One of the great strengths of the Massachusetts health reform effort has been recognition by the state and the health policy community that maximizing insurance coverage requires more than just expanding eligibility for public programs. Effective reform requires ongoing financial support for outreach and enrollment, ongoing assessment of health care disparities, and an eye toward the consumer experience on the ground to assure that high quality coverage and care are available to all.

At the end of this month, two great Massachusetts-based organizations with key roles in assessing and influencing health care reform from the consumer perspective will close. Both are grantees of the Blue Cross Blue Shield of Massachusetts Foundation, but our targeted support, and that of other foundations, is not enough to sustain their operations.

The Access Project was founded in 1982 and works in multiple states on consumer health access issues. Recently the Access Project has become a national leader in researching consumer medical debt and educating consumers and lenders about methods of minimizing and resolving debt.

Community Partners is an Amherst-based organization that has been instrumental in providing technical assistance and support to health care outreach and enrollment workers in Massachusetts. Since the mid-1990s Community Partners has facilitated regional meetings of outreach and enrollment workers at which they share information and learn from each other. This has been an important mechanism for developing recommendations to the state for simplifying the enrollment processes for publicly-subsidized coverage and minimizing gaps in coverage.

Both organizations served as a hub for networking and increasing the capacity of direct service providers. As such, it was a challenge to describe the complex and indirect way their work benefited communities and individuals, and to secure stable funding. But all who are familiar with these organizations will agree that they provide a crucial “public good,” supporting continuous improvement of the work-in-progress that is Massachusetts health care reform.

Surely this is an unstable time for non-profit organizations of all types. But closing the doors on these particular organizations signals to me that we need to be mindful of the critical role certain non-profits play in furthering health care reform and ensure that this capacity is not entirely lost. Direct service workers in this state need support, peer-to-peer learning, technical assistance, and ideas for innovation. Policy makers need feedback from the grassroots to know how health care reform is working and where it needs to be tweaked.

In the loss of the Access Project and Community Partners we are losing organizations that play both of these roles. As the voice of these organizations disappears from the dialogue in Massachusetts, we all have to work harder to determine how policy innovations and system changes affect those who need help the most, and how programs can be improved.

There is a broad consensus that public and private payers need to better align provider payments to encourage delivery of effective, efficient and high-quality care. Among the many solutions being considered at both the federal and state levels is the use of global payments. Fee-for-service payments are the predominant model for paying health care providers in Massachusetts. Global payments have been recommended by both the Special Commission on Health System Payment and the Massachusetts Health Care Quality and Cost Council as a means of reigning in health care costs and improving care coordination.

Under global payments, providers would be paid a set amount to provide all care for a person for a defined contract period (e.g., a year or a month). With payments fixed, providers would have a disincentive to provide costly and unnecessary care. The underlying concept is that providers get a single global fee regardless of the resources a patient uses, though the payment is adjusted for some differences in patients’ health.

So, for example, under global payments doctors treating a woman who is overweight and has both diabetes and depression would receive a higher payment for that patient because she has two chronic conditions. But, because their payment is capped, they still would have an incentive to help the woman lose weight. They also would want to manage her diabetes and depression on an outpatient basis, avoiding costly complications of the diseases, including potential hospital stays. They might also include lower-cost providers such as physician assistants or nurse practitioners in the team caring for the woman.

All of these steps could reduce the total cost of care, leaving more money for either provider payments or investments in improved care. At the same time, payers would gather data to measure the results of the woman’s care to make sure providers are not skimping – is she getting recommended preventive care for diabetes and depression and staying out of the hospital, for example?

The Massachusetts Medicaid program (MassHealth) could play a leading role in implementing global payments in the Commonwealth. MassHealth covers almost one in five Massachusetts residents, is a proven innovator in health care payment. MassHealth also is under huge financial stress and has a particular interest in maintaining or improving the quality of care provided to potentially vulnerable enrollees with special care needs. The Massachusetts Medicaid Policy Institute (MMPI) released a report Tuesday with recommendations for how MassHealth might implement global payments.

