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Mass. a model of healthcare reform, hurdles

Challenges lie in expanding plan across US

By Kay Lazar
Globe Staff / November 6, 2008
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With Barack Obama heading to the White House, Massachusetts' pioneering experiment with near-universal healthcare suddenly takes on new meaning as a potential model.

The president-elect has touted an affordable, universal coverage plan that draws heavily from the Bay State's 2006 law, which requires most employers to offer insurance or pay a penalty; expands subsidies; and provides more coverage choices.

Some healthcare analysts and leaders in the business and insurance industries say Massachusetts' experience offers tangible proof that overhauling a massive system is possible. But, they warn, the political and financial challenges state leaders have faced may pale in comparison to what lies ahead for Obama as he approaches the issue on a national scale during an economic meltdown.

"Healthcare makes immigration reform look simple," said Randy Johnson, vice president for labor, immigration, and employee benefits at the US Chamber of Commerce. "I think people continue to underestimate the friction that's involved when you have so many different interest groups involved with one issue."

Johnson and others said the urgency to fix the economy might initially crowd out plans by Obama and Congressional leaders to tackle healthcare reform. He said that lawmakers are more likely to initially choose smaller pieces to target first, such as expanding the State Children's Health Insurance Program, known as SCHIP, which subsidizes insurance to millions of low-income children.

Massachusetts' path toward near-universal healthcare - roughly 97 percent of the state's residents are now covered - featured many delicate negotiations and hit many potholes before leaders struck an agreement among businesses, health insurers, healthcare providers, consumer groups, and trade unions. The initiative is still a work in progress, with state regulators recently agreeing to suspend rules that would have required small businesses to cover more of their workers.

"This is a two-year conversation," said Len Nichols, director of health policy at the New America Foundation, a nonpartisan, nonprofit public policy research institute based in Washington, D.C.

Nichols said that judging by the Massachusetts experience, it will take at least two years to build bipartisan support for a health initiative that attacks the soaring costs of care. By then, he said, the nation's economic woes may have eased a bit.

Although Obama's healthcare blueprint borrows many key points from the Massachusetts plan, analysts say it will be tough to expand the state's template to a national scale. Indeed, even before Massachusetts overhauled its system, a much higher percentage of state residents already had health coverage, compared to the rest of the nation. Although about 10 percent of the state's residents lacked care before 2006, new US Census figures show that about 15 percent of Americans now lack health coverage. The figures are higher in some states, such as Texas, where 25 percent are not covered.

Another key difference between Massachusetts and the rest of the nation is that the Bay State has less overall poverty.

"The average wage is about $10,000 higher than the national average," said Karen Ignagni, president and CEO of America's Health Insurance Plans, an industry trade association. "Massachusetts also had a strong commitment to public programs before the start of its initiative that is far more than what is common across the country."

The Obama plan includes several provisions to tighten regulations on the insurance industry, such as prohibiting insurers from denying coverage based on preexisting conditions. Ignagni said the industry is willing to work with the new administration because there is a consensus that "we can't sustain a country with 47 million without coverage."

Senator Edward M. Kennedy, Democrat of Massachusetts, who played a critical role in the state's overhaul by helping secure federal money to subsidize it, has vowed to make national reform a priority. And it appears he is looking to the Massachusetts experience to help shape the debate. Earlier this year, Kennedy recruited John McDonough, the former executive director of Health Care for All in Boston and a major force in the Massachusetts debate, to lead his drive.

Kay Lazar can be reached at klazar@globe.com

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