Coverage for Caregivers: Lessons from Massachusetts Health Reform

Transcription

1 Coverage for Caregivers: Lessons from Massachusetts Health Reform Findings from a Survey of Eldercare and Disability Services Employers Authored by: Carol.Regan,.MPH,.and.Amy.Robins,.MPA. PHI.Health.Care.for.Health.Care.Workers In Collaboration with: Amy.Lischko,.DSc Department.of.Public.Health.and. Community.Medicine Tufts.University.School.of.Medicine October

2 PHI and the Health Care for Health Care Workers Initiative PHI ( works to improve the lives of people who need home and residential care and the lives of the workers who provide that care. Using our workplace and policy expertise, we help consumers, workers, employers, and policymakers improve long-term care by creating quality direct-care jobs. Our goal is to ensure caring, stable relationships between consumers and workers, so that both may live with dignity, respect, and independence. Health Care for Health Care Workers ( an initiative of PHI, seeks to expand health coverage for workers who provide support and assistance to elders and people living with chronic conditions and/or disabilities. These consumers need a skilled, reliable, and stable direct-care workforce to provide quality long-term care services. We believe that one way to ensure a quality direct-care workforce is to provide quality direct-care jobs jobs that offer health coverage and pay a living wage.

3 Coverage for Caregivers: Lessons from Massachusetts Health Reform Findings from a Survey of Eldercare and Disability Services Employers Table of Contents Acknowledgements Executive Summary Introduction Methodology Findings Provider Characteristics Direct-Care Worker Characteristics Health Insurance: Eligibility, Enrollment, and Cost Impact of 2006 Health Reform Law Worker Reliance on Publicly Subsidized Insurance.. 18 Conclusions Recommendations Appendices A. Massachusetts Health Reform at a Glance B...Focus Group Findings Endnotes

4 Acknowledgements PHI gratefully acknowledges The Nathan Cummings Foundation for its support for the Health Care for Health Care Workers initiative and the funding that helped to support the research for this study. Amy Lischko, DSc, is an assistant professor in the Department of Public Health and Community Medicine at the Tufts University School of Medicine. Dr. Lischko, as Director of the Massachusetts Department of Health Policy and Finance, was the principal investigator and author of the 2003 Health and Human Services Employers Survey. She helped design, administer, and analyze the 2009 survey that is the basis of this report. Dr. Lischko has conducted numerous studies for the Robert Wood Johnson Foundation, the Commonwealth Fund, and others, assessing ways to increase access to affordable health insurance. PHI lead staff on this project included Amy Robins, Massachusetts State Policy Director; Carol Regan, MPH, Director of Health Care for Health Care Workers; Dorie Seavey, PhD, Director of Policy Research; and Karen Kahn, Director of Communications. We want to also acknowledge Michael Miller, Policy Director for Community Catalyst, for his comments on an early draft of this report, and Steve Edelstein, PHI Director of National Policy, for his insights. Finally we want to thank the employers and direct-care workers who participated in the focus groups, and for the work they do every day to ensure quality care and services for tens of thousands of Massachusetts residents. 2

5 Executive Summary Under historic health care reform legislated in 2006, Massachusetts is achieving unprecedented rates of health coverage. According to the latest data, less than 3 percent of the state s population lacks health insurance. Moreover, coverage gains have been achieved without the feared exodus of employers from the employer-sponsored insurance (ESI) system. However, while these gains have been undeniably impressive, the goal of moderating the growth of private health insurance premiums has proved more elusive. In 2008, Massachusetts had the most expensive family premiums, and the eighth-highest individual premiums, Eldercare/disability services play an increasingly pivotal role in the in the country. Massachusetts economy. This study, conducted by researchers at Tufts University and PHI, examines the impact of Massachusetts health care reform on one of the state s largest and fastest-growing industry groups: the eldercare/disability services sector and its primary workforce of direct-care workers. Eldercare/disability services play an increasingly pivotal role in the Massachusetts economy, currently accounting for one-third of all health care and health assistance employment in a state traditionally dominated by research and teaching hospitals. In addition to its growing role in the state s economy, the eldercare/disabilities services sector is notable for two other reasons. First, its employment core depends on a large frontline workforce of mostly low-wage earners direct-care workers who nationally lack health coverage at twice the rate of the general population. Second, because employers in this industry sector often provide services under publicly funded long-term care programs, their finances are often very sensitive to public payment policies. Key Findings and Conclusions Drawing primarily on the results of a 2009 survey of Massachusetts nursing care facilities and home care agencies, the key empirical findings of this report are: Less than one-fifth of direct-care workers were enrolled in employer plans. By comparison, Massachusetts residents overall had significantly higher rates of employer-sponsored coverage. Post-reform, an estimated 71 percent of working-age adults had coverage through their employers. Even low-income workers those with household incomes under 300 percent of poverty were twice as likely as direct-care workers to have employer-sponsored insurance. Nearly half of direct-care workers were not even eligible for their employer plans because of their part-time status or an eligibility waiting period. Roughly 60 percent of home care workers were ineligible for employer-sponsored plans. Only 12 percent were enrolled. While one-fifth of employers reported increasing the benefits they offered to their employees to comply with the reform law s minimum creditable coverage requirements, almost onethird raised employee premium cost-sharing. Only 39 percent of home care workers were eligible for ESI compared with 70 percent of nursing home aides. 3

