In one sign that Massachusetts' healthcare initiative is succeeding, use of the "free care pool" dropped by about 16 percent in the program's first year, as the state insured 200,000 low-income residents, according to new state figures.
The decline in free care use is a crucial measure of the impact of insuring people, and is being watched by the federal government and others to gauge the progress toward universal health insurance.
"It's very important to the financing of reform and to the goal of getting people better primary and preventive care," said Nancy Turnbull, associate dean at the Harvard School of Public Health and a member of the board overseeing healthcare reform. Turnbull said a long-term goal is also to reduce costs by keeping people with conditions that can be treated in a doctor's office out of the hospital.
But the state, which is counting on using former free care funds to help pay for soaring insurance subsidies, did not save any money on the pool in the fiscal year that ended Sept. 30, 2007, because it based its payments on the previous year's expenditures.
"We're seeing things trending down, but the real impact of all these changes is yet to come," said Sarah Iselin, commissioner of the Division of Health Care Finance and Policy.
State officials project an even bigger free care decline this year, one they are banking will bring actual savings of about $240 million. That drop is expected to come not only from insuring more people, but also from changes in the way hospitals are paid and in who is eligible for free care. The savings are included in the state's 2008 budget figures.
The free care program pays for medically necessary services provided by hospitals and health centers to the uninsured or underinsured. In fiscal 2007, the program covered 16 percent fewer medical visits than the 1.9 million in 2006, Iselin said, as patients shifted from free care to Medicaid or the state's Commonwealth Care insurance program. Funding for free care comes from the state treasury as well as from a tax on hospitals and insurers.
The overall decline in free care spending projected through fiscal 2009 is about $140 million less than anticipated by the Legislature when it passed the healthcare reform law in April 2006.
The savings, while significant, will only go a small way toward paying for insurance subsidies. The state estimates that subsidies for Commonwealth Care will total $869 million in fiscal 2009 as enrollment continues to grow.
In fact, reductions in free care spending were never expected to cover the total cost of subsidies, because insurance costs substantially more than the episodic visits paid through the free care program. The insurance program also covers a broader range of care, including prescription drugs, specialists, and visits to private doctor's offices.
State officials also believe there will be a continuing need for the pool, which has been renamed the health safety net trust fund. The program serves undocumented immigrants, who are not eligible for other insurance programs. It also pays bills for seniors with basic Medicare coverage who cannot afford large hospital copayments, and helps others of modest income whose medical bills, despite insurance, present a serious financial hardship.
And it serves people like Henry Murphy, who suddenly find themselves without insurance because of a change in job status or income.
When Murphy's heart unexpectedly conked out in November 2006, doctors were able to revive him and insert a pacemaker and defibrillator. But the 62-year-old Chelsea resident could no longer work as a tractor-trailer driver, leaving him uninsured - and in serious need of regular medical care.
With help from staff at Cambridge Health Alliance, Murphy got on Medicaid. Then, his Social Security payments put him over Medicaid's income limit.
Free care provided a bridge for two months until he could complete the enrollment process for Commonwealth Care.
"The system is excellent for people who don't have much," said Murphy, during a visit last week to Revere Family Health Center.
While on free care, Murphy got needed heart medication and care for his diabetes that kept him out of the emergency room, according to his doctor, Somava Stout. After moving to Commonwealth Care, he had heart surgery to replace a valve last November and is feeling better, but is often winded. He now pays $108 per month for the state-subsidized insurance.
Cambridge Health Alliance, one of the state's three largest providers of free care, saw a 2 percent increase in free care use last year, running counter to the state trend, according to chief financial officer Gordon Boudrow Jr. According to the Massachusetts Hospital Association, it was one of 29 hospitals where free care visits increased. Boudrow wasn't sure of the reasons, but suggested that the hospital's reputation for helping "cultural and linguistic" minorities, including immigrants, might be a factor.
Boston Medical Center, the state's number one free-care provider, saw the largest reduction in usage - 35 percent fewer free-care patients in one three-month period, according to vice president Tom Traylor. BMC was one of 37 hospitals that saw decreases, according to the hospital association.
Most hospitals and health centers assigned staff to help eligible patients transfer from free care to insurance.
The institutions have an additional incentive this year, because the state will no longer reimburse them for free care provided to patients eligible but not enrolled in Medicaid or Commonwealth Care.
In a report released last month, the hospital association questioned whether free care costs would decline this fiscal year as much as the state predicts.
Alice Dembner can be reached at Dembner@globe.com.