The MMPI report was prepared by Sellers Dorsey, a national healthcare consulting firm with expertise in Medicaid payment methodologies. The report specifically recommends that MassHealth:

– Set a target date by which all providers will be paid according to the new payment methodology
– Develop a pilot program with a defined set of providers that includes both high-volume Medicaid providers and providers with experience operating under global payments.
– Implement immediate, but more gradual payment reforms for providers who are not part of the global payment pilot.
– Develop reports for all providers related to key areas of performance that are expected to be affected by the move to global payments.
– Coordinate investments in health information technology authorized under the federal stimulus bill so that they help providers prepare for global payments.

The legislature authorized a pilot program to implement global payments in Medicaid in the FY 2010 budget. MassHealth is in the process of designing the details of that pilot. Some versions of the pending federal health reform legislation also include Medicare and Medicaid payment reform that is consistent with the global payments concept.

The MMPI report notes that here are special considerations in implementing global payments in MassHealth. Among them:

MassHealth provides coverage to a diverse set of populations — some of them particularly vulnerable or with special needs not typically found in a commercial insurance population.

MassHealth utilizes a different mix of providers than Medicare or commercial insurance, with greater reliance on community health centers, safety net hospitals, and children’s hospitals.

MassHealth frequently reimburses these providers using methodologies that recognize their unique role, and that may be necessary under global payments. In addition, community health centers and safety net hospitals may have limited access to capital markets, and this impacts their ability to finance projects such as health information technology that may be necessary to manage costs and quality under global payments.

Unlike most of the commercially insured population, Medicaid members may be eligible for a broader set of health care services, including acute care, behavioral health, and long-term care. From a cost and quality perspective, there is a need for better coordination within and across all three provider systems, which global payments can help to create, but this coordination is complex and should be undertaken with care.

MassHealth must ensure that payment changes comply with the specific state and federal laws that govern Medicaid, and also comply with requirements for receiving federal matching funds.

MassHealth serves some of the most vulnerable citizens of the Commonwealth. It is important to take special precautions and measure the impact of the transition to global payments to ensure that the populations around which Medicaid has been built — children, disabled, and low-income residents — see improved outcomes and better care coordination as a result of payment reform.

Anya Rader Wallack, interim president of the Blue Cross Blue Shield of Massachusetts Foundation (one of the funders of the report) and Executive Director of the Massachusetts Medicaid Policy Institute, explains how a few simple changes in health care delivery can begin to fix this complex problem:

The persistent use of emergency departments (ED) for non-emergency conditions is rooted in complex factors at the patient, provider, and organizational levels. Yet some of the solutions are elegant in their simplicity: evening hours at health clinics, making better use of physician extenders, and basic patient education. This is yet another lesson from the Bay State’s experience with near-universal health insurance coverage.

A policy brief released last week by the Blue Cross Blue Shield of Massachusetts Foundation, the Commonwealth Fund, and the Robert Wood Johnson Foundation provides, for the first time, a robust, data-driven picture of who seeks emergency care in Massachusetts — and why. Those who visit their local EDs for treatment have trouble accessing care in other settings, and frequent users of EDs (those who visit them three or more times a year) are a sicker, more disabled, and more chronically ill population than other working-age adults in the state. This suggests some chronically ill individuals may be using the ED for primary care.

Forty-four percent of those surveyed had visited an emergency department for a non-emergency condition in the previous 12 months. Of those, 76 percent needed care after normal operating hours; 56 percent had been unable to book an appointment with a health care provider as quickly as they needed; 53 percent reported that it was simply more convenient to seek care in an emergency department; and 39 percent had been directed by their primary care physician to go to their nearest emergency department.

If the absence of insurance coverage was a factor in a patient’s decision to seek care in an ED for a non-emergency condition, we could expect to see such use of EDs decline in a state where nearly everyone has health insurance coverage. Yet that hasn’t happened in Massachusetts. In 2006, before the health care reform law was implemented, the overall rate of non-emergency use of emergency departments was 15.9%. In 2008, it was 14.6%. (The 1.3% drop is not considered statistically significant.)

It is striking that one of the most common reasons given for seeking care in an ED is that the patient needed treatment outside of normal business hours. This suggests that one way to significantly reduce ED visits in Massachusetts for non-emergency conditions is simply by offering care during evening and early morning hours as well as on weekends, or by managing more primary care needs over the phone (something for which physicians seldom receive reimbursement).

There are a number of initiatives taking place in Massachusetts to reduce ED visits. The Primary Care Access Project of Partners HealthCare will link ED visitors at several Partners hospitals who do not have primary care providers with community health centers for follow-up and on-going care.

