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