New health plans: better than what's out there

IN THE DISCUSSION of the new health plans that will be available to uninsured people in Massachusetts starting May 1, one important detail has been missed: These plans are far better and more affordable than any plan uninsured individuals can purchase right now.

Under the plans announced last week, the typical individual who is uninsured -- a 37-year-old living in Greater Boston -- will be able to buy health insurance from the Connector for as little as $175 per month. That's about half of the $335 premium individuals would pay now if they tried to buy insurance on their own.

Currently, people don't have a lot of choice if their employers don't offer them insurance and if they earn too much to qualify for state-subsidized insurance. All of their options are expensive, as is the alternative of forgoing coverage and paying all medical expenses out of pocket. So let's do some comparison shopping.

Right now, an individual in Massachusetts can buy insurance for $335 a month. That plan doesn't cover prescription drugs, so consumers have to foot the bill for all medications. It includes a $5,000 deductible, meaning that until that amount is reached, consumers have to pay out of pocket for every medical expense, from doctors' appointments to emergency room visits.

Compare that with the $175-a-month plan the Connector will soon offer. This plan covers prescription drugs. The deductible is $2,000 -- no small amount, but less than half of the $5,000 the same consumer pays under a plan now offered. Even more important, the Connector's plan, unlike current plans, allows patients to see primary-care physicians and specialists for just a small co-payment before the deductible is met. (Truth in advertising: Premiums generally rise over time, so the plans may cost 1-2 percent more by July 1.)

All told, then, the Connector has successfully cut the monthly premium consumers pay today by half, and slashed the deductible by almost two-thirds. The result is not cheap -- healthcare never is -- but it's far more affordable than anything available today. And the Connector is looking to make it even more so, by working with employers to allow employees to pay for insurance with pretax dollars. This would further reduce the $175 premium to a net cost of about $109.

Also, these new plans include important protections. They help protect against medical bankruptcy by capping out-of-pocket expenses at $5,000. Even if an enrollee needs major surgery or contracts a chronic illness, no one will ever have to pay more than $5,000 for hospital and medical services in a given year.

Massachusetts also guarantees access to coverage, meaning that health insurance companies cannot refuse to sell an individual insurance because he or she is sick, nor can they raise premiums if an enrollee falls ill. Whichever policy a consumer chooses, the insurer has to provide it and has to renew it.

So how is Massachusetts delivering more insurance for lower premiums? Because of two reforms. First, Massachusetts is changing the current system, which penalizes those who have insurance by forcing them to subsidize services for people who don't buy insurance. By expanding the pool of people with insurance, Massachusetts is helping drive down everyone's costs.

Second, the Connector is increasing competition among health plans. Ten health plans bid to receive the Connector's seal of approval. Everyone who shops for health plans at the Connector can now compare the seven "winners" who were approved to offer health insurance starting May 1. That's creating choices that didn't exist before.

Massachusetts is leading the way on healthcare reform. It is the first state to make high-quality, affordable healthcare available to every resident. It is the first to require that people with insurance have access to preventive-care office visits before having to pay a deductible. It is the first to cap annual deductibles and out-of-pocket medical spending. And, when the board meets on Tuesday, Massachusetts is expected to become the first state to phase in a requirement that all health plans offer prescription drug coverage -- an extraordinary benefit that not even Medicare requires. Once Massachusetts takes this step, it will have guaranteed a level of health security unprecedented in the United States.

Jon Kingsdale is executive director of the Commonwealth Health Insurance Connector Authority.