BOSTON -- Massachusetts finds itself in a unique position as states gear up to launch new insurance marketplaces under President Barack Obama’s health care law.
It was Massachusetts that created the blueprint for the marketplaces when it passed its landmark 2006 health care law, making it the first state to create the kind of exchanges envisioned under the federal Affordable Care Act.
But the state and federal laws aren’t mirror images, and that means plenty of work trying to mesh the two.
Many of those changes are being welcomed by state officials who say Massachusetts could reap hundreds of millions in additional federal dollars under the law.
"There is no question that the Affordable Care Act benefits Massachusetts in very concrete and significant ways," said Glen Shor, Massachusetts secretary of administration and finance.
But the federal law could also mean some smaller employers and individuals could end up paying more for coverage, and reconciling the laws could spark disruption with some individuals forced to shift from one health program to another.
The federal law could also cause headaches for those deemed able to afford health care but who opt not to. Both the state and federal laws have individual mandates that levy tax penalties to those who refuse to get insurance.
Since the inception of the state mandate, Massachusetts taxpayers have paid more than $115 million in penalties. For 2013, the state penalty is as much as $106 per month or $1,272 per year for an individual. Those who earn up to 150 percent of the federal poverty level don’t face penalties.
Federal penalty to take effect in 2015
The federal penalty kicks in next year, meaning uninsured individuals could face federal tax penalties when they file in early 2015. The new federal penalty doesn’t mean the state mandate goes away, however, though that won’t trigger a double penalty.
Officials say the higher penalty will act as a cap. If an individual owes a $95 federal penalty and a $200 state penalty, they will pay the federal penalty and that amount will be deducted from the state penalty.
Businesses are also keeping a close eye on the federal law, which will affect insurance costs for smaller businesses and individuals who pay out-of-pocket for insurance.
Changes in what factors can be taken into account when determining insurance rates means about 14,000 individuals and small businesses that employ 377,000 workers could see their costs rise, while about 69,000 individuals and businesses employing 256,000 workers could see costs drop.
The increases could be as high as 10 percent, but a federal waiver will let that increase be phased in over three years.
Re-enrollment required for some
Merging the two laws will also require many people already receiving insurance coverage to re-enroll or be shifted to new programs.
The biggest change will be for those insured through the state’s subsidized Commonwealth Care program. Under the federal law, about 150,000 will have to re-enroll in health care plans beginning Tuesday.
They’re not alone.
Aligning the federal and state laws means an additional 100,000 individuals will be shifted from Commonwealth Care into the state’s Medicaid program, known as MassHealth, and 45,000 uninsured people will become eligible for MassHealth.
The ACA allows states to offer Medicaid coverage to low-income adults making less than 133 percent of the federal poverty level, or about $15,000 a year for an individual.
As a result of the change, state officials expect the total number of individuals in MassHealth to hit about 325,000 next year.
State health officials say they’re working aggressively to make sure the enrollment efforts go as smoothly as possible so no one falls off insurance during the transition. They say they want to protect Massachusetts’ status as the state with the highest percentage of insured residents.
"We are doing everything we can not to backslide," said John Polanowicz, secretary of health and human services.
On balance, Massachusetts officials say that, despite any disruption, the federal law will help the state strengthen health care services.
They say the state will also reap an additional $200 million in higher federal reimbursements during the current fiscal year and $400 million in the fiscal year that begins next July.
The state has taken other steps to help smooth the transition.
Lawmakers repealed a mandate requiring employers provide health insurance to workers or pay a penalty -- in part because the federal law included its own mandate. Under the federal law, firms with 50 or more employees face a mandate to offer insurance or risk fines from the government starting in 2015.