Federal funding of Massachusetts health insurance reform

The expansion of health insurance in Massachusetts has been largely financed by the federal government.

A recent article in the New England Journal of Medicine paints a sanguine picture of the cost (to Massachusetts anyway) of expanding health insurance through the state’s 2006 reforms (Massachusetts Health Care Reform).

The article reports that in the 2006 fiscal year prior to reform, relevant state expenditures on health care totaled $1,426 million.  Comparable expenditures are estimated at $2,017 million for fiscal year 2009, including $805 million in premium subsidies for Commonwealth Care.  The $591 million increase represents a compound annual growth rate of 12.3 percent.

The article reports that “federal financial participation” (including from a special Medicaid waiver) as a source of revenues is projected at $1,272 million for 2009, a $584 million increase from the pre-reform amount of $688 million in 2006, or an annual growth rate of 22.7 percent.

While other revenue sources changed during 2006-2009, the increase in total state expenditures of $591 million is approximately equal to the $584 million increase in federal funding.