The Massachusetts Experiment

The heated debate lost most of its steam. The Supreme Court has swatted back the big legal challenge. And November's presidential election has snuffed out opponents' hopes for an 11th-hour reversal.

Come Jan. 1, you -- like almost every other American -- will have to carry health insurance or pay a fine if you don't, as one of the final pieces of Obamacare falls into place. In return, you'll be guaranteed coverage, no matter your health.

For the 6 million residents of Massachusetts, though, not a whole lot will change. In 2006 then-governor Mitt Romney signed a health-reform law that contained a similar insurance mandate, plus tough rules for when employers must offer plans and the blueprint for a government-run online insurance marketplace, or exchange. What became known as Romneycare ultimately served as the model for the national plan.

Some six years into the Massachusetts experiment, the people who live in the state have had plenty of time to answer the kinds of questions you may be asking about Obamacare now: Will my premiums go up or down? Will my boss drop insurance? Will I face longer waits to see my doctor? Am I looking at a tax hike to pay for reform?

As a small New England state with a high-tech economy, the most doctors per resident in the country, and above-average health care spending even before reform, Massachusetts is not a perfect bellwether for the nation. The laws are far from identical, and the state only recently began tackling the costs of care. But the experiences of the locals can still tell you plenty about what to expect come Jan. 1 and what you might want to do to prepare.

"I give a lot of talks to groups from outside the state," says Andrew Dreyfus, CEO of Blue Cross Blue Shield of Massachusetts, "and I often begin, 'Hi, my name is Andrew Dreyfus, and I am from the future.' "

So for a glimpse at the future of your health care, there's no better place to start than Massachusetts. Here are the six most significant results of this statewide experiment, along with a look at how reform may shake out where you live.

When you mandate insurance, pretty much everybody gets insurance

Even before the mandate took effect in 2007, only 8% of Massachusetts residents went without insurance -- half the national figure today. The mandate, along with subsidies that make policies more affordable, has brought the Massachusetts uninsured rate down to 3%, the lowest in the country.

Now that firms with 11 or more workers are on the hook for insurance, small-business employees are less likely to go without. More low-income workers are covered. And the hard-to-persuade healthy 18-to-34 crowd has been brought into the fold: Only 6% of these "young invincibles" lack insurance today, according to the state's Center for Health Information and Analysis (CHIA), down from 18% pre-reform.

Some joined a parent's policy -- under Romneycare, as with Obamacare, you have that right until age 26. Others accepted workplace coverage they might have otherwise skipped, sometimes to everyone's benefit.

In the Berkshires of western Massachusetts, the Barrington Stage Company, which employs 15 administrators, many of them less than a decade out of college, saw more workers sign up. "When I talk to them about insurance, their immediate response is, 'I don't really have a choice, do I?'" says Peggy Thieriot, director of finance for the nonprofit theater.

Those reluctant invincibles are paying off. With more people on the plan and a lower average age, the organization is paying slightly less for each worker this year.

Some of the state's newly insured have seen a payoff too. In 2007, Andrew Herlihy, then 24 and working without benefits as an afterschool program director in Malden, shelled out $150 a month for a catastrophic plan. He didn't appreciate having insurance -- until he tore his ACL during a basketball game the next year and needed surgery that would have set him back $45,000 without coverage. Now Herlihy is literally a poster boy for the insurance marketplace, singing its praises in a video on the state's site.

The coverage that residents must get isn't paltry. When the law was being debated, consumer groups, initially reluctant to force everyone to buy insurance, fought for meaty policies.

"If you're going to require we buy this, it has to be comprehensive enough so that people with means weren't having to buy extra coverage, and people without means were going without," says Amy Whitcomb Slemmer, executive director of Health Care for All.

As a result, health plans are robust. Most policies must include prescription coverage and maternity and mental-health benefits. Since the law passed, legislators have made another dozen items mandatory for individual and some group plans, including orthotics and kids' hearing aids.

What's in store for you: The country is expected to fall short of Massachusetts' milestone: By 2017, 10% of Americans will still lack health insurance, estimates the Congressional Budget Office, down from 16% today. With less generous subsidies under the national plan and some states refusing to expand Medicaid, more low-income Americans may go without than has been the case in Massachusetts, says Tufts School of Medicine professor Paul Hattis.

Will your coverage get better? Workers at large firms with generous benefits may see no change, says Boston-based Mercer benefits consultant Susan Connolly. People who buy on their own probably will (for a price, as you'll learn).

A recent study found that 51% of solo shoppers are in plans that fall short of what Obamacare requires, which includes maternity and mental-health coverage and caps on deductibles.

