Amy Higgins

With the national health insurance mandate scheduled to take effect in 2014, supporters and opponents alike wonder how health care reform ultimately will affect them. In 2006, Massachusetts passed a law requiring its residents to purchase health insurance by July 1, 2007, or face penalty fees, rules that are similar to those of the national mandate.

So how does health care work in the Bay State? Massachusetts' health insurance law is multifaceted and affects residents differently, depending on where they obtain coverage.

Mandatory health insurance can be broken into three categories:

Individuals

Residents of Massachusetts are required to have health insurance they can afford, either through their employers or through private insurance companies. Those who don't have coverage through their employers can shop for insurance in the state's online insurance exchange, the Commonwealth Health Insurance Connector.  How much coverage costs depends on what an individual can afford based on income, family size and the lowest-cost plan available through the Connector. Failing to provide proof of coverage can result in a financial penalty of up to $912 a year, according to the Kaiser Family Foundation.

Employers

Employers with the equivalent of at least 11 full-time employees are required to pay an annual "fair share contribution" of up to $295 per employee if they do not make a “fair and reasonable” contribution to an employee health plan, according to the Connector's website. The proceeds from this fee go toward providing health coverage to the uninsured.

There are two tests the state can apply to see whether an employer is making a fair and reasonable contribution, according to the Connector. Massachusetts businesses with fewer than 50 employees need to pass only one. Employers with 50 or more employees must pass both.

  • At least 25 percent of the employees are enrolled in the company's insurance plan, and the employer is making a contribution to that plan.
  • The employer provides at least 33 percent of the premium cost of the individual health insurance plan offered to the company's full-time employees.

Low-income citizens

More than 1 million low-income children, families and individuals receive coverage through MassHealth and Commonwealth Care, according to the University of Massachusetts's Center for Health Law and Economics. MassHealth, the commonwealth's Medicaid program, covers children whose families earn up to 300 percent of the federal poverty level, which was $32,490 for an individual in 2009, according to Kaiser. The Commonwealth Care Health Insurance Program provides subsidized health insurance coverage for individuals with incomes below 300 percent of the federal poverty level, Kaiser says. 

Is it working?

Since health care reform took effect in Massachusetts, there have been some noticeable changes:

  • In 2009, more employers in Massachusetts offered health insurance (76 percent) than employers nationwide (60 percent), according to the Massachusetts Division of Health Care Finance and Policy.
  • In 2010, the Division of Health Care Finance and Policy found that 98.1 percent of Massachusetts residents had health insurance coverage, and 99.8 percent of all Massachusetts children had health coverage.

According to a 2009 survey conducted by the Urban Institute, the Bay State's health insurance reforms have improved access to health care. But have they lowered health care costs?

According to a 2010 Forum for Health Economics and Policy paper, employer-sponsored insurance premiums have gone up by about 6 percent, or $262, since health care reform took effect in Massachusetts. In fiscal 2010, the state poured $1.2 billion into health care reform, according to Kaiser. Such fiscal challenges might suggest that states that adopt comprehensive reform will struggle during tough economic times.