For the vast majority who don’t follow MA health reform closely, the significance of the release of today’s new about the first round of bids for “Commonwealth Choice” non-subsidized insurance policies may be hard to grasp. Insurers will begin marketing these plans in early May for coverage that takes effect starting July 1 2007. So let’s take a shot at the importance of this, as well as some related observations.
First, in January, the Connector’s announcement that the average preliminary premium bid was $380 received national attention, making many wonder if MA health reform was falling off the tracks. Premiums that high are plainly unaffordable for most folks with incomes between 301 and 600 percent of poverty ($30-60K for a single adult), making reasonable enforcement of the looming “individual mandate” darn near inconceivable.
Premiums as low at $153 (Neighborhood Health Plan premiums, with prescription drugs, outside Eastern MA — below $100 when treated as non-taxable income) reduce significantly the legitimate affordability worries that greeted the $380 number. In fact, the $380 number was artificial — an average that included some ridiculously high estimates by carriers that had no desire to play in this market.
Second, the decision on prescription drugs or no drugs in all policies is still on the table. The Connector asked for bids with and without drugs and got them. In general, drugs adds between $17 and $75 per month — less for 20-somethings and more for 56+ year olds. That decision will be made at the Connector Board meeting on 3/20. So stay tuned.
Third, these new numbers will change the nature of the discussion on the Individual Mandate. Penalties for non-coverage fall on those for whom the purchase of insurance is deemed “affordable,” definition to be set by the Connector within the next month or so. The discussion can now be rooted in a dollars and cents discussion with real premium levels on the table for everyone’s consideration. Importantly, while the penalty for non-coverage is based on one half the cost of the most affordable policy in a geographic region, the determination of affordability — according to Chapter 58 — MUST take deductibles into account as well as premiums. No wiggle room on this.
Fourth, with these bids we can now begin to guage what the minimum individual mandate penalty — when fully effective in 2008 — will be for folks in different geographic regions (final decision depending on drug coverage — let’s use the with-drug coverage number). (Note to self — are the IM penalties supposed to differ by age category? Got to check…numbers below are based on the premiums for the Young Adult Plans):
Eastern Mass: $861
Central Mass: $756
Western Mass: $756
Fifth, left out of today’s presentation were details on cost sharing. Some plans have limited cost sharing, some have deductibles, and some have co-insurance. Also not discussed is the nature of provider network restrictions — NHP’s plans, for example, rely heavily on steering patients to community health centers for basic care.
Sixth, also left out of today’s presentation were costs of higher benefit and lower cost sharing plans. The plan details released today are for the “.60″ actuarial value plans (meaning 60% of the value of the most comprehensive plan with the least cost sharing). Details on these other higher cost plan offerings were not released.
Seventh, kudos to the Patrick Administration. The Governor got personally engaged in this and intervened with health plan CEOs to pressure them to come in lower. A&F Sect. Kirwan, HHS Sect. Bigby, Connector ED Kingsdale all rolled up their sleeves and worked on this. Kudos to the Insurers who came in with much more affordable offerings — NHP, Fallon, Tufts, Blue Cross, Harvard Pilgrim, Health New England, and Connecticare.
It will be fascinating to observe how Commonwealth Choice changes or does not change the functioning of the small/individual insurance market (merger happens 7/1/07). Will this become the center of gravity or a sideshow? Will businesses and individuals with coverage now gravitate to this new market?
Eighth, this is by no means the end of the road of heavy decisions ahead. Lots more to come, and many of these will be intense, contested, and controversial. Importantly, the broad array of stakeholders who supported the passage of the law last April are hanging together, negotiating differences, and working things out. We have significant differences on many points, and we’re not letting those difference derail the essential work of expanding affordable coverage and making the new law work as well as possible.
Also since last April, there have been voices across the country — right and left — denouncing the new law and predicting its failure and demise. They had a field day chortling over the $380 number. I had one colleague in New York confidently tell me he’s giving Chapter 58 “three years to fail.”
Well, health reform passed a significant and treacherous milestone today. And it’s still on track.
John McDonough
admin says: “And individuals decide themselves on that tradeoff”
WRONG WRONG WRONG
Very misleading to say that. People are BEING FORCED to choose between limited options; this reform approach is creating a stacked deck to satisfy propping up/building on the private insurance industry that by its very nature treats healthcare as a commodity rather than as a public good.
“Essentially, the cost has been shifted from the premium to the deductible but remains about the same.” (as a previous commentor rightly points out).
The Emperor Has No Clothes and the minions are smiling and saying “oh, doesn’t he look nice”.
Please inform yourself of a smarter, more cost-effective, clinically effective and more civilized approach to universal health reform and sign on to help make it our reality. Visit http://www.MassCare.org/about. Thanks.
Response to Ted:
The deductibles vary. Some plans have deductibles as high as 2K and others have none. There is a clear tradeoff between lower premiums and higher cost sharing. And individuals decide themselves on that tradeoff. The Globe article also clearly showed there are individuals who prefer higher deductibles, and regard the deductible limit for Connector policies as too low. Enforcement of the individual mandate must be based on both the premium and the deductible.
Today’s Boston Globe (Monday, March 5) reports that the likely deductible for these lower premiums will be around $2000 for an individual. This doesn’t make the lower premiums look so good any more. Essentially, the cost has been shifted from the premium to the deductible but remains about the same. Also, as noted in the Globe, such high deductibles will keep people from using the insurance that they are being forced to purchase. This doesn’t look like reform to me. How can we justify requiring people to purchase a product that they then will not use?
If you are stuck with an HMO, the company decides exactly what you get (or don’t get). This is why some families have to run spaghetti suppers to raise funds when their child needs a transplant. Some call that community spirit; I call it begging. Want to sue an HMO? The Supreme Court has said you can’t. If you don’t have an HMO now, it may be better to just keep your policy and pay the penalty. Also, my insurance representative suggested I keep my current plan because the current law will probably be struck down.
