The Impact of Health Insurance Reform in Massachusetts

[Massachusetts] health insurance reform reduced the number of uninsured among the inpatient hospital population by 36 percent.

The national health care legislation passed in March 2010 requires U.S. citizens to obtain health insurance coverage. Modeled on legislation passed in Massachusetts in 2006, the new federal law contains many provisions that are similar to that state's reform, including new requirements for employers and expansions in subsidized health insurance.

In The Impact of Health Care Reform on Hospital and Preventive Care: Evidence from Massachusetts (NBER Working Paper No. 16012), co-authors Jonathan Kolstad and Amanda Kowalski note that the Massachusetts changes undertaken in 2006 present a novel opportunity for analyzing the impact of a mandated expansion in health insurance coverage more generally, and perhaps for predicting the effect of the federal bill. Using hospital discharge data, they conclude that the Commonwealth's health insurance reform reduced the number of uninsured among the inpatient hospital population by 36 percent. The reform increased coverage most among: young adults and the near elderly, men, people from the lowest-income zip codes, and people identified as black and Hispanic.

Insurance coverage through Medicaid, the state-run federal program designed for low-income people, expanded by approximately 30 percent among nonelderly residents of Massachusetts. The largest change occurred in 2006 and the first half of 2007, immediately following passage of the new law. The researchers note that some of the Medicaid expansion appears to have crowded out private coverage, which decreased among the hospitalized population by almost 4 percentage points during the same period. CommCare, a new state-subsidized program for insuring low-to- moderate income residents, began covering 1.2 percentage points of the hospitalized population, also suggesting some crowd-out of other coverage for those individuals.

Coverage through Medicare, which provides insurance for those over age 65, did not change significantly in the elderly population. And, after the reform, the total number of newly insured and their doctors apparently did not demand more inpatient care. In fact, after the Massachusetts reform, treatment intensity -- as measured by length of hospital stays -- decreased by approximately 1 percent.

Use of hospital emergency rooms for routine care also declined after 2006: the reform's expanded insurance coverage resulted in a 2 percentage point decrease in the fraction of hospital admissions from the emergency room. The reduction in emergency admissions was particularly pronounced among people in low-income areas of the state.

Hospital admissions for treating preventable conditions also fell. The authors find a decrease of 2.7 percentage points in inpatient admissions attributable to preventable conditions.

The authors note that the Massachusetts mandate for individual insurance coverage widened access to outpatient treatment and thus management of preventable conditions. Despite finding other hospital impacts, this study finds no evidence that hospital cost growth increased following the reform.

-- Sarah H. Wright