6 Recommendations Home care workers enrolled in ESI pay nearly 50 percent more than aides in nursing care facilities for the same coverage. One in four employers reported changing eligibility or hours-worked requirements for employer-sponsored health benefits to allow their employees to enroll in Commonwealth Care. In FY 08, the state spent $63 million through its public insurance programs on coverage for direct-care workers and their dependents. At least one-fifth of the state s direct-care workforce appear to be covered by publicly subsidized programs. This study offers three main conclusions: The employer-based health insurance system is not meeting the needs of employers or their direct-care staff, largely because the current price of private health insurance in Massachusetts is prohibitive for many employers and their workers. As a result, public and publicly subsidized insurance programs are essential to this sector. Reform measures appear to have strengthened subsidized options for both employers and direct-care staff. However, access to these options is far from seamless, sometimes leading to perverse employment outcomes. For example, to qualify for MassHealth or Commonwealth Care workers often reduce their hours worked. Similarly, employers may limit eligibility for health benefits to those who work full-time, but then offer employees only part-time hours. These disincentives to work are particularly problematic for the home care industry, which is one of the Commonwealth s fastest-growing employment sectors. This report has implications for two critical policy areas health reform and workforce development. First, key elements of the Massachusetts health reform model form the basis for emerging federal approaches, including an individual mandate, employer responsibility, expanded public coverage, an insurance exchange, and premium subsidies for low-income individuals and families. Second, the growing economic importance of the eldercare/disabilities services sector and the sheer size and anticipated growth of its direct-care workforce make this an employment sector of critical importance to policymakers. The findings of this report support the need for both federal and state action. Federal Action Steps The study shows that states are extremely unlikely to be able to solve the health coverage problem on their own, particularly the challenges of providing affordable coverage for all and achieving systemwide cost containment. Congress would significantly States are extremely unlikely to be able to solve the health coverage improve access to quality, affordable insurance for direct-care workers and their employers by incorporating the following provisions in health reform problem on their own. legislation: Support the inclusion of a national, publicly operated health insurance option: This step is critical to promote competition and efficiency, and to hold down costs. 4

7 Allow all eldercare/disability service employers access to the proposed insurance exchanges or gateways regardless of size: Because they employ substantial numbers of low-wage workers many of whom are older and face a high risk of on-the-job injuries eldercare/disability services employers have difficulty negotiating for affordable group health plans on their own. These employers would greatly benefit from access to the highquality plans available through the exchange, which current proposals make available only to individuals and small employers. Ensure adequate federal subsidies to low- and moderate-income workers and their families: This study demonstrates that without sufficient assistance, workers cannot afford and will not enroll in job-based coverage. Expand Medicaid to include all individuals earning up to at least 133 percent of the federal poverty level: Medicaid is an essential source of coverage for many direct-care workers, yet current categorical restrictions and state income eligibility limits force workers in and out of coverage as their hours fluctuate. Massachusetts Action Steps For employers: Provide a dedicated reimbursement-rate increase for employee health coverage to eldercare/disability employers that rely primarily on state Medicaid revenue. This would enable employers to make a significant contribution toward the premium for quality insurance and eliminate high cost-sharing for their workers. Montana and New York both have such programs. Open up existing state purchasing arrangements to eldercare/disability employers to improve their access to affordable, subsidized insurance plans. These existing arrangements include: the Insurance Partnership Program (now available only to small employers) and the Group Insurance Commission (the state employee plan). For direct-care workers: Expand access to affordable insurance in one of two ways: Allow ESI-eligible workers to enroll in Commonwealth Care if their employer premium and co-payments are higher than they would be under the state s subsidized program, or Using Commonwealth Care s income guidelines, provide premium subsidies to eligible direct-care workers employed in agencies with more than 50 employees. Stabilize public coverage by guaranteeing 12-month eligibility: Many direct-care workers face coverage disruptions due to fluctuating work hours, which in turn result in churning between their employer and their public insurance program. For policymakers: Undertake further research to better understand sources of coverage for direct-care workers. Future research should identify sources of coverage for this workforce, and especially investigate consumer-directed personal care attendants workers who comprise nearly one-quarter of the state s direct-care workforce, yet have no employer-sponsored insurance. Such analysis will equip policymakers with the information necessary to craft an effective mechanism for providing affordable coverage for this workforce and their employers. 5

