"Health Reform in Massachusetts is on track" by Jon Kingsdale

As Governor Patrick announced March 3rd, Commonwealth Choice will offer basic coverage that provides preventive care, primary physician care, prescription drugs, and most other medical services with some cost-sharing, for about $175. I don’t call that cheap, but it is a lot more affordable than some may have been led to believe.

I want to be very clear about what the $175 represents.

First, this is the price (in Boston for the average uninsured individual) of one option that staff has recommended to the Connector Board. If approved, the average uninsured Massachusetts resident (37 years old) will be able to purchase basic health insurance with drug coverage for as little as about $175 a month.

Actually, if purchased through payroll deduction with pre-tax dollars, the net cost of this coverage for someone earning $50,000 a year is reduced to $109 per month. Mass. health reform requires employers with 10+ workers to offer tax-preferred “Section 125 plans.” Most uninsured adults work, and S. 125 plans will substantially reduce the cost of insurance for most uninsured workers.

This is a significant step forward in our efforts to make health care affordable to the uninsured in Massachusetts and to offer them a broad choice of quality plans to meet their individual needs.

Second, we are very pleased that the seven recommended health plans represent a wide variety of options, including: with and without annual deductibles, with and without co-insurance, broad provider networks and more select provider networks. Two of the seven plans are statewide; five are available only in some regions within the state.

With these seven plans, the Connector will be able to offer almost every resident of the Commonwealth 3-5 meaningfully different health plan options, at the basic coverage level. These same health insurance carriers will offer through the Connector a broad array of options at more generous benefit levels, carrying higher premiums. To repeat, however, basic coverage with drug coverage will be available at about $175.

Third, premiums actually vary by many factors. We announced premiums for basic coverage in each region of the state, with and without drug coverage, for the broad range of eligible individuals: (1) for young adults (19-26), (2) for the typical uninsured individual (37 years old), and (3) for individuals aged 56 and above.

The seven different health plans offer different levels of cost-sharing and premiums. Among them, individuals may choose an annual deductible ranging from $1,000 to $2,000--$2,000 to $4,000 for a family--or a basic health plan without any annual deductible. All plans with a deductible cover preventive visits --some cover all physician visits—without the policyholder having first to satisfy any deductible.

Prices on basic benefits actually vary from a low of $108 per month to a high of $505, depending on the plan selected, the individual’s age and where she lives. So, why do we focus on one option for $175?

We focus on $175 because the underlying public question is: What will uninsured people have to pay in order to meet the new obligation for universal participation in health insurance? The answer is: For basic coverage, including drugs, the average uninsured individual in our most populous (and expensive) market will have to pay about $175. Clearly, this is not the average premium being offered by all plans, but it is the minimum that an uninsured individual would have to pay, and it relates directly to next year’s penalty for not having insurance—one half the premium of the lowest priced plan.

I want to repeat—there will be a range of prices available. We did not choose to focus on the price for a Young Adults Plans, in a less expensive market, without drug coverage—Fallon Health Plan’s offering in Central Massachusetts for $108 a month. Nor do we focus on typical tax-advantaged costs--another 38% reduction--bringing the monthly price of that Fallon plan down to $67. On the other hand, nor do we focus on the most expensive option for the oldest individuals.

Our research shows that, when the uninsured are obliged to participate, most of them will prefer the less expensive to the most expensive options available. But we will see, we will learn as we go, and we will make adjustments accordingly.

So, now the Connector can move on to address the next in a series of difficult challenges. I hope no one ever thought that reforming the largest sector of our economy and bringing health security to hundreds of thousands of uninsured people across Massachusetts would be easy or quick. It took three years to enact Massachusetts health reform, and it will take at least two years to implement. By confronting the affordability of these plans, we simply take another big step forward in the long, long march.

Jon Kingsdale is the Executive Director of the Commonwealth Health Insurance Connector Authority