Health premiums for poor will vary

Most low-income residents will have to spend between $30 and $140 a month to buy health coverage under the state's new mandatory insurance law, according to an analysis by the Romney administration.

These estimates, the first indication of how much it could cost the state's poorest adults to comply with the law, suggest that insurance premiums would be affordable for many low-income residents but not for all, consumer advocates said.

Health and Human Services Secretary Timothy Murphy said the state developed the range based on what seemed reasonable for residents given their other likely expenses. Some residents will receive discounts off of their share of the premium when employers allow them to purchase healthcare on a pre-tax basis.

For people who earn less than the federal poverty level -- $9,800 annually for a single person -- the state would pick up the entire cost of the premium, which officials estimate will be about $300 a month for an individual and $600 a month for a couple. For individuals who earn between $10,000 and $20,000 a year, the state would pick up 80 to 90 percent of the cost of the premium, a more generous share than that borne by many private employers.

But the subsidies gradually fall as income rises. Individuals who earn $20,000 to $29,400 will pay a far higher share of the premium, as much as 47 percent, or $1,680 a year. Advocates warn that this group in particular could run into trouble paying for health insurance, especially those residents who have crushing housing and child-care expenses or debt.

The subsidies for low-income residents are crucial to the success of the entire law, which requires all residents to have health insurance by July 1, 2007. If the subsidies are too small, many uninsured people would be unable to afford coverage and could be exempted from having to buy it. They would continue to show up in emergency rooms for their urgent care, putting a financial strain on hospitals, and many would not get preventive and other routine care.

An authority created to implement the law, called the Commonwealth Health Insurance Connector, will make the final decisions about the amount of the subsidies. The group plans to meet on Wednesday and must make its decisions soon, because the insurance plans for lower-income residents must be ready by Oct. 1.

``There are a broad array of issues that are going to have to be put on the table," said John McDonough, executive director of Health Care for All, an advocacy group that helped build support for the law. ``One person may carry heavy students loans, while someone else might be free and clear. Some families may need day care and a car for transportation, others don't. The amount of these subsidies is going to be a critically important piece."

The state plans to provide subsidies to up to 200,000 uninsured residents with family incomes between 100 percent and 300 percent of the federal poverty level -- up to $29,400 for an individual and $60,012 for a family of four. Medicaid will cover children in these families. Uninsured residents who earn more than the 300-percent threshold will be required to buy low-cost plans on their own for their families.

Peter Brook, who is 45 and lives in South Boston, will qualify for a subsidy. Brook is a self-employed handyman, landscaper, and construction worker. Being uninsured is a problem for him, because he is diabetic. The South Boston Community Health Center provides free basic check-ups, and Brook gets free insulin from Boston Medical Center. But having insurance, he said, would enable him to get an insulin pump, so he doesn't have to give himself shots several times a day, among other benefits.

Brook earns about $17,000 a year, or between 150 percent and 200 percent of the federal poverty level. According to the state estimates, he would pay roughly $40 of his $300 premium, with the state subsidizing the rest. He said that's an amount he can afford.

``I will have to work a couple of extra hours on Saturday afternoon. But I can certainly make that swing," he said. ``This looks like something that's going to help me out greatly -- as long as it's a real insurance plan without high deductibles and other costs and doesn't bar pre-existing conditions."

Murphy said that the subsidies must be generous, at least in the first year of the law, to convince low-income residents to buy insurance. ``This is a new purchase for most people in this group," he said. ``Today, they aren't paying anything."

Residents who don't buy insurance by July 1, 2007, face fines under the new law, including a loss of their personal income tax exemption. There is one way uninsured residents can escape the mandate: The law allows the Health Insurance Connector to analyze the ``affordability" of the health plans proposed by insurers, both for low-income residents as a group and for individuals who file appeals. If the authority rules the plans are not affordable for certain individuals, even with the subsidies, those people do not have to buy insurance.

A number of advocacy groups plan to survey low-income residents and develop their own recommendations for the size of the subsidies and how much uninsured residents can pay toward premiums. ``When the Connector comes out with its criteria, we're going to hold it up against real people's lives," said Rabbi Jonah Pesner, of Temple Israel in Boston and a leader of the Greater Boston Interfaith Organization, which, along with the Affordable Care Today coalition, will survey residents. ``I have never lived on $24,000 a year with a family. It makes sense to talk to people in the pews about what it means for them to pay $50 a month. We're prepared to support the individual mandate only if the products really are affordable and the subsidies are real."

Before passage of the insurance law, the interfaith group was campaigning for a ballot initiative for universal health coverage, and it will continue to do so if the health plans end up being too expensive for low-income residents.

Consumer advocates also are worried about other aspects of the subsidized health plans.

``On the surface, these sound like meaningful subsidies," said Mark Rukavina, executive director of the Access Project, an advocacy group for low-income residents. ``But what are the benefits and what are the copayments? For people who are not sick, the primary concern is the premiums. But for those likely to get sick, they're concerned with the entire package. A few trips to the doctor and a couple of prescription drugs and you're not only eating into your disposable income, but into your savings as well."

The new law does not allow insurers to charge deductibles to residents with incomes under 300 percent of the poverty level, but the Connector is allowed to approve modest copayments.

Another issue for consumer advocates is fairness. The law prohibits uninsured residents from purchasing subsidized health plans through the state if their employer has offered them subsidized health insurance -- with 20 percent of the premium covered for families and 33 percent covered for individuals -- within the previous six months. This leaves these workers to pay much higher amounts than they would have to for state-subsidized plans.

The Connector could decide to let some or all of these residents into its health insurance plans, but that would mean a far greater number of people would need subsidies, forcing the state to lower its contributions, or come up with more money for subsidies.

Even if the subsidies are generous in the program's first year or two, the state must find a way to control soaring healthcare costs, or premiums could skyrocket.

``One question is how well the Commonwealth lives up to this commitment in coming years," Rukavina said. ``I have a feeling we will be revisiting that commitment as healthcare costs rise."