8 Introduction In 2006, Massachusetts passed landmark legislation to ensure health coverage for its residents. Since the plan s inception, more than 439,000 people have gained access to coverage, giving Massachusetts the highest rate of insurance coverage 97 percent in the nation. Still, approximately Since the plan s inception, more than 170,000 Commonwealth residents remain uninsured. 439,000 people have gained access National proposals are looking at various components of the Massachusetts model an individual to coverage. mandate, employer responsibility, expanded public coverage, an insurance exchange, and premium subsidies for low-income individuals and families for expanding coverage to all Americans. This study provides important information to both state and national policymakers about how the Massachusetts model (see Appendix A for more details), which relies heavily on employer-sponsored insurance, has served one economic sector: eldercare and disability services employers and their largely low-wage frontline workforce. The sheer size of this workforce, its anticipated growth, and the amount of public funding for these services make this employment sector of critical importance to policymakers. Eldercare and disability services have assumed a pivotal role in the Massachusetts economy, currently accounting for one-third of overall health care and health assistance employment in a state that traditionally has been dominated by research and teaching hospitals. 1 These services, provided in skilled nursing facilities, assisted living residences, group homes, and in individual homes, constitute one of the fastest-growing industry groups in the state. Jobs in this sector increased 19 percent from 2001 to 2007, adding nearly 24,000 positions at a time when the overall Massachusetts economy actually lost jobs. Direct-care workers home health aides, nursing aides, and personal care attendants who provide the vast majority of daily hands-on care and support to elders and people with disabilities constitute the employment core of this industry. The generally poor quality of direct-care jobs low wages, insufficient training, and the lack of affordable health coverage means that the state s health care system is likely to face serious recruitment challenges as the overall economy improves and workers have competing job opportunities. That challenge will grow as a result of an aging population and public policy choices that encourage more labor-intensive home and community-based services. Health insurance is vital to attracting and retaining workers in these jobs. In fact, recent studies have found that health insurance may be more important than wages in improving recruitment and reducing turnover, 2 making coverage a central workforce development Health insurance is vital to attracting strategy for this sector. and retaining workers in these jobs. This study examines how the new health reform law has affected eldercare and disability services employers and their low-wage direct-care employees. Massachusetts health reform requires employers to offer coverage to employees or to pay an annual Fair Share Assessment fee of $295 per employee to help offset state health insurance costs. Employees, when offered insurance, must either accept coverage, find an alternative plan through a spouse or another job that they may hold, or pay a fine (which can be waived for hardship). If offered employer-sponsored insurance (ESI), employees cannot access state-subsidized coverage. Thus, the health reform law incentivizes ESI and presumes that workers will most often access coverage through their employers. 6

9 Our research began with a fundamental question: Is the Massachusetts health reform law, which favors ESI, working for the eldercare/disability services sector? We were concerned both with the impact on employers and on their direct-care workers, who make up 80 percent of this workforce. The key questions we sought to answer are these: Do employers offer employer-sponsored coverage to their direct-care staff? Have significant numbers of employers dropped coverage and instead chosen to pay the less costly Fair Share Assessment? Do employers consider the new health care law to be a financial burden? Are employers shifting coverage costs to employees or to the state by encouraging workers to enroll in publicly subsidized programs? What percentage of direct-care workers are offered and enroll in employer-sponsored plans? Finding a way to provide affordable coverage to direct-care workers, either through employersponsored or publicly subsidized coverage, is critical to the Commonwealth s future workforce development strategies and its ability to provide quality support services to seniors and people with disabilities. Moreover, since public dollars provide the majority of revenue for this sector, it Given that direct-care workers are is crucial that the state determine the most costprojected to soon number 4 million effective means of providing coverage. nationwide it is incumbent upon Since national reform proposals also rely heavily on the employer-based system, the way that directcare workers have fared in Massachusetts is likely policymakers to find a way to provide affordable coverage for this crucial to be mirrored across the country. Given that directcare workers are projected to soon number 4 million health care workforce. nationwide, and that government is a major payer of eldercare/disability services, it is incumbent upon policymakers to find a way to provide affordable coverage for this crucial health care workforce. Finding a solution is essential to the health of America s workers and to the economic health of the nation. 7

10 Methodology This study was conducted by Dr. Amy Lischko of Tufts University and PHI, a national organization dedicated to improving eldercare and disability services by improving the jobs of the directcare workers who provide that care. PHI s Health Care for Health Care Workers initiative has conducted analysis and provided technical assistance in ten states to expand coverage to their direct-care workers. Both quantitative and qualitative data were collected for this study. The quantitative analysis relies on a survey administered in 2009 to nursing homes and home care agencies. Comprehensive lists of licensed nursing homes and home care agencies were obtained from the Executive Office of Elder Affairs (EOEA) and the Division of Health Care Finance and Policy (DHCFP); a random sample of 200 providers was drawn from these lists. Surveys were mailed to the sampled providers in early A total of 46 surveys were returned undelivered. 3 We received 62 completed surveys for an overall response rate of 40 percent. From these surveys, we gathered information on basic employer characteristics, workforce demographics, and the basic parameters of respondents employer-sponsored insurance plans. 4 Of particular interest was data collected on eligibility, take up rates, and employer and employee costs. In addition to the survey data, we also analyzed a state report that provides information on employers (with 50 or more employees) whose employees depend on publicly subsidized health care. Using this data, we analyzed the degree to which long-term care employers rely on public coverage for their employees. Our qualitative analysis included focus groups with administrators of nursing facilities and home care organizations and also with personal care attendants (PCAs). The personal care attendants were independent providers i.e., they were directly employed by people with disabilities, This project builds on a 2003 study not agencies. But the experience of these direct-care that was conducted by the state workers trying to access coverage provides a good proxy for the many direct-care workers either not DHCFP in order to understand the offered or unable to afford employer-sponsored health insurance coverage of the insurance. Both the employers and workers in health and human services workforce. the focus groups provided information on the challenges that still leave some Massachusetts residents without coverage. Importantly, this project builds on a 2003 study that was conducted by the state DHCFP in order to understand the health insurance coverage of the health and human services workforce, including employees of nursing homes and home care agencies. While the pre-reform study takes into account a broader workforce, there are important areas of overlap. Using results from 2003, we provide a comparison regarding access to, and affordability of, employer-sponsored insurance before and after the passage of the new law in Massachusetts. 8