MassHealth is leading the Massachusetts Medicaid Emergency Room Diversion initiative, which is funded by the Centers for Medicare & Medicaid Services, also to identify strategies to link non-acute patients without a primary care provider to health centers. And the Institute for Healthcare Improvement has developed a prototype program to reduce avoidable ED visits and is currently recruiting sites for participation.

The Blue Cross Blue Shield of Massachusetts Foundation is also funding several projects to reduce unnecessary ED visits. For example, the Family Health Center Worcester is converting its urgent-care center, which currently serves nearly 3,000 uninsured patients, into a walk-in primary care and social services clinic. The transition will allow uninsured patients to enter into a relationship with a primary care provider and receive an array of other services and supports associated with a “medical home.”

The Lowell Community Health Center is implementing the Lowell Health Compass Program, which will integrate a team of patient navigators into the center’s primary care delivery system.

And the Holyoke Health Center is implementing a community-based triage system. A nurse case manager will work with the uninsured population of Holyoke and Chicopee to evaluate individuals referred by community partner organizations. Those patients requiring urgent care will be treated accordingly and those able to wait for a primary care appointment will be supported by a patient navigator to take charge of their health through the Health Center’s various wellness and patient education programs available in the community.

It will take time before we see measurable results from these initiatives. In the meantime, flexibility in the provision of care — such as extended office hours — coupled with patient education about how to connect with and navigate the health care system, could go a long way to resolving the persistent problem of inappropriate use of emergency departments.

Under the right kind of national health care reform, states would have much to gain:

• Fiscal relief. Medicaid made up 21 percent of the average state budget in fiscal year 2008. This includes both state and federal funds, and the federal share has increased temporarily under the federal stimulus bill. Nonetheless, increasing medical care costs, particularly when combined with caseload increases due to an economic downturn, crowd out other priorities and force very difficult choices in state capitols in terms of coverage, eligibility, and provider payments. Health care reform could provide badly-needed relief for states by supplying federal funding for low-income subsidies, stemming the erosion of employer-sponsored insurance and any associated increase in Medicaid caseloads, and buffering states against economic downturns by increasing federal matching rates during recessions. Of importance for Massachusetts, it also could level the playing field between our employers and those in other states by imposing national requirements for employer coverage.

• Long-term care reform. It isn’t the “medical” side of Medicaid that is really killing states, it’s the long-term care side, through which states pay for the continuing and often very expensive service needs of low-income elderly and disabled individuals. Spending for elderly and non-elderly disabled individuals accounted for 63 percent of Massachusetts Medicaid spending in 2007. Senator Kennedy pushed for inclusion of an important long-term care provision in his committee’s bill. It would provide a new vehicle for middle-income Americans to save toward future long-term care costs, potentially reducing demand on Medicaid. The feds also could make it easier for states to rationalize Medicaid eligibility for long-term care and could accelerate the shift of funds from institutional to community-based care, which could help lower costs.

• Incentives to better manage care for the most costly individuals. Some of the highest costs in Medicaid are incurred by “dual eligibles,” low-income elderly and disabled individuals who qualify for both Medicare and Medicaid. Medicare provides relatively limited core coverage, and Medicaid pays for everything else. States are frustrated by the limits on their ability to manage care for these individuals across both programs to improve coordination and reduce costs, and by the fact that cost savings from innovations accrue to the federal government. Some of the reform proposals under consideration would broaden state latitude in this regard, and allow states to share in any savings realized.

That said, governors have every right to be nervous. They have not yet been given a clear picture of what to expect under reform. They do not know what price they will pay for reform, or what responsibilities their states will bear, and they have no assurance that the potential benefits outlined above will be realized. In fact, as federal negotiators work to pare down the cost of the reform bill, they are undermining many of the potential positive effects of reform on states. Specific worries include:

• Ambiguous financing provisions. It is not clear what burden states will bear for expanding Medicaid. And in at least one of the major proposals, short-term federal support for expansions expires after several years, leaving states holding the bag. Equally unclear is the expectation regarding state maintenance-of-effort for financing currently covered populations. Add to that a lack of clarity about the federal matching formula – a proposed rewrite of the formula could hit states like Massachusetts particularly hard – and state budget writers have no hope of calculating their liability under the reform proposals.

