Mass.-Approved Health Plans Unaffordable At Up to 30% of Income

Santa Monica, CA — Health plans approved today under Massachusetts’ health insurance mandate would be unaffordable for many citizens due to high out of pocket costs and no regulation of future rate increases, said the nonprofit nonpartisan Foundation for Taxpayer and Consumer Rights (FTCR). The cheapest plan providing minimum coverage could cost a 56-year-old, living in Boston and making $30,000 a year, a third of his income in health expenses.

“These plans are proof that when private insurers can charge whatever they choose, and consumers must buy what they’re selling, patients get the short end of the stick. It’s a bonanza for insurers and a financial catastrophe for the consumer. Patients and families cannot afford to spend 30% of their income on health care. Even worse, nothing prevents these prices from going up in the future,” said Carmen Balber, consumer advocate with FTCR.

A heavy reliance on co-insurance in some plans (meaning a patient could pay 35% of a hospital bill rather than a co-pay for a fixed amount) leaves consumers unable to estimate the real cost of coverage.

The state will be forced to exempt many citizens from the health insurance mandate because these plans remain unaffordable, said FTCR, defeating the promise of universal care under the law.

On top of premiums, which range from $173 a month for the cheapest “basic” coverage plan to $837 a month for the most expensive “premium” plan, patients are subject to additional costs in all of the basic coverage plans. These include:

– Out of pocket maximums up to $5,000 per individual and $10,000 per family, that do not include premiums, some co-pays or some deductibles.
– Co-pays ranging from $10 a doctor visit to $750 for a hospital admission, in addition to the plan deductible. Plans do not specifically include co-pays in the out of pocket maximum.
– Separate deductibles for drug costs up to $500, after which patients will still pay for drugs in a range between $10 to $100 a month, all the way up to 50% of the cost of every brand name drug.

These additional costs would make the basic coverage plans unaffordable for many patients. For example:

Under the cheapest basic health plan, Neighborhood Health Plan, in Eastern Mass.:
– A 56-year-old living making $30,000 a year could pay over 30% of her income on health costs. She would pay $4,164 in premiums, a $2,000 deductible, co-insurance costs of 20% for almost all health services up to $5,000, as well as a drug deductible of $200 and 50% of the cost of some drugs after that deductible was met.
– A 37-year-old in this area with this plan would pay $2,100 in premiums; a 19-year-old would pay $2076.

Under Blue Cross Blue Shield in Western Mass.:
– A 56-year-old would pay $5,640 a year in premiums and quickly reach the $5000 deductible with required 35% co-insurance costs for all hospital, surgery and laboratory services — over $10,000 a year. Co-pays for doctor and hospital visits appear to be in addition to the deductible.
– A 56-year-old making just above 300% of the poverty line — approximately $30,000 a year — would pay over 15% of their income on premiums alone before incurring a single co-pay, co-insurance, deductible or drug cost.
– A 37-year-old in this area with this plan would pay $3,300 in premiums per year, and a 19-year old would pay $3,024.

Under Tufts Health Plan in Central Mass.:
– A 56-year-old would pay $5136 a year in premiums, a $500 drug deductible, $35 or $50 copays for doctor visits in addition to a $2000 deductible for services.
– A 37-year-old in this area with this plan would pay $2,688 in yearly premiums, and a 19-year-old would pay $2,568.

“Low-income patients will be hard-pressed to afford the premiums for these plans, even if they never get sick enough to incur the added cost of co-pays, co-insurance, deductibles and drugs,” said Balber.

The “young adult” plans provide no real value to patients, said FTCR, because they cap benefits at low levels but still set premiums over $100 a month. The cheapest young adult plan, through Neighborhood Health, would charge $126 a month to consumers in Central and Western Massachusetts, but cap all benefit payments at $50,000 a year, meaning any serious illness or injury would leave the patient with crushing medical bills. This premium is just $50 a month cheaper than the same company’s basic coverage plan, that has no yearly cap on benefits.

(All examples assume drug coverage is included in basic coverage plans, a decision that will be made later this month.)

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The Foundation for Taxpayer and Consumer Rights (FTCR) is the state’s leading consumer watchdog group. For more information, visit us on the web at: http://www.ConsumerWatchdog.org.