Jan. 26, 2007 – Members of a panel charged with implementing the Massachusetts "universal" healthcare plan redirected some insurers this week to make their premiums more affordable. But critics of the plan say itâ€™s the government that needs to go back to the drawing board.
- Critics Blow Holes in Mass. â€˜Universalâ€™ Health Plan (Apr 12, 2006)
In April, the Massachusetts legislature passed what supporters called a universal healthcare initiative: one that forces state residents to obtain health insurance. The plan offers a sliding-scale subsidy for residents who earn up to three times the poverty level. Those who exceed the income-eligibility threshold for subsidies are required to purchase their own health insurance without help or face tax penalties and fines.
Then-Governor Mitt Romney pledged that healthcare plans would be affordable for everyone and predicted that low-cost plans would be offered for about $200 a month. Romney vetoed a provision in the bill that would have penalized employers for not offering affordable healthcare to their employees.
Last Friday, a subcommittee of the Commonwealth Health Insurance Connector Authority (the Connector), reviewed insurance company proposals for Minimum Credit Coverage â€“ plans that are the cheapest consumers can purchase.
Disappointed by the high costs of the minimum insurance plans â€“ which average around $340 to $380 per month â€“ the Connector told insurers to "sharpen their pencils and come back with more affordable options," said Joe Landolfi, spokesperson for Connector chair Leslie Kirwan.
Critics of the stateâ€™s plan have been warning the government that universal health care achieved through the requirement to buy private insurance will lead to bloated premiums and bare-bones coverage.
But critics of the stateâ€™s plan have been warning the government that universal health care achieved through the requirement to buy private insurance will lead to bloated premiums and bare-bones coverage for middle-income residents who can only afford the minimum plans.
"We should not let these board members get away with telling us that theyâ€™re surprised [about the costs for the minimum plans]," said Steffie Woolhandler, a physician at Cambridge Hospital and the co-founder of Physicians for a National Health Program, a nonprofit organization pushing for comprehensive national health plan.
In an April interview with The NewStandard, Woolhandler predicted: "Many people will be forced to pay thousands of dollars for a policy that is only a piece of paper. If someone actually does get sick, the policy will be so full of gaps â€“ like large co-pays â€“ that they could go bankrupt. Theyâ€™ll be facing the worst of both worlds: [being] forced to hand over thousands of dollars to the private health-insurance companies, and finding that theyâ€™re not actually covered when they get sick."
Benjamin Day, executive director of Mass-Care, a coalition advocating a single-payer healthcare system for Massachusetts, said making a low-cost but effective private-insurance plan is impossible.
"You canâ€™t just tell insurers to provide more-affordable health insurance," Day told TNS. "Unless theyâ€™re willing to erode the quality of the plan, theyâ€™re not going to get an affordable plan because health insurance is just not affordable [through private insurers]."
â€œUnless theyâ€™re willing to erode the quality of the plan, theyâ€™re not going to get an affordable plan because health insurance is just not affordable [through private insurers].â€
Day said the USâ€™s fragmented private insurance system keeps administrative costs â€“ such as marketing expenses â€“ too high to offer cheaper insurance. According to analysis by the Kaiser Family Foundation, administrative costs have risen from $85 in 1986 to $421 in 2003.
Day predicted insurers will offset the cheaper plans by raising deductibles and co-payments â€“ the amount consumers have to pay out of pocket before their insurance kicks in. "Itâ€™s not making it more affordable," he said. "Itâ€™s just shifting the money around."
Day and Woolhandlerâ€™s predictions are already materializing. At the same time the subcommittee called for lower premium costs, committee members lowered their expectations for what benefits lower-cost plans should offer.
The recommendations include a cap on out-of-pocket medical expenses at $5,000 per year for individual coverage, and between $7,500 and $10,000 for family coverage. According to a chart released by the Connector, in November, the board had discussed a $3,000 - $4,000 cap on out-of-pocket expenses.
However, insurance companies are not even required to follow these downgraded recommendations in order to get a "seal of approval" from the Connector; spokesperson Landolfi said they are simply guidelines for the insurers to follow, not mandates.
Asked what would happen if insurance companies dismissed the guidelines, Landolfi said on behalf of the Connector chair: "Weâ€™ll cross that bridge when we come to it. We think everyone wants this plan to succeed."
â€œFor a family who is just above the limit on subsidized insurance, if they have a family member that falls seriously ill and needs treatment year-after-year, that $10,000 out-of-pocket can be a formula for bankruptcy.â€
He added there were some plans submitted that were affordable and "well within the range that we had anticipated. Weâ€™re confident that in the next couple of weeksâ€¦ the carriers will submit plans that will address most of all of the recommendations."
But Landolfi would not provide TNS with details of the plans that he said met the recommendations.
Even if insurers follow the Connectorâ€™s suggestions, critics say health care will remain unaffordable for many people.
"Most people donâ€™t have $5,000 lying around in a bank account," said Woolhandler, of the recommended maximum out-of-pocket expenses subscribers could incur.
Judy Dugan, research director of the California-based Foundation for Taxpayer and Consumer Rights (FTCR), predicted that plans like the Massachusetts initiative and one proposed for his state could leave families in dire situations.
"For a family who is just above the limit on subsidized insurance, if they have a family member that falls seriously ill and needs treatment year-after-year, that $10,000 out-of-pocket can be a formula for bankruptcy," Dugan told TNS.
Several of the committeeâ€™s recommendations were not unanimous, possibly giving insurance companies a sense of further discretion on the minimum plans offered. For instance, three members of the committee favored a ceiling on deductibles, while one member opposed such a cap and another member abstained.
The committee also could not decide on a number of covered routine doctor visits the plans should offer.
Critics of the plan say itâ€™s the government, not the insurance companies, that needs to roll up its sleeves to fix the problem, particularly as other states â€“ such as California and Maine â€“ consider copying the Massachusetts model.
FTCR said states implementing individual healthcare mandates need to couple affordable health care with insurer oversight.
"Something has to give: either the big-bucks lifestyle of insurers and the rest of the medical industry or policyholder benefits," said Carmen Balber, consumer advocate with FTCR, in a press statement. Regulation would rein in "the excesses of the
medical establishment to make benefits affordable," Balber added.
But both Woolhandler and Day said no matter what controls are in place, states can never achieve meaningful universal health care through the current system of private bureaucracies.
"Itâ€™s asking people to buy their own way out of their predicament â€“ I call it a â€˜Marie Antoinetteâ€™ policy," Woolhandler said. "Private insurance is the problem, not the solution."