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58 Years Old, $15/hour, No Insurance - What Next? by Bill Walczak

In a previous blog entry, I asked whatever happened to community rating for insurance. For those of you who don’t know, community rating was the system in place for most medical insurance companies in which most people had similar insurance premiums, because the risk was shared among the entire population of insured people.

Community rating has all but disappeared in the private insurance market, but what is still somewhat surprising to me is that the Commonwealth of Massachusetts also abandoned community rating in setting up the insurance system for Commonwealth Care and Commonwealth Choice insurance plans.

This decision allowed the governor to state last year that it was possible for an individual to get medical insurance for $170 per month. The fine print, however, was that this was the insurance premium for a 38 year old man, and the $170 doesn’t include the cost of deductibles and co-payments.

What it also doesn’t say is that the effort to keep the cost down for 38 year olds results in extremely high rates for those in riskier categories, meaning anyone over 38. Just how expensive, you ask?

A class from UMass Boston Nursing School recently visited me to discuss community health. One of the students happened to have with her a previous assignment, which was to find out what kind of insurance was available for an uninsured person in the new health care system. She used information for a 58 year old single female from Fall River, working as a nurse’s aide and making $32,000 per year, which is above the annual income that would qualify her for subsidized insurance. The options were eye opening.

The cheapest plan is from Neighborhood Health Plan. The premium is $4424.64 per year, or $368.72 a month. But you have to add the additional expenses to get a true picture. Co-payments for office visits are $25/visit, and $100 for an emergency room visit. If you need hospital care, you pay the first $2000 out of pocket, then 20% coinsurance after the deductible is met. Lab charges are subject to the deductible, meaning that you have to pay full charge for lab services until the deductible is met. Pharmaceuticals have a $100 deductible, after which you pay a $15 co-payment for generic drugs, and 50% of the cost of any other drug.

The price goes up from there to the "gold" plan of Blue Cross/Blue Shield. (For the record, all the companies have various plans, generally categorized as bronze, silver and gold.) In this plan, the premium is $11,212.20 per year, or $934.35 per month, but there is no deductible. You still have to pay a $10 co-payment for office visits and $50 for an emergency room visit, but there are no additional costs for hospital stays. And co-payments for pharmaceuticals are $10/$25/$45 depending on whether it’s generic or brand name.

There are 16 other insurances offered between the lowest tier and the highest. But of course they're all unaffordable for the woman making $32,000 per year. The lowest cost plan is 13.8% of the woman's gross income, unless she actually needs to use medical care. The "gold" tier is 35% of income. Try it yourself - it's easy to do. Just go to the Connector website, and put in your information, then try some other ages and incomes.

I'm sure the Connector would point out that there are few Massachusetts residents who would be in this income/age category, and they might be right. But my point is that medical care costs a lot of money, and is unaffordable for lots of people in the non-subsidized category. And this somewhat theoretical example is based on 2007 prices, which are expected to rise, or, more accurately, be held to 5-7%. Jon Kingsdale, executive director of the Connector, has rightly pointed out that health reform is unsustainable with the kind of annual premium increases we have seen for the last few decades. My fear is that the premium increases will be tempered by increasing fees, deductibles, and co-payments, or cutting back on what is actually covered, an effort to further mask the actual cost of medical care by pushing more of it out of the insurance plan, taking more money out of the wallet in addition to the monthly check.

The reality is that medical care is already unaffordable, with few realistic plans to even keep the increase in cost to the rate of inflation, let alone reduce the price of care. The problem is that we celebrate the very reason for the dramatic increase in medical costs at the same time we bemoan its cost. Has any candidate for statewide office ever pointed out that their suggested solution to increasing employment in Massachusetts - expansion of life sciences - will dramatically increase the cost of medical care?

2008 will be the year in which our health reform law will have its sustainability tested. It won’t be sustainable if the cost can’t be made affordable for both the consumer and the taxpayer.

Bill Walczak
CEO, Codman Square Health Center

This program aired on January 7, 2008. The audio for this program is not available.

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