• “Savings” extracted from the safety net. The White House has proposed using safety net payments to finance coverage expansions, similar to what was enacted under the Massachusetts reform plan. But Massachusetts is a living example of the complexity and potential effects of this policy shift. If a blanket extraction of safety net funds was included in reform, many states would have no choice but to make up the difference in state funds for their vulnerable safety net providers.

• Enormous new responsibilities without any funding. States have huge responsibilities under all of the major reform proposals – from implementing insurance market reforms, to administering new subsidy programs and integrating those with Medicaid, to establishing and operating new Connector-like structures. In many ways, it is the states that will be expected to guarantee results from federal reform. Yet it is not clear that states will be given the supports – financial and otherwise – to ensure success.

It would be a tragedy if health care reform never gets off the ground for lack of support from states. Or if it were enacted and then collapsed, leaving states with the status quo for Medicaid: uncertainty about federal financing for the poor; increasing Medicaid caseloads as employer-sponsored health insurance erodes under the pressure of rising premiums; and responsibility for crushing long-term care costs for the elderly and disabled.

Federal leaders have to bring on board and keep happy numerous constituencies if they want to see health care reform pass. States, however, should have a special status in that effort, as they are necessary partners in the implementation of whatever passes. And governors should compare any reform proposal with the prospect of an indefinite Medicaid compact under the current rules. Governors should take an active role in shaping reform, and should not simply chant the mantra of “no unfunded mandates.” If reform fails, we all lose.

The history of state-federal relations around Medicaid is filled with animosity and distrust. Health care reform should provide an opportunity to repair that relationship and move forward with transformations of Medicaid that any governor could love.

Anya Rader Wallack is the Executive Director of the Massachusetts Medicaid Policy Institute and a member of the Massachusetts Health Care Quality and Cost Council.

The Special Commission on the Health Care Payment System, which has been charged by the legislature with examining alternatives to fee-for-service payment in the Massachusetts health care system, is pursuing bold reform. It seems willing, for example, to endorse budgeted payment mechanisms that fundamentally change the incentives in our health care system. Such changes, if implemented correctly, will permit health care providers to enhance revenue not by simply increasing the volume of services they provide, but by providing better care at a lower cost.

But payment reform alone will not eliminate our cost problem or allow us to slow spending while maintaining or improving quality of care. To do that, we need better information systems to support provider decision-making and tighter linkages between providers to coordinate care and reduce waste.

And that’s where the Health Care Quality and Cost Council’s (QCC) Roadmap to Cost Containment comes in. QCC’s goal is to sharply curtail the expected rate of growth in health care costs which, if left unchecked, are projected to rise at an annual rate of 6.5 percent between now and 2017, while economic growth is expected to be well below that level.

In September, the QCC will release a report enumerating the multiple, interlocking strategies we believe hold the most promise for controlling health care costs. We will address payment reform, taking into account the recommendations of the Special Commission. We also will examine a long list of other potential cost control interventions, gathering information about related activities in the state which could be encouraged or broadened, looking at analysis of the potential impact on costs and gathering stakeholder input on what is needed.

For payment reform to be effective and sustainable, though, we must think big: improvements to every aspect of health care delivery and payment must be part of the solution. Reform must get every part of the health care system rowing in the same direction: consumers must seek out and use appropriate services and providers, and they must practice healthy behaviors; payers must reimburse for providers and technology that are proven effective and efficient; doctors and hospitals must prescribe only the most effective and appropriate care. Changes that will encourage this kind of behavior modification include greater investment in coordinated health information technology; an increased focus on prevention in public investments and insurance coverage; and reduced administrative complexity for providers and patients.

Payment reform won’t realize its full potential without near-simultaneous systems change. As the Commonwealth Fund made clear in a recent analysis: “The effects of the payment reforms depend upon their being pursued simultaneously with coverage and system reforms.” This is the real work of Health Reform 2.0. We have the tools to make it happen, we just need to keep the momentum going.

Anya Rader Wallack is the Executive Director of the Massachusetts Medicaid Policy Institute and a member of the Massachusetts Health Care Quality and Cost Council.

