Wednesday, September 02, 2009

Mass Confusion

Kaiser Foundation has released new reports about the Massachusetts experiment in universal health coverage. The Bay State is held up as a model for Obamacare so it is only fitting to see what they have done as a precursor to what is in store for the other 49 states.

The expanded health care program was enacted in 2006 under then governor Mitt Romney. Among the provisions in the legislation are the following.
Requiring people age 19 and older to purchase health insurance coverage if “affordable coverage” is available. This is known as the “individual mandate.”

• Expanding MassHealth (the Massachusetts Medicaid program) to cover children with incomes up to 300 percent of the Federal Poverty Level (FPL).

• Creating a new subsidized health insurance program, Commonwealth Care, for adults with incomes up to 300 percent of FPL who do not have access to other insurance.

• Creating the Commonwealth Health Insurance Connector Authority (the Connector) to set policy and facilitate access to insurance for state residents.

The Connector:

• Sets affordability standards that specify the amount that people can afford to spend on health insurance premiums. People for whom insurance is deemed unaffordable are exempted from tax penalties for not having insurance.

• Sets Minimum Creditable Coverage (MCC) standards for insurance plans to satisfy the individual mandate.

• Sets rules for the Commonwealth Care plans and negotiates contracts with health plans that provide services to enrollees.

• Approves non-subsidized health plans, called Commonwealth Choice plans, which are available to people who do not qualify for the subsidized plans and want to purchase insurance in the non-group market.

• Converting the Uncompensated Care Pool to the Health Safety Net (HSN), which reimburses hospitals and community health centers (CHCs) for a portion of the uncompensated care they provide. The HSN helps subsidize the costs for uninsured individuals not eligible for other programs and for people who are underinsured
Nice, but what does this mean in plain English?

In summary, if you are over age 18 you are required to buy "affordable" health insurance or pay a fine. The state determines what is affordable and what is not, as well as setting minimum benefit levels for policies sold in the state.

The state also has a new level of bureaucracy to oversee all of this, including reviewing available plans and pricing.

So what is affordable?

Affordable health insurance

What they are saying is, if you are an individual earning $32,000 per year the most you should pay for health insurance is $116 per month. A family earning $55,000 shouldn't pay more than $364 per month.

These are certainly generous and would meet almost anyone's definition of affordable.

Unfortunately the state of Massachusetts has made it almost impossible for anyone to find affordable health insurance in Massachusetts.

Minimum coverage

These are very nice benefits to have, but also very expensive. Add in the provision that prohibits medical underwriting and the result is premiums that are twice what you would pay for health insurance in Atlanta.

Using a popular online quoting service to search plans and rates in Boston turned up only 8 plans available. Premiums for a family of 4 with two adults age 40 ranged from $1082 to $1580 per month.

Using the same demographics in Atlanta turned up over 150 plans ranging in price from $195 to $1082.

I will tell you, the doctors and hospitals in Atlanta don't charge any less for their services than those in Boston, so the premium difference can only be chalked up to the mandated benefit levels in Massachusetts.

The Massachusetts model has been praised because they have reduced the number of uninsured from 6% to 3% in less than 3 years. That is admirable, but at what cost to the individuals and most importantly, the taxpayers.

Recently Massachusetts announced they would not be able to cover legal immigrants under the taxpayer subsidized plan because they ran out of money. In the interim, those covered under this plan were encouraged to use free clinics and charitable hospitals.

Commonwealth Care, the taxpayer subsidized "public option" is also bleeding profusely. One can only surmise that, not only do members of Congress fail to read legislation before signing it, they don't even bother to see if their gold standard is working.

Smaller cars, bigger health insurance, Poppa Washington.

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