11 Findings Provider Characteristics The respondent providers were fairly evenly split between nursing facilities (55.5 percent) and home care agencies (44.5 percent). Most of these organizations had been in existence for ten years or more (80 percent); only 5 percent were relatively new, with fewer than five years of operation. On average, the respondents 30% employed an average of 140 employees, 24.1% 24.1% 25% 20% the vast majority of these being directcare workers (80 percent). Figure 1 10% 12.5% shows the size distribution of the 4.2% 10.4% sample, with the majority of nursing home employers having more than 100 employees, and the majority of home care employers being smaller organizations, with fewer than 100 employees. On average, about 55 percent of the revenue for the organizations surveyed came from public programs such as Medicare and Medicaid. This means that the finances of these providers are sensitive to public payment policies and reimbursement systems, which have not taken into account the rising costs of employer-sponsored health coverage. Direct-Care Worker Characteristics Figure 1: Size Distribution of Providers by FTEs Nursing Facility Home Care 60% 58.3% 50% 40% 41.4% Direct-care workers employed by the providers surveyed had an average age of 43, and while the survey did not specifically ask for gender, data show this workforce to be predominantly female. 6 Other research shows that these workers often suffer from chronic illnesses and job-related injuries. 7 Most workers (61 percent) earned more than $12 per hour, with a median hourly wage of $ This compares with a state median wage of $19.00 per hour for all occupations. No significant differences were found in the hourly wages of home care versus nursing home workers. Figure 2: Tenure of Direct-Care Workers 50% 40% 30% 20% 10% 11% 11% < 6 months 6 months 1 year 17% 1 year 2 years 20% 2 years 5 years 41% 5 years+ 9

12 Despite their relatively low wages, the tenure of direct-care workers at the respondent provider organizations was relatively long, with 41 percent having worked more than five years with the agency they were currently employed by, and another 20 percent having worked between 2 and 5 years (see Figure 2). The most significant difference between the The most significant difference nursing home and home care workforce related to full-time vs. part-time hours. Home care agencies between the nursing home and home reported far more part-time direct-care workers care workforce related to full-time (75 percent) than nursing facilities (34 percent). Most respondents required direct-care workers to work vs. part-time hours. between 32 and 40 hours per week to be considered full-time employees. The high rate of part-time employment among home care workers affects not only their annual income, but also their access to employer-sponsored health coverage. Massachusetts Health Reform: Employer Responsibility Employers with eleven or more full-time employees (FTEs) are required by Massachusetts law to make a fair and reasonable contribution toward an employee health plan or pay a state assessment of $295 per employee, per year. The fair and reasonable contribution tests for employers are: Percentage of Full-Time Employees Enrolled : At least 25 percent of your full-time employees are enrolled in your health insurance plan, and you are making a financial contribution to that plan. Premium Contribution Standard : You provide at least 33 percent of the premium cost of the individual health insurance plan offered to your full-time employees. Employers of 50 or fewer FTEs only need to meet one of these tests to avoid the Fair Share Contribution. Employers of more than 50 FTEs must meet both tests. Employers with 50 or fewer employees (4 percent of nursing home respondents. and 41 percent of home care respondents) may offset their costs by participating. in the Insurance Partnership, which offers state subsidies to small employers and. their workers. 5 10

