Executive Summary -

The past decade marked an era of seismic change in the Massachusetts health care market and one in which the Commonwealth led the nation in coverage and delivery system reform. In 2006, Massachusetts passed its comprehensive health care reform law (Chapter 58 of the Acts of 2006), and has since achieved near universal coverage through a combination of expanded Medicaid, private market reforms, and individual subsidies to purchase coverage in the nation’s first health insurance exchange, the Massachusetts Health Connector (the Connector). The national health care coverage reforms implemented earlier this year, part of the Affordable Care Act of 2010 (ACA), were modeled on the Commonwealth’s successful reform road map. Having closed the coverage gap for most residents of the Commonwealth, Massachusetts policy makers turned their attention to reining in health care spending growth across all payers, culminating in landmark legislation, Chapter 224 of the Acts of 2012. In the first full year following enactment of Chapter 224, the Commonwealth appears to be making some progress: total health care costs in the Commonwealth grew by 2.3 percent, well below the 3.6 percent health care cost growth benchmark set for 2013.

As one of the largest health care insurers in the state and the steward of health care coverage and financing for an expected 1.7 million low- and moderate-income individuals, or one in four residents, MassHealth—the state’s Medicaid program—is at the center of these reforms. With anticipated expenditures of $13.7 billion in 2015, MassHealth spending represents over 30 percent of the total state budget. This gross figure includes both state and federal Medicaid dollars. The federal government reimburses more than half of this total dollar amount. The MassHealth program is expected to generate $7.7 billion in federal revenues this fiscal year, representing more than 80 percent of all federal revenues to be received by the Commonwealth. As a result of this spending and revenue generation, MassHealth is a major contributor to the Commonwealth’s overall economy, supporting health care providers and health plans that employ thousands of people.