All eyes on Massachusetts health reform: Universal coverage advocates monitor state incentive program

The landmark Massachusetts healthcare reform plan requires all adults in the state to have purchased health insurance by July 1, and policy makers are scrutinizing whether the combination of "carrots" and "sticks" has spurred compliance. The legislation, adopted in April 2006, aims to establish universal coverage by subsidizing insurance for lower-income individuals and penalizing those with higher incomes who fail to sign up. Employers with more than 10 workers have to play or pay: provide coverage to employees or pay an annual fee.

The program so far is having an impact. As of May, more than 100,000 previously uninsured people had gained coverage. However, that increase primarily involves those eligible for subsidized coverage through Medicaid and the state's Commonwealth Care program.

HOW AFFORDABLE?

In June, the Connector board decided that "creditable coverage" includes preventive and primary care, emergency services, hospitalization benefits, ambulatory care, mental health services and prescription drug coverage. It also capped deductibles at $2,000 for individuals and $4,000 for families, and limited annual out-of-pocket spending ($5,000 for individuals, $10,000 for families).

While the subsidized plans appear affordable, the unsubsidized plans have been criticized as too expensive. In a recent poll conducted by the Kaiser Family Foundation, the Harvard School of Public Health and the Blue Cross Blue Shield of Massachusetts Foundation, most respondents were skeptical about the cost and benefits of Harvard Pilgrim's Core Coverage Plan. An individual with income above subsidy levels would pay a $259 monthly premium, $1,500 deductible, 20% copay for healthcare and 50% copay on brand-name drugs. More than half (58%) of some 500 respondents said this was an unreasonable cost, and 62% believed that the individual would be vulnerable to high medical bills.

The Harvard Pilgrim family plan, with an $850 monthly premium and $3,000 annual deductible, received similarly low grades. Almost 60% thought it was unfair to require an uninsured family to sign up for a plan like this.

At the same time, a subsidized individual plan that costs $105 a month, or a family plan with a premium of $210, were considered "reasonable" in cost and likely to provide sufficient protection.

The decision to retain prescription drug coverage, mental health and other costly benefits requires plans to have high deductibles in order to keep monthly premiums reasonable. Whether Massachusetts residents believe this is an equitable trade-off remains to be seen.

Expanded individual subsidies and other outlays will cost Massachusetts $1.6 billion a year, which could become unaffordable in an economic downturn. To keep coverage affordable, the program needs healthy uninsured individuals to sign up, and health policy experts throughout the nation are watching closely to see if this occurs.

Jill Wechsler, a veteran reporter, has been covering Capitol Hill since 1994.