13 Health Insurance All but one organization surveyed currently offers health insurance to its employees. 8 However, employers have significant flexibility regarding eligibility requirements and cost-sharing, leaving many direct-care workers unable to access these employer-sponsored plans. As the analysis below details, less than 20 percent of the direct-care workers employed by the surveyed agencies access insurance through employer-sponsored plans. Notably, among home care workers, the fastestgrowing sector of the workforce, only 12 percent are enrolled in ESI. Eligibility One of the ways by which employers manage the number of employees enrolled in their health care plans is to set eligibility criteria. Typically, participation in an employer-sponsored plan is conditioned on two criteria: a waiting period and a threshold for hours worked (i.e., full-time or part-time status). Waiting Period Criteria: The vast majority of respondent organizations (84 percent) reported a waiting period before workers were eligible for health insurance. The average waiting period ranged Less than 20 percent of the directcare workers employed by the 3). Of providers responding, 40 percent required from between one and six months (see Figure surveyed agencies access insurance their employees to wait three to six months after hire before they were eligible for health insurance. through employer-sponsored plans. Roughly one-third of the providers required a oneto three-month waiting period. All of the nursing facilities reported a waiting period prior to eligibility for health insurance, compared with 78 percent of home care agencies. The more prevalent use of waiting periods in nursing facilities may be attributable to a relatively high rate of turnover during the first several months of employment. 9 Massachusetts Health Reform: Individual Mandate The Massachusetts health reform law requires individuals to have health insurance. Individuals can access insurance through multiple avenues, depending on their eligibility: a) A plan offered through one s employer b) A plan offered through a spouse s employer c)...a private or state-subsidized plan (Commonwealth Care) available through The Connector, the state s insurance exchange d) MassHealth, the state s Medicaid plan (if income-eligible) Most importantly for direct-care workers, an individual offered coverage by an employer cannot enroll in the state-subsidized Commonwealth Care plans. For low-wage workers, employer plans are often much more expensive than Commonwealth Care. For those who can t afford employer-sponsored plans, there are two options: either pay a fine on your state taxes or apply for a certificate of exemption. 11

14 Hours Worked Criteria: Half of the respondent employers (52 percent) offered health insurance only to full-time employees. 10 The bar for full-time work was much higher for home care agencies, 73 percent of which required more than 35 hours a week to reach full-time status. Among nursing facilities, only 37 percent required workers to work more than 35 hours to be full-time employees. For employers offering insurance to part-time workers, 37 percent required workers to work at least 20 hours, while 44 percent required workers to work between 21 and 30 hours to be eligible for health insurance benefits. Overall Rates of Eligibility: As noted above, among respondent organizations, all but one offered insurance to employees. However, only half (51.5 percent) of direct-care workers were eligible for that insurance. Primarily as a result of their part-time status, home care workers eligibility was far more limited than that of nursing aides working in facilities: 70 percent of aides in Primarily as a result of their part-time nursing facilities were eligible for coverage, status, home care workers eligibility compared with 39 percent of home care workers. was far more limited than that of That health insurance was much more difficult to access within home care agencies is underscored by nursing aides working in nursing the fact that the range of eligibility for ESI among care facilities. surveyed home care agencies was far lower than for nursing facilities. Among home care agencies, eligibility ranged from no direct-care workers eligible to 100 percent of aides eligible, while at nursing facilities, the eligibility ranged from 40 percent to 100 percent of nursing aides. Enrollment in Employer Insurance Figure 3: Length of Health Insurance Waiting Period The Massachusetts individual mandate is designed to encourage workers to take up insurance coverage offered by their employers. But among the 51.5 percent of direct-care workers offered coverage, less than half are participating in their employer plans. 40% 30% 20% 10% 13% 13% no waiting period less than 1 month 34% 1 3 months 40% 3 6 months 12

15 Overall Enrollment: As shown in Figure 4, overall, employers reported that just one-fifth of their direct-care workers (18.5 percent) were enrolled in employer-sponsored insurance. 11 More than twice as many direct-care workers were not eligible for employer-sponsored insurance (48.5 percent). Home Care Aides. Among home care employers, just 12 percent of aides enrolled in employer-based plans (see Figure 5). Moreover, a striking 61 percent of home care workers were not eligible for ESI. Nursing Aides. Among nursing aides, 28 percent were enrolled in employersponsored coverage, as shown in Figure 6 below. While this is more than double the percentage of home care workers enrolled in ESI, this take-up rate is small considering that 70 percent of nursing aides were eligible for coverage. Eligible But Not Enrolled. Of all direct-care workers at the respondent agencies, 33 percent were eligible for ESI but were not enrolled. This means that of those offered ESI, 64 percent chose not to enroll. Employers reported that their take-up rates had not changed significantly from previous years, an indication that the 2008 economic downturn did not adversely affect the take up of coverage. In sharp contrast to eldercare/ disability providers, the average ESI take-up rate among similarly sized private companies in Massachusetts was much higher 80 percent. 12 This suggests that the cost of ESI including premiums, deductibles, and co-pays is beyond the reach of the vast majority of direct-care workers. Figure 4: Employer-Sponsored Insurance (ESI) of DCWs in Respondent Organizations 33% Figure 5: Employer-Sponsored Insurance (ESI) Coverage of DCWs in Respondent Home Care Agencies 26.9% DCWs enrolled in ESI DCWs not eligible for ESI DCWs eligible for ESI but not enrolled DCWs enrolled in ESI DCWs not eligible for ESI DCWs eligible for ESI but not enrolled Figure 6: Employer-Sponsored Insurance (ESI) Coverage of DCWs in Respondent Nursing Facilities 42% 18.5% 48.5% 12.1% 61% 28% 30% DCWs enrolled in ESI DCWs not eligible for ESI DCWs eligible for ESI but not enrolled 13

