston, Mass.-based think tank.

The Pioneer Institute for Public Policy Research relayed those findings in a report, “Fixing the Massachusetts Health Exchange,” released last night at an event at Harvard Medical School.

Studying the performance of the Commonwealth Health Insurance Connector is critical to predicting the success of federal health care reform, according to the report. That’s because the Patient Protection & Affordable Care Act calls for such health benefit exchanges to be operating in every state by 2014.

“The question of the Connector’s effectiveness is of critical importance to other states as they try to plan and design what an exchange will look like in their own states,” wrote Amy Lischko, the report’s author and a senior fellow at Pioneer.

The Connector has succeeded in enrolling low-income families and individuals into insurance programs through generous subsidies from the Bat State and the federal government. But the system has failed to attract large numbers of constituents who don’t qualify for the free plans, such as non-subsidized individuals and businesses.

“Improving the insurance market by changing how insurance is purchased and putting the consumer in control of insurance decisions does not appear to have been a priority,” Lischko wrote. “As a result, officials have not seen dampening of premium costs, and the affordability of insurance is becoming a serious concern for an increasing number of individuals and small businesses.”

The report calls for an overhaul of the Connector in order to achieve those results.

The paper also details how the Connector generates revenue by enrolling people in insurance plans, which has enabled the quasi-public agency to continue operating. Most of these revenues came from placing the poor into the subsidized Commonwealth Care program. But the cash may be in jeopardy as the federal reform begins to take shape and those low-income enrollees are moved over to Medicaid.

The resulting loss of income will “significantly impact the Connector’s operating budget,” according to the report. “The Connector needs to aggressively focus its efforts on attracting private sect purchasers in order to remain a sustainable model.”

The Pioneer Institute does not have an official party affiliation but it identifies itself as “fiscally conservative.” A full copy of the report can be found on the institute’s web site.

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