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The Massachusetts Health Care Reform Experiment: A Success

To some extent, the Affordable Care Act (ACA) is based on the “Massachusetts experiment,” the health care legislation passed by the state in 2006, leading politicians on both sides of the political aisle to claim it as a success or failure. Supporters assert that the legislation resulted in nearly universal health insurance coverage in Massachusetts. Detractors point out that the quality of coverage may be suboptimal and its costs are exorbitant. Both sides have overstated their cases.

Michael J. Zinner, MD

Massachusetts health care reform was evolutionary, not revolutionary. In 1985, the state established a “free care pool” paid for by profitable facilities to support the safety net hospitals. Hospital rate deregulation in 1991 resulted in a cost crisis, leading both conservative and liberal politicians in Massachusetts to cooperate on legislation. In 2006, a Republican Governor, a Democratic Speaker of the House, and a Democratic President of the State Senate collaborated to develop Massachusetts health insurance reform. The Republican Governor insisted on a proposal originally written by Stuart Butler, PhD, of the conservative Heritage Foundation (and a JAMA Forum contributor), which included an individual mandate to purchase health insurance. Butler said, “If a young man wrecks his Porsche and has not had the foresight to obtain insurance, we may commiserate, but society feels no obligation to repair his car. But health care is different. If a man is struck down by a heart attack in the street, Americans will care for him whether or not he has insurance.”

Although it is true that the legislation resulted in near-universal health insurance coverage in Massachusetts, including 98% of the state’s population and nearly 100% of children, baseline rates of insurance were high before the law went into effect. In 2007-2008, when the law was just being implemented, uninsured rates in Massachusetts were only 5% at a time when up to 25% of the population of California, another progressive state, was uninsured.

Given that health care reform in Massachusetts was more of an adjustment rather than an upheaval, its effects on the state’s economy and the practice of medicine were modest and even beneficial. Most physicians are now paid for patient care that was previously uncompensated and 70% of physicians polled in 2009 were satisfied with the new law. Over the 5 full fiscal years since the law was implemented, the incremental additional cost per year has averaged $91 million, well within initial projections; this cost is not a “budget buster.” The cost of the plan added only 1.4% to the annual state budget. Health insurance rates for the small business community initially increased by 10% per year as an adjustment to the new requirements but now only increase 1% to 2% per year—far less than in most other markets.

Massachusetts does have high health care costs. However, the state also has a high cost of living, and when adjusted accordingly, the state ranks 48 of the 50 states in percentage of household income devoted to health care insurance premiums. Nevertheless, high costs have driven businesses and insurers to pursue market-based changes in health insurance contracts. A new “risk-based” reimbursement model has gained traction. Three commercial carriers that account for about 70% of the state’s nongovernmental insured have instituted risk-based contracts. They have a variety of names, such as the Alternative Quality Contract, which is a global payment strategy. Five of 32 Medicare Pioneer Accountable Care Organizations are in Massachusetts. These models reimburse organizations so that physicians and hospitals within them must collaborate to control costs.

These newer contracts also facilitate patient responsibility in cost control by placing some risk on them. There are an increasing number of high-deductible and “tiered” plans offered by employers. In these plans, patients pay significantly more out-of-pocket expenses should they choose to receive care at a hospital or from clinicians or health care centers that are known to be more costly than others in the region.

Despite evolutionary changes and improvements in the health care landscape in Massachusetts, business leaders and politicians are calling for more rapid cost reductions. However, proposals to achieve this goal are draconian, such as the imposition of price controls, a luxury tax on clinicians who charge substantially more than their competitors, and premium caps.

In July, a new law was passed that capped “total health care expenditures” at 3.6% per year for 2013. In 2014, health care costs can increase only as fast as the gross state product (an estimate similar in notion to gross domestic product but never actually measured before). A host of new commissions, councils, data repositories, and other entities have been established to track the increase in health care costs. The legislation gave teeth to the attorney general, who will examine as yet unidentified cost outliers.

The Massachusetts health care experiment has been a success. However, it was not an overnight radical change in health coverage. Rather, a series of changes made over the years led to gradual evolution of the health care delivery system. Importantly, these changes have challenged the private sector to find solutions for improved insurance coverage and to establish incentives for patients as well as for clinicians, hospitals, and other health care centers to manage costs. Bipartisan political support was critical for developing legislation that resulted in an improved health care delivery environment that 88% of Massachusetts physicians surveyed believed improved or at least did not negatively affect the quality of health care in the state.

Is Massachusetts a model for national health care reform? Not necessarily. Although the ACA has some features in common with Massachusetts’ health care reform, the law is making changes on a much larger scale and more rapidly than occurred in Massachusetts. The lesson from Massachusetts is that improved health care delivery can be achieved when there is broad-based community support, when reform elements are implemented in a reasonably confined population, and when change is introduced slowly enough to allow market forces to adapt to the new environment.

About the authors:
Michael J. Zinner, MD, is the Moseley Professor of Surgery at Harvard Medical School, Surgeon-in-Chief at Brigham and Women’s Hospital, and Clinical Director of Dana-Farber/Brigham and Women’s Cancer Center. He was the Chairman of the Board of Governors of the American College of Surgeons from 2008-2010 and is now a Regent of the College. He is on the editorial boards of several surgical journals. He established the Center for Surgery and Public Health, a collaboration between Harvard's Medical School and School of Public Health, focused on health care, quality, safety and effectiveness, and global surgical care.
Edward H. Livingston, MD, is Deputy Editor for Clinical Content, JAMA. He is a Professor of Surgery at the University of Texas Southwestern School of Medicine and Professor of Bioengineering at the University of Texas, Arlington. Dr. Livingston was the Service Line Director for Surgery at the VA Greater Los Angeles Health Care System from 1996-2002 and the Chairman of Gastrointestinal and Endocrine Surgery at University of Texas Southwestern School of Medicine  from 2003-2012.
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