16 Cost of Coverage As other studies have shown, cost is the major barrier to direct-care worker enrollment in employer-sponsored insurance. 13 With average annual incomes for full-time workers hovering around $22,000, insurance comes at a hefty price. Cost is the major barrier to direct-care worker enrollment in employer-sponsored insurance. Among provider respondents, the average monthly premium for employee insurance was $477 per month. On average, employers were paying 70 percent of this cost, with employees contributing $144 per month, or nearly 8 percent of the average income for a full-time employee. For family coverage, the average monthly premium was $1,239 per month, with employers contributing 60.5 percent. The employee contribution was $491 per month. Only 15 percent of the direct-care workers enrolled in employer-based coverage chose family plans. Most provider respondents reported that they did not vary employee contributions toward health insurance by tenure or other characteristics, although 36 percent reported that they varied contribution levels according to part-time versus full-time status. Though overall premiums were similar for nursing home and home care employers, the average full-time employee contribution was significantly higher for home care workers (see Figure 7). Nursing aides paid $117 per month for individual coverage whereas home care aides, who tend to earn lower annual wages, paid nearly 50 percent more, or $171 per month. In addition to premium costs, workers assessing whether they can afford insurance coverage also must consider co-pays and other costs. Median co-payments for a physician visit were $20, while an emergency department visit averaged $75. Employers reported average co-payments for pharmaceuticals ranging from $10 to $25 up to $40. Employers who received a greater proportion of their overall revenue from the state contributed less toward their employee health benefits. Figure 7: Cost of Individual and Family Plans Per Month, Home Care vs. Nursing Facilities Home Care Nursing Facility $1,500 $1,200 $900 $600 $300 $171 $117 Individual Employee Contribution $485$480 $567 $421 Total Individual Premium Family Employee Contribution $1,296 $1,208 Total Family Premium Notably, employers both nursing facilities and home care agencies who received a greater proportion of their overall revenue from the state contributed less toward their employee health benefits. This suggests that employers reliant on Medicaid reimbursement rates do not have sufficient revenue to cover a large share of their employee premiums. 14

17 Impact of the 2006 Health Care Reform Law Two methods were used to assess the overall impact of the 2006 health reform law on employers and their workers. First, the 2009 survey asked provider respondents several questions regarding their assessment of the financial burden of the law, and changes they made in coverage offered as a result of the law. Second, results of the 2009 post-reform survey were compared to a 2003 survey of health and human service employers conducted by the Division of Health Care Financing and Policy (DHCFP). 14 Using this comparison, we were able to assess changes in employer and employee costs as well as changes in overall enrollment patterns. Provider Responses: Survey participants were asked several questions about how they have responded to the 2006 health care reform law. These responses were explored in more detail through two focus groups (see Appendix B for more detail). First, we assessed whether the health reform law had a negative impact on the bottom lines of these organizations. When asked, Do you agree or disagree with the following statement: The Massachusetts health care reform law created a financial burden for your organization, 53 percent responded affirmatively (see Figure 8), suggesting that the law has increased costs for over half of eldercare and disability service providers. For 21 percent of respondents, the increased financial burden was attributable to offering a more comprehensive benefit package in order to meet the new law s minimum credibility rating. 15 Figure 8: Providers Respond: Health Care Reform Law is a Financial Burden Strongly Agree Somewhat Agree Somewhat Disagree Strongly Disagree Providers were also asked if they had taken specific actions to decrease the financial impact of the law for example, increasing employee cost-sharing, decreasing pay, or reducing the number of workers. One-third of employers reported increasing employee cost-sharing, asking their employees to pay a higher percentage of monthly premiums. Many fewer reported a cutback in employees (4.2 percent) or decreasing the pay of their workers (2.1 percent) (see Table 1). One-third of employers reported increasing employee cost-sharing, asking their employees to pay a higher percentage of monthly premiums. 40% 30% 20% 10% 23% 30% 33% 14% Finally, survey participants were asked whether they helped to facilitate their employees eligibility for Commonwealth Care (the state-sponsored subsidized insurance plan). Such a move could benefit both the employer and the employee. For most direct-care workers, the cost of coverage through Commonwealth Care is far less than the cost of employer-sponsored insurance (see box on page 16). 15

