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Health plan may exempt 20% of the uninsured

To remove the threat of a public backlash, the state plans to exempt nearly 20 percent of uninsured adults from the state's new requirement that everyone have health insurance.

The proposal, expected to be approved by a state board today, is based on calculations that even the lowest-cost insurance would not be affordable for an estimated 60,000 people with low and moderate incomes who do not qualify for state subsidies. Forcing them to buy insurance or pay a penalty could jeopardize the rest of the state's initiative, officials said. Instead, the state board appears prepared to settle for near universal coverage, all but 1 percent of the state's population.

The proposed affordability standard is a compromise between those who believed that broad exemptions were needed and those who argued that most people could afford new state-approved insurance plans. State officials had previously indicated they were not inclined to exempt many people.

The compromise drew praise yesterday from many quarters, including some who see the state's initiative as a national model.

"Getting to 98 or 99 percent insured is about the best that anyone is going to be able to do," said Karen Davis, president of the Commonwealth Fund, a New York-based foundation that sponsors research to improve healthcare.

"I don't see it as an unraveling, but a sensible, pragmatic way to deal with the issue of how affordable premiums are."

The law, signed a year ago today, set the goal of universal insurance but required that waivers be given to individuals for whom insurance was unaffordable. The definition of affordability was left to a state board, the Commonwealth Health Insurance Connector Authority, which is implementing the law.

The decision has been widely seen as one that could make or break the success of the initiative. Under the law, all adults must have insurance by July 1. A penalty, initially $200, will be imposed on those who do not have insurance by Dec. 31.

In addition to the exemptions, the proposal from the Connector Authority staff would expand subsidies for 52,000 of the lowest-income individuals and families who qualify for a state-sponsored insurance program called Commonwealth Care. Specifically, it would extend free coverage to individuals earning up to about $15,000 a year and families of four earning up to $31,000. It would also reduce the cost of insurance by $5 a month for those earning between $15,000 and $20,000 who are eligible for Commonwealth Care.

The increased subsidies would cost the state about $13 million more than the $470 million estimated for the fiscal year that starts July 1. A portion of the money would be taken from funds used to pay for free care at hospitals, a state official said.

The new proposal adopts some of the recommendations offered by a coalition of advocacy, labor, and medical groups, which had argued that applying the insurance mandate to people who couldn't afford it would undermine public support. Some had threatened to lead protests against the law.

Advocates praised the proposal yesterday, even though it does not exempt as many people as they had hoped. Celia Wcislo, a labor representative on the Connector Authority board, said she would vote for it.

"We think this protects the folks we are most concerned about -- the poor and those with low-moderate income -- while making it possible for as many people as possible to have insurance coverage," said the Rev. Hurmon Hamilton, pastor of Roxbury Presbyterian Church and president of the Greater Boston Interfaith Organization, which had pressed for broad exemptions.

The plan sets up a sliding scale, based on income and family size, to determine whether available premiums are considered affordable. For example, individuals making about $33,000 a year would be exempted if they can't find a policy meeting state standards that costs $150 a month or less. Connector staff estimate that about 30,000 individuals making more than $30,000 a year would be exempted.

In addition, the sliding scale would exempt about 30,000 people who earn less than $30,000 but who are not eligible for subsidies because their employers offer them a chance to buy insurance, Connector staff said.

The proposal also allows individuals to apply for hardship waivers, based on individual circumstances other than income.

In response to lobbying from activists, Governor Deval Patrick agreed yesterday to waive Medicaid premiums for children of parents who enroll in Commonwealth Care. The move would affect about 10,000 families.

Annabelle Blake would probably get a break under the proposal. The 34-year-old Roxbury woman has been scrambling to find a full-time job with health benefits because paying for insurance is a stretch on her income of just over $30,000 a year. The least expensive policy available to her costs about $175 a month, more than the $150 limit for her income.

"It takes the pressure off to come up with a job or the money for insurance," she said yesterday. "I don't want to be the person who burdens society by going to the emergency room for care. This would give me a little more time to see how I can get insurance."

Members of the business community said late yesterday that they would support the compromise, despite a letter they sent to the Connector earlier in the day urging strict limits on exemptions. They had maintained that insurance is affordable for most individuals, either through new state-subsidized plans or through new lower-cost premiums for private insurance negotiated by the state. But Richard Lord, president of Associated Industries of Massachusetts and a member of the Connector board, said he would vote for the compromise.

Jonathan Gruber , an MIT economist on the board, also said he would support the proposal although he believes that "people can afford health insurance at higher levels than the compromise."

"My primary concern is fiscal," he said. ". . . We can't solve all our problems by spending more."

Alice Dembner can be reached at Dembner@globe.com.

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