State demographic trends show that both populations are going to grow rapidly over the next decade. The total number of individuals with disabilities between the ages of 16 and 64 is expected to increase by 12 percent between 2004 and 2015; subsets of this population, such as those under age 24, are expected to grow by more than 20 percent. Medicaid, in this state and nationally, is the primary payer of long-term support services and yet it covers far less than the nearly 20 percent of the state’s population that at any time could be in need of this assistance.

The amount of money spent on long-term care is considerable. A November, 2007 study by the AARP Public Policy Institute estimated that approximately 700,000 to 1 million Bay State residents provided approximately $8.8 billion (yes, billion with a ‘b’) worth of services that year for loved ones in need of long-term care that were not covered by private insurance, Medicare, or MassHealth. In 2008, an additional $4.8 billion in long-term care services for elders and people with disabilities was paid by MassHealth ($2.8 billion) and other states agencies ($2 billion) operating under the auspices of the Executive Office of Health and Human Services and the Executive Office of Elder Affairs.

Many of our long-term care dollars are spent on nursing homes and other institutional settings even though the overwhelming preference of those in need of long-term care services is to receive community-based care. The state’s 2008 Community First Olmstead Plan, a community-based long-term care action plan, is based on the understanding that elder and disabled members of MassHealth wanted more access to home- and community-based care, and, if given the choice, would take such services over those provided in institutional settings. These findings echo a 2000 national survey by the AARP of individuals age 45 and over. But we don’t have the services — or the resources — in place to fully meet this demand.

Private insurance may be a part of the answer over time. In fact, the number of Massachusetts residents with long-term care insurance more than doubled between 1998 and 2004 (from 65,928 to 136,287), but approximately six percent of people who turned age 65 in 2005 can expect to incur out-of-pocket expenditures of $100,000 or more on long-term care services. And approximately 12 percent of people who turned 65 in 2005 will spend anywhere from $25,000 to $100,000 on long-term care costs. These costs will come about, in part, because we have relied on a medical insurance model to pay for services that aren’t reimbursable (help getting dressed, for example, or managing medications). Additionally, we have yet to develop an effective strategy that would inter-link public and private financing and support in an effective manner.

Neither the problem of the rising costs of long-term care services nor the desire for increased availability of home- and community-based care options will be solved by simply moving state monies out of nursing homes and into alternative care delivery models. Strategic planning by policy makers, providers, advocates, and consumers is necessary to ensure that capacity is built to provide services in the community, that individuals are appropriately screened for services, and that we don’t simply replace expensive institutional care with equally expensive community-based care.

The challenge we now face is to build a system for delivering and financing the long-term care services that more and more of us are going to need in the years ahead. And we must do so amid an historic economic downturn that is squeezing public and private dollars alike. One of the first steps in meeting that challenge will take place today when more than 100 long-term care policy makers and advocates will convene to talk about the work that needs to be done and how we can get it done. Sponsored by the Massachusetts Medicaid Policy Institute and the Blue Cross Blue Shield of Massachusetts Foundation, in collaboration with Massachusetts Executive Office of Health and Human Services, the confab doesn’t boast the most scintillating title (“Long-Term Care Financing in Massachusetts: Current Challenges, Future Trends and Policy Options”), but the work could not be more critical to the Commonwealth’s future health.

Watch this space for discussion of some of the ideas that come out of today’s conference.

Anya Rader Wallack is the Executive Director of the Massachusetts Medicaid Policy Institute. Jean McGuire is Assistant Secretary of the Office of Disability Policy and Programs of the Executive Office of Health and Human Services.

The latter, of course, is the strategy most likely to work over the long term. So the question is not what we should do. It’s whether we can bring to the table those who have the greatest ability to control health care costs, get them to set aside some of their self interest, and develop bold new approaches to solving the problem. The state has already shown that it can be a national leader in expanding health insurance coverage to the uninsured. In just two years, Massachusetts cut its rate of uninsured from approximately 13 percent to just three percent. Employer-sponsored health insurance is holding steady. And residents of the Commonwealth generally are happy with the effects of Chapter 58.

But we eased our way into this deal by putting more money in the system. Chapter 58 included Medicaid rate increases for providers, and Medicaid managed care plan rates have increased at about five percent annually in recent years. Payments to safety net providers continued as we moved gradually from a system of paying for the uninsured through the free care pool to an insurance-based mechanism. And for the second year of the Commonwealth Care program, the Connector negotiated a nine percent rate increase with MCOs.