18 Of respondents, 25 percent reported that they changed either eligibility rules for their employee health insurance plan or reduced employee hours (to avoid eligibility) so workers could enroll in Commonwealth Care. Table 1 summarizes the actions employers took to reduce costs related to the new health insurance law. Notably, in focus groups (see Appendix B), employers emphasized that rising premium costs were increasingly putting employer-based insurance plans beyond the reach of their direct-care staff. Premium costs for some employers were up 22 percent in 2009 alone. One employer noted that, as costs have risen, We ve switched to two different companies and went with higher co-pays It puts a real burden on our staff. Another employer noted the negative impact that increased hours worked and therefore, higher earnings had on one employee s eligibility for publicly subsidized insurance: It was enough to kick her off MassHealth, but then she had to buy into our employer plan at an extraordinary cost to her. Comparison of 2003 and 2009 Survey Results: The 2003 DHCFP survey provides a rough basis of comparison for assessing changes in employer-based insurance coverage as a result of the 2006 Massachusetts health reform law. It is a rough comparison, because the surveys were not identical. The 2003 survey sampled a broader array of health and human service providers, including day care centers, residential care facilities, and other human services providers, but did not include questions specific to direct-care workers as did the 2009 survey. In addition, the response rate obtained for the 2003 survey was higher than the response rate reported here (71 percent vs. 40 percent). The two sample groups, however, were similar on several key features. First, the average size of organizations in both samples was similar (118 in 2003 sample versus 140 in 2009), as was the percentage of revenue received from the state (59.6 percent in 2003 sample compared with 55 percent in 2009). Since employers decisions about what health insurance plans to offer are closely tied to the size and financial stability of an organization, we were comfortable making comparisons across the two samples because of the consistent results for these characteristics. Cost Comparison: Commonwealth Care vs. ESI Table 1: Employer Actions Taken to Reduce Costs Associated with Health Care Reform Law Actions in Response to Reform A direct-care worker working 32 hours a week and making $12.37/hr 16 would spend $144/month for employer-sponsored insurance, or 8.3 percent of her salary. Based on her income, the same worker would qualify for a Commonwealth Care plan. with a premium of $39 per month, or just 2.3 percent of her salary. This worker could not enroll in Commonwealth Care, if eligible for ESI. Percent of respondent employers taking this action Facilitated employees enrollment. into Commonwealth Care 25% Increased employee cost-sharing 33% Reduced number of workers 4% Decreased pay of workers 2% 16

19 Over 93 percent of the human service providers who responded to the survey in 2003 reported offering health insurance to their employees, compared with nearly 100 percent of the eldercare/ disability employers responding to the current survey. Although this is not definitive evidence that more employers are offering coverage, it is consistent with the finding of other studies that employers have not dropped coverage as a result of the new law. 17 There is some evidence that, since 2003, eligibility Since 2003, eligibility requirements for requirements for ESI may have become more stringent. In 2003, approximately 80 percent of parttime and full-time employees of health and human ESI may have become more stringent. services agencies were eligible for health insurance, compared with an average of only 51.5 percent of direct-care workers employed by the agencies responding to the 2009 survey. The 2009 survey found that 75 percent of home care workers are part-time, dramatically affecting their eligibility for ESI. Most importantly, a comparison of the 2003 and 2009 survey data on premium costs underscores the fact that the Massachusetts health reform law has not stemmed the rising cost of coverage. While controlling costs was not the primary purpose of reform in Massachusetts, the law did create the Health Care Quality and Cost Council to help consumers shop for the best care at the lowest price and provide some data about quality measures for hospitals and costs for some procedures. 18 According to a recent report by the Commonwealth Fund, between 2003 and 2008, premiums on individual and family plans throughout Massachusetts rose 38 and 40 percent, respectively, making Massachusetts premiums among the most expensive in the country. 19 Long-term care employers appear to have responded to these increases by shifting a greater One nursing home employer cited share of costs to their workers. In 2003, employers weekly employee premiums as high on average covered 77 percent of the individual premium, but in 2009 they covered 70 percent. Family as $198 for a family plan, despite the coverage cost-sharing has shifted from a 70 percent employer contributing 50 percent of employer contribution to a 60 percent employer contribution. 20 For direct-care workers, this cost-shifting the cost. has meant an increase of 25 percent (from $ to $144) in average monthly premium costs for individuals lower than those in the state overall and an extraordinary 86 percent increase (from $263 to $491 per month) in the average cost of a family policy, more than twice the increase of those in the state overall. In addition to rising premiums, co-pays for services have also continued to rise. Since 2003, we found that: Physician office visit co-payments, on average, have doubled; Tiered prescription drug co-payments have increased for preferred brands; Emergency department co-payments have increased on average 50 percent; Hospital visit co-payments have risen, on average, by 25 percent. 17