Employers haven't dumped plans

Any Massachusetts business that employs fewer than 11 full-time workers can get out of providing health insurance today; bigger firms can opt to pay a fine of $295 per employee instead, which would almost certainly cost less than providing insurance. (Come January, Obamacare cut-offs may trump state rules.) With Romneycare making it easier for workers to buy affordable policies on the open market, the fear was that employers might have few qualms about closing the company plan.

The opposite happened. From 2005 to 2011, the percentage of companies with three or more workers that offer insurance rose from 70% to 76%, according to the Massachusetts Employer Survey.

"You have to give employers credit," says Slemmer. "They've hung in there and shared in the cost burden." Only 5% of private firms pay the fine, says CHIA. Overall, businesses didn't cut hours or lay off employees to skirt the mandate, a study by the Urban Institute found. Most workers in Massachusetts still get insurance on the job.

At big firms, it helped that reform didn't jack up insurance premiums: Total premiums for group family policies have risen by 6.8% a year since 2007, down from a 9% rate between 2000 and 2006.

"Employers had already made a decision to offer insurance to their workers, so we didn't get much pushback," says Richard Lord, president and CEO of Associated Industries of Massachusetts, a trade group that represented the state's employers when the law was being debated. Still with more employees signing up, overall benefits costs rose -- the Massachusetts Taxpayers Foundation estimates that businesses spent an extra $500 million in 2012 due to reform.

For small operations that can skip coverage, deciding whether to offer the benefit can be tricky. Michael Tow, a financial planner in Brookline, began offering a plan to his two employees in 2007 because he was worried they might jump ship. "At a small firm like mine it's important to keep your core team intact," he says. He pays $1,000 a month for his two employees.

Linda Baker, owner of a Fall River signmaking business, initially went the same route with her two employees. But costs finally outweighed any hiring edge. As monthly premiums climbed $50 to $100 per worker annually, she changed plans three times in four years. "I wanted to give my employees coverage and have them stay," she says, "but it was drowning my company."

During a brief window when Baker had no employees on the plan, she dropped it. New hires will be on their own.

What's in store for you: Don't count on this much buy-in. The industries that dominate in Massachusetts -- education, financial services, and technology -- need skilled workers who expect insurance, says Josh Archambault, director of health care policy at the Pioneer Institute.

Under Obamacare, your boss won't have to offer you insurance if the company employs fewer than 50; bigger firms can pay a penalty that starts at $2,000 a worker in lieu of giving you coverage. Will they? Early signs point to a wait-and-see approach: In a recent Mercer survey, only 6% of large firms said they were likely to have workers buy their own policies come 2014.

If you work for a company with a big low-wage or part-time workforce that's now uninsured -- think retail and hotels -- you're in for more uncertainty. A firm facing penalties that are below the plan costs or a workforce that's largely better off in cheaper, government-subsidized insurance might simply skip a plan, says Archambault.

Buying insurance solo is cheaper (although maybe not in your state)

After Christina Carico, now 46, of Newburyport lost her job as a corporate trainer in 2012, she was able to put one worry behind her: the fear of finding affordable health insurance.

She bought a $450-a-month policy on Massachusetts' Health Connector, the online exchange where residents can compare and sign up for policies. That price was about 25% less than what she would have paid to stay on her former company's plan under COBRA, and she can keep her policy for as long as need be -- a godsend for Carico, who has since switched career paths.

She recently earned a master's in education but has so far been able to land only part-time work without benefits while she applies for full-time jobs. Having her own individual plan, says Carico, "has allowed me to work in a high-need area that is fulfilling."

This option to buy health insurance online the same way you might compare airline tickets is coming to all 50 states in October. In Massachusetts what you see on the exchange are primarily state-approved standardized plans grouped into four tiers: gold, silver, bronze, and young adults. Deductibles, co-pays, and co-insurance pretty much run the same across each tier, with the nine insurers competing on premiums, in-network doctors and hospitals, and customer service, says James Roosevelt Jr., CEO of Tufts Health Plan. The better the tier, the higher the price, and the lower the deductibles.

For a family of four, for example, you might pay $1,850 a month for gold, $1,500 for silver, and $1,050 for bronze. With diabetes, your annual out-of-pocket costs with a gold plan could be $510, estimates the Robert Wood Johnson Foundation; with bronze, they could be $3,370. Only 8% of buyers go for the gold -- more than half snap up bargain bronze plans.

You don't have to buy your plan through the exchange (unless your income qualifies for a subsidized premium), and only about half of unsubsidized buyers do, says Jon Kingsdale, who led the design of the exchange and now consults for other states. While exchange shoppers have proved price-sensitive, he notes, those who buy direct, where comparing plan features is harder, often end up in pricier policies from familiar names.

