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Massachusetts-Style Coverage Expansion: What Would It Cost in California?

Institute for Health Policy Solutions

This study examines the potential cost of implementing a health coverage plan in California similar to the near-universal coverage plan unveiled in April 2006 in Massachusetts, which requires all residents to purchase health coverage.

In April 2006, Massachusetts became the first state to require all residents to obtain insurance. The plan has drawn national attention and sparked debate about whether a similar approach could work in California, which has 6.5 million uninsured residents — nearly 12 times the number in Massachusetts.

Massachusetts-Style Coverage Expansion: What Would it Cost in California? explores the costs of a similar approach in California. The analysis, conducted by the Institute for Health Policy Solutions, finds that because of economic and insurance coverage differences between the two states, providing Massachusetts-style health insurance coverage in California would require as much as $9.4 billion in additional funding — or $1,450 per uninsured Californian.

Spending on premiums and out-of-pocket expenses for Californians under age 65 would rise 9.9% per year to just over $117 billion. Contributions from employers would increase 8.8% per year to $63.8 billion, assuming no changes in employers’ contribution policies. The rise in employer spending would be due to a projected increase in enrollment by workers and their dependents who previously declined employer coverage.

The study notes several key differences between the two states. For example, the percentage of the population without health insurance in California is 20.7%, which is much higher than the 13.1% in Massachusetts.

The study is part of a larger California HealthCare Foundation project, begun in 2005, to explore policy options for expanding coverage. Those options include mandating that all Californians obtain coverage, requiring that employers and workers contribute through payroll taxes toward coverage, and other proposals that would impose new requirements on individuals or employers.

An executive summary is also available that provides an overview of the key findings from the issue brief. The issue brief and an executive summary are available under Document Downloads.

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