20 For low-wage direct-care workers, the rising cost of health coverage has made employer-sponsored insurance increasingly unaffordable. Though premium rates have increased 25 percent between 2003 and 2009 and co-pays continue to rise, the median weighted average wage for direct-care workers increased by only 13.9 percent from 2003 to 2008 from $10.86 to $ This rising cost burden likely accounts for the low take-up rates of employer-sponsored coverage by directcare workers in the 2009 survey, only 36 percent of direct-care workers eligible for employer-sponsored coverage actually enrolled. Worker Reliance on Publicly Subsidized Insurance Coverage Table 2: Key Differences in Health Insurance Coverage, 2003 and Survey 2009 Survey of Health and of Long-Term Human Service Care Key Provisions Providers Providers % of Employees Eligible 80% 51.5% Employer Premium Share. Individual Coverage 77% 70%. Family Coverage 70% 60.5% Monthly Employee Premium. Individual Coverage $ $ Family Coverage $ $ Co-pays. Physician office visit $10 $20. RX $10 generic $10 generic. $20 preferred $25 preferred. ER $50 $75. Hospital visit $200 $250 If less than one-fifth of direct-care workers are enrolled in ESI, then how are these workers accessing coverage? Direct-care workers who are ineligible for ESI may be insured through MassHealth or publicly subsidized Commonwealth Care. Workers who are eligible for ESI but not enrolled have fewer choices. These workers may be covered through a spouse but they are not eligible for Commonwealth Care, and may be among the uninsured benefiting from the state s Health Safety Net, a program that covers medical services to those who are not eligible for health insurance and cannot afford to purchase it under the individual mandate. 22 We approximated the numbers of direct-care workers accessing public insurance options by reviewing the Massachusetts DHCFP s annual report identifying large employers (50 or more employees) whose employees receive health services through publicly subsidized programs. 23 Of the 1,553 employers identified in the state s Division of Health Care Finance and Policy 50+ Employers Report for 2009, we identified 191 eldercare/disability services employers. These employers represented Roughly one-fifth of the state s 12.3 percent of all employers on the list. direct-care workforce may rely on Data from the report indicates that these 191 these [public] programs for coverage employers had 21,014 employees receiving their health insurance coverage through publicly because they are ineligible for, or subsidized programs. Since direct-care workers unable to afford, employer-sponsored in the state currently number about 100,000, this insurance. suggests that roughly one-fifth of the state s directcare workforce may rely on these programs for coverage because they are ineligible for, or unable to afford, employer-sponsored insurance. Notably, this is roughly equivalent to the number of direct-care workers receiving coverage through their employers. 18

21 The Department of Revenue estimates that in FY 08 the state incurred $669.2 million in expenditures related to providing health care to the employees (and their family members) of businesses and organizations employing more than 50 persons. Of this amount, the state spent an estimated $63 million on health services for the employees and dependents of eldercare/disability services employers. The majority of these expenditures were directed to MassHealth ($48,164,060), with Commonwealth Care ($10,098,775) and the Medical Safety Net (former Uncompensated Care Pool What is most important is that these $4,732,377) comprising the rest. workers, who constitute a substantial Public health expenditures that the state incurs portion of the Commonwealth s in order to provide health coverage to eldercare/ disability employees most of whom, presumably, health care workforce, have access are direct-care workers represent an additional, to affordable coverage. but largely hidden, cost incurred in the provision of long-term services and supports to people of all ages with disabilities in Massachusetts. The majority of these services and supports are financed by public programs such as Medicare and Medicaid. Whether it is more efficient to cover workers through the public safety net rather than through employer-sponsored coverage is an open question. What is most important is that these workers, who constitute a substantial portion of the Commonwealth s health care workforce, have access to affordable coverage. 19

22 Conclusions Under historic health care reform legislated in 2006, Massachusetts is achieving unprecedented rates of health coverage. According to the latest data, less than 3 percent of the state s population lacks health insurance. Moreover, coverage gains have been achieved without the feared exodus of employers from the employer-sponsored insurance (ESI) system. However, while these gains have been The employer-based health insurance undeniably impressive, the goal of moderating the system is not meeting the needs of growth of private health insurance premiums has proved more elusive. In 2008, Massachusetts had the employers or their direct-care staff. most expensive family premiums, and the eighthhighest individual premiums, in the country. This study, conducted by researchers at Tufts University and PHI, examines the impact of Massachusetts health care reform on one of the state s largest and fastest-growing industry groups: the eldercare/disability services sector and its primary workforce of direct-care workers. Eldercare/disability services play an increasingly pivotal role in the Massachusetts economy, currently accounting for one-third of all health care and health assistance employment in a state traditionally dominated by research and teaching hospitals. In addition to its growing role in the state s economy, the eldercare/disabilities sector is notable for two other reasons. First, its employment core depends on a large frontline workforce of mostly low-wage earners direct-care workers who nationally lack health coverage at twice the rate of the general population. Second, because employers in this industry sector often provide services under publicly funded long-term care programs, their finances are often very sensitive to public payment policies. This study offers three main conclusions: The employer-based health insurance system is not meeting the needs of employers or their direct-care staff, largely because the current price of private health insurance in Massachusetts is prohibitive for many employers and their workers. As a result, public and publicly subsidized insurance programs are essential to this sector. Reform measures appear to have strengthened subsidized options for both employers and direct-care staff. However, access to these options is far from seamless, sometimes leading to perverse employment outcomes. For example, to qualify for MassHealth or Commonwealth Care workers often reduce their hours worked. Similarly, employers may limit eligibility for health benefits to those who work To qualify for MassHealth or full-time, but then offer employees only part-time hours. These disincentives to work are particularly Commonwealth Care workers often problematic for the home care industry, which is one reduce their hours worked. of the Commonwealth s fastest-growing employment sectors. 20