Panel sets rate plan for health coverage

Low-earners would pay up to 6.6% of income

By Liz Kowalczyk, Globe Staff  |  August 17, 2006, The Boston Globe

Lower-income uninsured residents would have to pay up to 6.6 percent of their income to buy health coverage under a state panel's recommendation, an amount that is more than is typically paid by higher-income people with employer-provided insurance.

The plan, which state regulators will vote on today, calls for lower-income, single adults to pay $10 to $100 a month toward their health insurance, or between 1 percent and 4.5 percent of their income, depending on their annual earnings. Lower-income couples would pay $20 to $200 a month, or between 1.5 percent and 6.6 percent of their income. Children will be covered under the state-federal Medicaid program.

Residents' ability to afford these premiums will be crucial to the success of the state's landmark health insurance law that passed in April. The law, which other states are monitoring as a potential model, requires all residents to be insured by next summer. But if the state and private insurers cannot come up with affordable insurance, the law would allow many of the more than half-million uninsured to be exempted from the mandate.

The proposal involves coverage for the more than 100,000 uninsured residents who earn between 100 percent and 300 percent of the federal poverty level, $29,412 for a single person. The state will subsidize the premiums for this group, but the subsidy will shrink as incomes rise, leaving people with incomes at the higher end of the range paying a greater share of their income. For uninsured residents who earn less than 100 percent of the poverty level, the state will pay the entire premium.

Advocates for the uninsured have heavily lobbied members of the Commonwealth Health Insurance Connector, a new agency that must decide what is affordable and help set insurance premiums for the uninsured. They generally have argued that low-income residents can afford to spend no more than about 2 percent of their income for health insurance premiums, which is close to the percentage paid by many middle-income residents who have insurance through their employer. People with employer coverage but lower incomes often pay a higher percentage of their income, however.

The Connector subcommittee that made the recommendations struggled with the issue of what is affordable for several weeks and only reached a consensus in the past few days. Celia Wcislo, assistant division director of SEIU Local 1199 United Healthcare Workers East and a panel member, said that all members agreed to strongly protect residents who earn less than 200 percent of the poverty level, but that there was disagreement about what to charge people who earn more.

The group decided to exceed 2 percent of income for some residents, because it was concerned that if individuals' contributions were too low, the state would run out of money for subsidies and not be able to cover everyone.

``That was some of the tension," she said. ``We wanted to make sure we cover as many people as possible. If it only covers half of the people who need it, how good of a plan is that?"

After voting today on the subcommittee proposal, the Connector plans to take comments at a public hearing on Sept. 25 and later decide whether to make changes.

Advocates for the uninsured said the proposal would be difficult for many people , especially those at the higher end of the lower-income scale .

``The concern is that lots and lots of people under 300 percent of the poverty level are not walking around with extra money in their pockets," said John McDonough, executive director of Health Care For All, an advocacy organization based in Boston. ``Not only are they not walking around with extra money, they are walking around under the crushing burden of debt. They're living pay check to pay check."

As the recommendations became public yesterday, Health Care for All and other organizations credited members of the subcommittee for hard work under very aggressive deadlines. Subsidized coverage for people who earn less than 300 percent of the poverty level was supposed to start Oct. 1, but the Connector has decided it cannot begin health plans for most of this group until January.

Advocates, however, said they believe that people at the lower income levels will be able to afford their part of the premiums. For example, single adults who earn between 150 percent and 200 percent of the poverty level, $14,700 to $19,608 annually, would pay $29 a month, or 2 percent of their income on average.

The Greater Boston Interfaith Organization has been leading budget workshops at churches and synagogues for uninsured members.

Brother Jack Rathschmidt of Our Lady of Lourdes in Jamaica Plain said advocates are hoping the Connector will test the rates and if many people do not sign up for health insurance because they cannot afford it, lower them before insurance becomes mandatory next July.

``The Connector is facing some significant time pressures that are forcing them to move rapidly," McDonough said. ``We're hoping we can get them to take another look at this."

The Connector, which will contract with private insurers to provide the health plans, has said the plans must include a full range of benefits including coverage for mental illness. But the subcommittee recommends the plans not include dental insurance for people between 100 percent and 300 percent of the poverty level. Because this would add $20 to $60 a month per person to the premiums, the group decided it was too expensive.

The subcommittee also recommends copayments for this income group for office visits, medications, emergency room visits, and other services, but would cap them at $500 or $750 annually.

Under the law, those individuals who don't get coverage would first lose their personal income tax exemption.

Eventually, they could face a yearly fee to the state equal to half of the lowest-cost available insurance plan.

Wcislo said the Connector will review the contribution amounts if they prove unaffordable for the majority of people.

The board will also establish an appeals process to allow residents to show they cannot afford insurance and be exempted from the law.


Copyright 2006 The New York Times Company