OLR Research Report

June 23, 2010




By: John Kasprak, Senior Attorney

You asked for information on the Massachusetts health care reform legislation, particularly the number of individuals insured and the cost of the reform effort.


Massachusetts passed its health care reform legislation in 2006 with the intent of providing near universal coverage to its residents. Currently, the state's uninsured rate is about 2.7%. Over half (about 56%) of the state's increase in coverage took place through Medicaid and “Commonwealth Care,” the state's new subsidy program for uninsured adults with incomes at or below 300% of the federal poverty level (FPL). The budget for Commonwealth Care was $724 million in FY 10 and a proposed $838 million in FY 11, with growth anticipated as people lose unemployment benefits and the economic recession continues.


The Massachusetts health care reform legislation was passed into law on April 12, 2006 (“An Act Providing Access to Affordable, Quality, Accountable Health Care”; Chapter 58 of the Acts of 2006). The goal of the legislation is to provide near-universal coverage of the Massachusetts population. The law imposes an individual mandate for the purchase of health insurance and calls for shared responsibility in financing coverage. For purposes of your questions, the legislation can be broken down into six key components: individual mandate, employer requirements, MassHealth expansion, Commonwealth Care health insurance program, Commonwealth Health Insurance Connector, and individual coverage.

Individual Mandate

As of July 1, 2007, all state residents are required to purchase health insurance coverage, unless they cannot afford it, or face a financial penalty of up to $912. Children are not subject to the mandate. This requirement is enforced through the state income tax system. But it is not enforced against adults with incomes at or below 150% of the federal poverty level (FPL; $16,620 for an individual).

Employer Requirements

Beginning July 1, 2007, employers with 11 or more employees are required to make a “fair and reasonable” contribution toward health insurance coverage for their employees or pay a “Fair Share” assessment of up to $295 annually per employee. Employers are required to offer both full and part-time employees a pre-tax, payroll deduction plan (a Section 125 “cafeteria plan”).

MassHealth Expansion (Medicaid)

The state's Medicaid program was expanded to cover children with family incomes up to 300% of FPL ($32,508 for an individual).

Commonwealth Care Health Insurance Program

The law created Commonwealth Care, a subsidized program for adults who are not offered employer-sponsored insurance; do not qualify for Medicare, Medicaid, or certain other special insurance programs; and who earn up to 300% of FPL ($66,168 for a family of four). There are plans available with no monthly premiums for adults earning 150% or less of FPL ($16,620 for an individual, $33,084 for a family of four).

Also, plans are currently available for $39 a month for a person earning between $16,621 and $21,672; $77 for an individual earning between $21,673 and $27,096; and $116 if earning between $27,097 and $32,508).

There are no monthly premiums for the children of adults covered by Commonwealth Care, as the children are covered by MassHealth (Medicaid).

Commonwealth Health Insurance Connector

Massachusetts created an insurance exchange for individuals and small businesses (50 or fewer employees) to purchase insurance. The Connector Board approves the plans that participate in the exchange, which must meet certain coverage and cost standards. Plans are currently offered by six of the state's health insurers providing a range of coverage options.

Individual Coverage

Individuals can purchase individual policies through the newly merged individual and small-group insurance market.


The number of individuals with health insurance in Massachusetts has increased by over 430,000 since late 2006, based on data from various sources (see “Massachusetts Health Care Reform: Three Years Later,” Kaiser Commission on Medicaid and the Uninsured, September 2009). Between the fall of 2006 and 2008, as measured in a survey by the Urban Institute, uninsured working-age adults declined from 13% to 4%. An estimate by the Massachusetts Division of Health Care Finance and Policy in October 2009 showed that only 2.7% of state residents remained uninsured. Of the newly insured, over half (56%) are enrolled in public coverage through MassHealth and Commonwealth Care.

Approximately 157,000 individuals are enrolled in Commonwealth Care as of May 1, 2010. About 66,000 contribute toward the monthly cost of premiums and the remainder receives free coverage. In addition, there are 24,000 currently enrolled in the Commonwealth Care Bridge program, which is for certain legal immigrants who lost coverage in the traditional Commonwealth Care program in this fiscal year.

There are also about 99,000 new members in MassHealth, the state Medicaid program, since the start of the state's health care reform.

As of June 30, 2009, about 132,000 newly insured individuals are in private commercial insurance, purchasing either through the Commonwealth Choice offering or a private health plan through their employer or directly on their own from private insurance carriers. Commonwealth Choice is an unsubsidized offering of six private health plans, selected by competitive bidding and available through the health Connector to individuals, families, and certain employers in the state.

The Commonwealth Choice membership represents over 40% of the statewide growth in the non-group market since July 2007 when Commonwealth Choice came on the market. As of May 1, 2010, Commonwealth Choice membership is about 31,000.

For more information see https://mahealthconnector.org.


The current economic situation has led to a steep decline in state revenues creating significant financial challenges to Massachusetts as it continues its implementation of health care reform. Greater success in enrolling people in Commonwealth Care has required additional funding. Commonwealth Care is funded by both the state and federal governments. In FY 08, the first year of implementation, spending was higher than projected because more people enrolled than anticipated. This may have been due to the state underestimating the number of uninsured at the outset.

In August 2008, Governor Patrick signed legislation that raised an additional $100 million through fees on private companies. The state also increased the cigarette tax by $1 per pack, which was expected to raise $160 million in FY 09 and $145 in FY 10. Also, in September 2008, the federal Centers for Medicare and Medicaid Services extended the state's Medicaid 1115 waiver, the primary source of funding for the subsidies provided through the Commonwealth Care program.

Enrollment leveled off during FY 2009 and spending came in at $69 million less than the budgeted $869 million. For FY 10, which began on July 1, 2010, the budget for Commonwealth Care is $724 million. In addition, the legislature approved spending of $40 million to provide Commonwealth Care Bridge program coverage for the estimated 26,000 aliens with special status whose traditional Commonwealth Care coverage was eliminated because this population did not qualify for federal matching funds. For FY 10, the overall allocation for health care reform is $1.2 billion.

In his FY 11 budget request, Governor Patrick proposed spending $838 million in Commonwealth Care with growth anticipated as people lose unemployment benefits. The governor also requested $75 million for the bridge program (“Health Reform Facts and Figures,” Massachusetts Health Connector, May 2010).