Massachusetts hikes premiums for state-subsidized health plans by 10%

Washington -- Higher-than-expected costs and enrollment in Massachusetts' health reform program are translating into higher premiums and co-payments for enrollees and a concern physicians will face pay cuts.

The Connector Authority, the board overseeing the state's comprehensive health system reform program, unanimously agreed on March 20 to raise monthly premiums by 10% for its subsidized health plans starting July 1, the beginning of the state's 2009 fiscal year.

Residents earning less than 300% of the federal poverty level are eligible for these plans, collectively known as Commonwealth Care. More than 176,000 people were enrolled in these plans as of March 1 -- 40,000 more than expected for fiscal 2008.

The hikes are an improvement over the 14% premium jump initially proposed by the health plans, according to Connector board spokesman Dick Powers.

The 10% increase will apply to enrollees in several income groups. For example, premiums will go up by $4, to reach $39 a month, for enrollees earning between 150% and 200% of the poverty level. Those at the high end of the qualifying income range, between 250% and 300% of the poverty level, will see premiums increase $11, to reach $116 a month.

Enrollees earning less than 150% of the poverty level will continue to pay no premiums. Those earning more than 300% of the poverty level are eligible for unsubsidized Commonwealth Choice plans.

Lawmakers, Connector board members and other reform stakeholders are looking for ways to balance the program's budget. It was initially estimated to be $869 million in fiscal 2009. But at the authority's March 20 meeting, Leslie Kirwan, the state's secretary of administration and finance, said that would not be enough. She did not offer specifics, but said the premium increase wouldn't cover the anticipated shortfall, according to Cindi Roy, spokeswoman for Massachusetts Gov. Deval Patrick.

Patrick and the Legislature face a July 1 deadline for finishing the budget. Options for closing the unspecified remaining funding gap could include requiring larger contributions from hospitals, insurers, businesses or others, or increasing tobacco taxes. Businesses that don't offer health insurance to employees have to pay up to $295 per worker annually, while hospitals and insurers contribute to a fund that supports the program.

Dale Magee, MD, president of the Massachusetts Medical Society, is concerned that the financial pressure on the program could fracture the broad coalition that's been supporting the Connector reforms over the last few years. He said he wouldn't be surprised if physician pay and insurance company administrative costs become part of the discussion on where to trim spending.

The Connector's budget problems are a result of residents making predictable choices, Dr. Magee said. People who needed health coverage and qualified for subsidized Commonwealth Care plans took the state up on their offer. Those who didn't qualify because they had higher incomes weren't as interested in signing up for the unsubsidized Commonwealth Choice plans.

Nearly 75% of Commonwealth Care enrollees earn less than 150% of the poverty level and therefore pay no premiums, Powers said. Meanwhile, enrollment in Commonwealth Choice plans has been about half of what was initially expected.

Dr. Magee is not optimistic that providing health care to the uninsured is going to reduce overall health spending, as some have argued. "The truth is that health care costs money, and that more health care costs more money."