The add-more-money strategy was not sustainable, particularly in the face of an economic downturn. With state revenues taking a dive, the Patrick Administration has had to cut Medicaid provider rates and Medicaid managed care plan rates have been flat-lined. CommCare rates will be negotiated later this year, probably with a significantly smaller rate of increase. Meanwhile, the state has followed through on its commitment to the federal government to move away from special payments to safety net providers — a large chunk of these payments will disappear, under the terms of the state’s Medicaid waiver, in 2010. And you can bet that Congress is taking a hard look at ways to reign in Medicare spending.

It’s time for Massachusetts to take up the next challenge — health care cost containment and delivery system reform. We need a cost control plan that:

• examines the potential impact of cost control approaches, including innovative new models for organizing care delivery and payment;
• makes reasoned choices among cost control options;
• implements cost controls that result in appropriate changes to our delivery system, assuring greater support for primary care and more appropriate use of our limited resources; and
• monitors the outcome of cost controls over time to assure that they are not having unintended effects.

The Health Care Quality and Cost Council has pledged to develop such a plan over the next six months. At the same time, the Payment Reform Commission created this year by the legislature will be examining opportunities for comprehensive payment reform. Massachusetts has unusually smart and forward-thinking leaders in its business, health insurance, advocacy and health care provider communities. We should be able to bring all of this attention and talent together to provide yet another example to the nation: how to do cost containment right.

There is a lot of talk out there about health care cost containment, payment reform, and changing the delivery system to support primary care and prevention. There are few live examples. Let us create one.

Anya Rader Wallack is Executive Director of the Massachusetts Medicaid Policy Institute

Massachusetts has operated its Medicaid program under a federal research and demonstration waiver since 1998. These waivers, authorized under section 1115 of the Social Security Act, allow states to deviate from the normal federal rules governing Medicaid. For example, states have used waivers to cover categories of adults and children not normally covered by the program and to increase beneficiary cost-sharing beyond the nominal amounts allowed under federal law. In exchange for increased flexibility, states must adhere to budget neutrality requirements – the program changes can not cost the federal government more than it would be spending without the waiver.

To live within budget neutrality limits while expanding insurance coverage, states like Massachusetts have pursued several strategies to produce cost savings that can be applied to coverage expansions:

• Moving Medicaid populations into managed care to reduce costs;
• Redirecting payments that compensate providers for caring for uninsured patients and instead purchasing insurance for the uninsured;
• Requiring that higher-income Medicaid enrollees contribute toward the cost of their premiums.

Massachusetts also has moved health care programs that were previously funded entirely with state dollars to Medicaid, enabling the state to get federal matching funds for a bigger base under the waiver.

These strategies worked, but unfortunately we are near the end of the line in terms of our ability to increase our baseline or create new savings to finance expansions. The state has made an effort to fill the funding gap with their recent revenue-raising proposals, but it is unlikely that it has the fiscal capacity to sustain further coverage expansions without more federal help. Medicaid is our only option for bringing more federal dollars into the state. But budget neutrality places severe limitations on our ability reach our goal – affordable coverage for all.

While the Massachusetts Medicaid waiver has allowed the Commonwealth to manage the Medicaid program more effectively and to expand coverage dramatically, it’s time to admit that coverage expansions of this magnitude cost money. Individual states lack the capacity to raise the broad-based revenues necessary to cover significant new coverage costs. In addressing health care reform at the national level, a new President and Congress must recognize that states like Massachusetts can do amazing things, but we can’t work fiscal magic.

Anya Rader Wallack
Executive Director, Massachusetts Medicaid Policy Institute

Both of the presumptive presidential nominees, Barack Obama and John McCain, have articulated proposals for major changes in the health care system if they are elected. While their plans differ in significant ways, they each have the one thing in common that we must carefully monitor: the potential for a major impact on the success of the Massachusetts health reform plan.

Obama proposes an expansion of Medicaid and SCHIP, and a system of income-based subsidies for those who do not qualify for public coverage. He supports a requirement that all children have insurance, and an employer mandate, but does not support a mandate for adults. McCain proposes tax credits for individuals and families to purchase private coverage, plus a subsidized high-risk pool for people who have been denied insurance coverage due to their health status. He also supports changes in the tax laws that currently make it much less expensive to purchase coverage through an employer. Both candidates propose some flexibility for state-based health reforms, a key concern for Massachusetts.