With so many people still buying directly, the exchange hasn't created the kind of competition that would drive down prices for unsubsidized plans, says Kingsdale. But another factor has: Even before Romneycare, Massachusetts guaranteed that no one could be turned down for insurance; healthy solo shoppers were grouped with the seriously ill when it came to setting premiums.

Reform merged that risk pool with the larger and healthier small-business group -- to the benefit of individuals (and detriment of small companies). Individual plan shoppers are enjoying huge savings -- premiums were 33% lower the year after reform than they would have otherwise been, says CHIA.

More affordable insurance can have real-world ripple effects. Worcester entrepreneur Vladimir Charlemagne, 41, left a corporate job to launch Bright Halo Technologies, a company that creates mobile software to help the elderly and disabled in emergencies. Being able to buy a quality policy for his wife and two kids on the exchange, he says, gave him the confidence to strike out on his own: "I have been able to work on something I really want to without jeopardizing my family."

What's in store for you: Here, Massachusetts probably isn't a good guide. Your local insurance exchange may or may not look like Health Connector -- states have until October to roll out their versions. Some, like California, have already announced they'll follow Massachusetts' lead and standardize plans to make shopping easier; others, including Texas, have opted out of creating their own exchange. Instead, the federal government will run one. So any insurer will be able to sell plans that simply meet minimum standards. And your prospects for savings if you buy insurance directly are murky at best.

You'll have a better sense of the price tag this summer, when states announce details about the exchanges, but early signs point to premium hikes.

"Insurers will err on the side of overpricing and then rebate funds if they have to," says Robert Hurley, senior vice president at eHealthInsurance.com. With a bare-bones policy now, you'll have to trade up to more comprehensive coverage required by Obamacare.

While the average family plan today costs $412 a month, says eHealthInsurance.com, a plan with a similar level of benefits would set you back $605 a month. What's more, the actuarial consulting firm Milliman predicts that an influx of sick people qualifying for coverage could raise premiums by 20% to 45%.

Not all will pay more. If you buy a solo plan in one of the four other states that already guarantee coverage -- New York, Vermont, Maine, and New Jersey -- your premiums could drop in 2014, as more healthy people join that pool.

Also, under Obamacare, insurers can't charge older buyers more than three times what younger shoppers pay (a 5-to-1 or 7-to-1 ratio is typical now). So while the young and healthy will probably see premiums rise, those 50 and older could catch a break. "Reform's winners will be early retirees," says Hurley.

Small-business owners have been taking a hit

For every delighted individual insurance buyer in Massachusetts, you'll find a disgruntled small-business owner. Premiums for small-business policies climbed by double digits four out of the first five years after reform, according to the Retailers Association of Massachusetts. Brookline planner Tow has seen small-business clients ax raises, bonuses, or similar perks to cover insurance. "They had to cut back on other areas that were not mandated," he says.

Rising health care costs in general are partly to blame. The risk pooling that brought down the price of solo plans nicked entrepreneurs. And business owners also point to the requirements that state legislators have added.

"Every specialty group in the state came out of the woodwork and said, 'You've got to make sure our coverage is included,' " says Jon Hurst, president of the retailers association. An analysis for CHIA estimates that up to 4% of insurance premiums go toward benefits that firms wouldn't otherwise cover, such as autism counseling.

Small-business owners, accustomed to using insurance brokers to tailor policies to their needs, haven't flocked to the standardized policies on the exchange, undermining any pricing pressure from insurers going head to head online.

At Mill City Environmental in Lowell, founder Brian Chapman has watched his company's premiums climb every year. With about a dozen employees when Romneycare took effect, the waste-management firm was just over the cutoff for avoiding insurance. So Chapman introduced a plan for his workers and their families, picking up 50% of the premium (the state typically requires 33%, but 50% is the insurer norm). He was able to swing the cost only because most of his workers already had coverage through their spouses. Only about a third signed up.

"If every employee had accepted it, that could have killed us," he says. Plus, as his company has grown -- he now has 46 workers -- he has gained more leverage with insurers. Still, adds Chapman, "it is just another way you're squeezed."

What's in store for you: One piece of good news for small-business owners: Few states will group you with individual buyers for underwriting purposes, and the benefits you'll have to cover may not be so far-reaching. Obamacare could also bring about a shift in how you offer insurance, though in this case Massachusetts is a cautionary example.

Starting in 2014 or 2015 small businesses can give employees a budget to pick from a few policies on a state exchange, cutting costs in the long run, the hope is, as workers opt for lower-cost plans. The Massachusetts small-business exchange was supposed to do the same, yet the program was killed after a limited yearlong run in which too few businesses signed on.