I have a PhD in economics, and it’s Econ 101 that a small group of suppliers will (legally) collude in a protected market. You can expect to see huge increases because the state has jimmied the rules to exclude out-of-state providers. By requiring no lifetime maximums and the two doctor visit rules, no nationally available plans can compete. The rates that are being offered are teaser ones.
There are a few other nasty implications of this law: If your employer pays your health insurance and you lose your job your FIRST expense will be having to buy health insurance. This comes before food, housing and your children’s clothes. Should you choose to feed your children over carrying “approved” insurance, Mass DOR will have the authority to fine you. Oh, and if you do get seriously sick, you’ll need to fork over $2000.
Another nasty complication are workers who are employed by out-of-state firms. When I contract with these firms, they don’t cover benefits. This means that (if they employ enough people in Mass.), they will get a fine. This puts me at a competitive disadvantage since these firms can hire workers from other states. This is also another reason for firms not to locate to Mass.
The simple fact is this: If Mass. would deregulate its insurance market, you could find cheaper and better plans from national providers. Instead, fines are levied. And all of these fines and mandates do *nothing* to expand the available supply of health care. Greater demand + steady supply = higher prices.
I appreciate the idea behind the Mass. regulations — and this open forum which allows for a free exchange of ideas.
I live in Federal Public Housing and work parttime for a non-profit. My rent is recalculated once a year through my gross income. Now, I’ve been told that my premiums will be paid with my pre-tax dollars. My rent will be calculated (and most likely, increased) with these pre-tax dollars which essentially I won’t have to begin with because it is paying for something that I will legally have to have. Unfortunately, this has the potential to create financial hardships for others like myself.
I think the more important questions are yet to be answered than just the premium
What if someone wants to go outside of network for their treatment? Who pays the bill, the client or the health plan?
Who determines what is medically necessary, the doctor or the health plan?
If the health plan determines the answers to these questions, they can offer lower premium pricing in return for limiting their exposure or not allowing care at the more expensive, more experienced providers.
Lastly, I think the premium increases next year will be along the lines of 30-40% at a bare minimum. The health plans had the premium figure correct at the $350-400 range. Since the state has forced them to reprice these plans in order to participate in this marketplace, the health plans will be forced to raise their prices in order to be profitable.
I object to your use of the term 600% of the fpl. Let’s be serious here. The average income in Massachusetts is below that figure and it would be more honest for you to compare incomes to the average than the federal poverty level. Real people don’t like to be related to how close or far away we are from poverty but rather the average. Someone at 400% of the fpl is closer to the average income than the poverty level. Isn’t most of Massachusetts below 600% of the fpl?
Details are what matter. Thanks for details on what’s known thus far and more when it’s available.
Advocates want reform that will help patients, families and communities, not “reform” that largely serves the people and the co’s who in john’s words “don’t want to play in this market” (at the expense of real people in need).
This very real and ever-present tension is what much of the Chapter 58 criticism has rightly been about.
Advocates and activists will stay tuned and stay active working for reform that helps people not profit-makers.
Beyond what works in Chapter 58 more reform will certainly be needed. Many details on this can be found at http://www.MassCare.org/about
I couldn’t agree with you more. As a member of the Connector Board, these new sets of bids are realistic, and move us a step forward in providing everyone in Massachusetts with the opportunity to be insured. While these low cost plans do not provide people with the “first dollar” coverage many people are use to in this state, they will give people access to preventative care as well as protection against financial crisis if they are very sick. These plans will help you NOT get very sick by helping you see a doctor to prevent illnes, as well as protect you financially when things go very wrong.
I personally want to thank members of the ACT! coalition-HCFA, GBIO, MHA, League of Health Centers, Partners, and all the other hospitals and consumer advocates who have worked tirelessly to help the Connector Board “do the right thing”. With these lower prices, and with the Governor’s commitment to making sure all plans end up covering prescription drugs, Massachusetts is once again about to be a beacon for everyone across the nation in covering everyone with decent health insurance.
Thank you guys for being the wind behind our back!
This step has made health care reform a practical reality now. We can insure every citizen, and, as the Governor said at the press conference, all of us want to find a solution to providing drug coverage for everyone. The members of the Connector Board have always voted to provide precription coverage. Now, with the prices in, we have the numbers we need to make it happen. Thank you to HCFA, GBIO, MHA, Partners, the League of NHCs, and all the others who have pushed us (the Connector Board) to get it right.
Step by step, we are insuring every resident. 110,000 covered, with several hundred thousand to go!
Right, John. I recall lots of gloom and doom from some observers a few weeks ago on the first round of this. Everyone knew this would take some time and effort. Congrats to you and the others for your persistent advocacy and to the Governor and Jon Kingsdale for doing the unglamorous work needed to keep things moving.
I’m currently self-employed and pay a little over $153 a month to my out-of-state health insurer. I can choose any doctor, have a similar deductible, and am in complete control of my health care. So, for my $153 at Neighborhood I get to enjoy the luxury of an inferior HMO product which sends patients to community health centers. Oh, and no such centers exist in my part of the state so looks like I’ll have to pay more than $153 plan. I don’t care if the insurance company is “spunky.” I want one that’s good and will be there when I need them. This is a business decision, not rooting for a little league team.
Is penalizing older people more than younger people (just for being citizens) even legal? Isn’t sharing health insurance with the Mass DOR against HIPA law? What about that “spunky” equal protection clause in the state constitution?
Not to rain on the parade…but what happens when the insurance firms take huge double digit premium increases every year (and you know that they will!)? There is no price regulation in place. This was all so ill conceived.