A framework of comprehensive national health reform offers tremendous potential benefits for Massachusetts, particularly in terms of solidifying the legal and financial underpinnings of Chapter 58. But we must not forget that the continued success of Chapter 58 rests upon strong and consistent financial support from the federal government. And that’s where the Massachusetts plan, a national model that has given policymakers the only real-life example of the costs, benefits, and mechanics of universal coverage, may face its biggest threat. In the context of a national debate about the distribution of new federal resources to cover the uninsured, Massachusetts might experience a profound lack of empathy from other states. Why? Several reasons:

– Massachusetts has relatively low rates of poverty and uninsurance. With 15 percent of our population below the poverty line and less than 10 percent uninsured, we may be viewed as less needy than states like California, New Mexico and Texas, which are at or above 20 percent on both measures.
– Massachusetts already receives more federal funding for Medicaid, on a per capita basis, than many states. The federal government spent about $766 per capita on Medicaid in Massachusetts in 2006, compared with a national average of $595.
– Massachusetts has relatively high health care costs. Our per capita health care expenditures, at $6683, are well above the national average of $5283, and our health insurance premiums exceed national averages ($12960 for a family premium in Massachusetts versus $12108 nationally).

We can take comfort in the fact that Senator Kennedy is already taking the lead on crafting consensus national health care reform legislation, and the Senator and his staff obviously have the state’s interests at heart. But we should not take for granted that a national plan will serve our needs, and we should continue to make a strong case that Massachusetts is a model for reform, and success in Massachusetts serves the entire nation.

Anya Rader Wallack is the executive director of the Massachusetts Medicaid Policy Institute. She is also a member of Barack Obama’s National Health Policy Advisory Committee and his New England Finance Committee.

Medicaid also is central to the success of the health reform law passed two years ago. Chapter 58 expanded Medicaid coverage and provided for increased outreach to eligible populations. Since July of 2006, more than 100,000 additional residents of Massachusetts have been enrolled in MassHealth. Medicaid also helps finance the premium subsidies that make coverage affordable to low income Massachusetts residents through Commonwealth Care, which now covers nearly 177,000 people.

Attention to the state legislative process from Medicaid-watchers is therefore well-placed, but there is another front we should be watching: Washington D.C.

Twice last year President Bush vetoed a reauthorization of the State Children’s Health Insurance Program (SCHIP), created in 1997 to supplement Medicaid in providing health insurance coverage to low-income children. Congress was able to extend the program through March of next year, but its long-term viability is in question.

In August of 2007, the Centers for Medicare and Medicaid Services (CMS), which administers Medicaid at the federal level, issued a directive that severely limits the ability of states to use SCHIP funds to cover children in families with incomes between 250 and 300 percent of the federal poverty level. States like Massachusetts will have to meet strict new federal tests to continue to receive federal matching funds for this population, and will be required to impose waiting periods and new cost sharing requirements. CMS recently relaxed its interpretation of the directive, but the policy is still intact, which is worrisome.

More recently, CMS issued seven new regulations designed to dramatically reduce federal reimbursement under Medicaid. The regulations will cut the availability of funds — or eliminate them entirely — for such items as graduate medical education, certain safety net hospital reimbursements, rehabilitation and school-based services. All told, these regulations would shift an estimated $1 billion in costs over the next five years from the federal government to the state.

The Patrick Administration currently is engaged in negotiations with CMS regarding renewal of the state’s section 1115 Medicaid waiver. This waiver, which expires at the end of June, has allowed the Commonwealth to support Medicaid expansions, offer affordable coverage through Commonwealth Care, support essential community providers, and maintain the fabric of Medicaid services and supports on which so many residents rely. Federal push-back on key components of the state’s plan is inevitable, and has huge implications for the total amount of federal funding available to the state over the next three years. The success of Chapter 58 rests not just on the federal government’s approval of the waiver renewal, but on an approval with terms that do not reverse the advances we have made.

The stakes for health care in Massachusetts have never been higher. The federal government can make or break the program that is the backbone of the Massachusetts health reform efforts and is vital to our health system as a whole, and we should beware.

Anya Rader Wallack is the Executive Director of the Massachusetts Medicaid Policy Institute.