A doctor will see you ... or someone will

At Baystate Mason Square Neighborhood Health Center, a clinic near downtown Springfield, the wait for appointments hit six months after Romneycare passed. So the clinic began offering shared appointments for chronic conditions such as diabetes and high blood pressure. Patients chat individually with a doctor for a few minutes, then hear about treatment plans and prevention tips from a nurse or social worker as a group.

"You don't have to repeat yourself 10 times," says Elizabeth Boyle, the center's medical director. Today new patients wait less than a month to be seen.

Introducing 400,000 newly insured patients to a health system was a bumpy proposition, even in a state with more doctors per resident than any other. But the initial spike in demand has leveled off. In 2012, 19% of residents said they waited to see a doctor, according to a Massachusetts Medical Society survey, down from 25% in 2008 and in line with waits on the eve of reform.

To relieve the pressure, medical practices are increasingly relying on so-called advanced practitioners.

"Physician assistants and nurse practitioners, we think, will be the future of filling out our primary-care infrastructure," says Dr. Mark Keroack, who oversees Baystate Health's 450 physicians and 150 advanced practitioners in western Massachusetts. With a commonplace condition like an earache or pinkeye, you'll see an advanced practitioner; doctors focus on diagnostic puzzles and complicated conditions. Keroack says his doctors have seen little pushback from patients.

One place that's nearly as crowded, though, is the emergency room, where patients, despite having insurance, still show up with nonemergencies. "That is one of the biggest disappointments," says Jonathan Gruber, an MIT economist who consulted on both Romneycare and Obamacare.

Kevin Epstein, an internist in Springfield, has hung posters illustrating when to go to the ER on the back of every exam-room door. He even offers same-day appointments. But many of his patients haven't kicked the ER habit.

Even if patients are slow to change, doctors and insurers aren't sitting still. For good reason: After essentially leaving cost controls out of the 2006 law, Massachusetts is cracking down. Anticipating those changes, many in the medical community are rushing headlong into payment reform -- rewarding doctors for providing high-quality care, not simply for performing costly tests.

Under one common new approach, insurers give doctors a budget for a group of patients. If certain measures of care are met and the treatment comes in under budget, doctors can earn a share of the savings. "It fundamentally changes how you think," says Keroack. Roughly 70% of Baystate physicians' patients are in an alternative payment system.

At Tufts Medical Center Physicians Organization in Boston, doctors are using electronic health records to track how well the practice is doing, says Dr. Michael Wagner, the group's CEO. Nurses call patients who are behind on care and check in after hospital stays. Nutritionists, social workers, and pharmacists educate patients on diet plans and medication regimens.

What's in store for you: In this case, Massachusetts is your future. In fact, you may already find yourself sitting with a nurse practitioner more often than with a doctor (keep in mind you can always insist on seeing an MD if you're worried, says Keroack). Private insurers nationwide are experimenting with alternative payment models, and Medicare is dipping a toe in the water.

To prepare for an onslaught of 14 million more insured Americans next year (27 million by 2017), lock in a doctor you're happy with now. Come 2014, you may have to make more calls to find one who'll take a new patient.

Reform has not bankrupted the state, but costs are a worry

So how is Massachusetts affording all this? The state shifted some direct payments to hospitals and community health centers into individual insurance subsidies. A $1 tax hike on cigarettes was approved in 2008. After the recession added more residents to the Medicaid rolls (under both Romneycare and Obamacare, the poorest Americans stay on Medicaid), Massachusetts cut Medicaid payments to providers. Plus, the federal government kicks in toward the subsidies.

Yet high health care costs could create bigger funding problems ahead. Total per capita health care spending is $9,278, the highest in the country and well above the $6,815 national average. While the 2006 law did little to tackle costs, a 2012 one does so aggressively. Health care providers must keep overall spending growth below certain goals -- 3.6% a year now. Failing that, the doctors and hospitals will have to devise cost savings plans and even possibly face fines. Insurers and medical providers have to post prices for medical services online, in the hope that more transparency will spur consumers to choose lower-cost care and providers to compete on prices.

What's in store for you: Obamacare attempts to control costs from the outset, encouraging the types of alternative payment models Massachusetts is experimenting with. Health reform also reduces Medicare spending by $425 billion over 10 years and establishes a board of 15 health experts that can recommend more limits on the program.

Come 2018, a tax kicks in on the most generous health plans, encouraging firms to pare back benefits and push more health costs onto you, which will, in theory, slow spending.

These measures all stop short of the aggressive steps that Massachusetts is taking. If those programs actually manage to rein in costs, some Romneycare veterans suspect -- or hope -- that the state may once again be a model. "We're confident if you come back five years from now," says consumer advocate Slemmer, "we'll be showing the country how to have better care at lower cost."