State Analysis Finds Insurance Too Costly for Families, Older Consumers

Santa Monica, CA — Massachusetts has moved away from the promise of “universal” health coverage at every step as it implements its insurance mandate, and now turns a blind eye to costs that will stop even the “insured” from getting needed care, said the nonprofit, nonpartisan Foundation for Taxpayer and Consumer Rights (FTCR) today.

“Affordable” health insurance, according to the cost analysis released by the state today, assumes consumers will never get sick because it does not consider the deductibles, co-pays and co-insurance that consumers must pay under the minimum benefit plans approved last month.

“Insurance is not affordable if consumers must buy it, but high out of pocket costs keep them from using it when they get sick,” said Carmen Balber with FTCR. “Today’s announcement masks the real cost of insurance to consumers under Massachusetts’ health insurance mandate.”

Under rules approved last month, consumers could be forced into high deductible health plans to satisfy the health insurance mandate, even though those plans do not limit patient costs, and do not have to meet minimum requirements for preventive care and prescription drug coverage.

“When consumers must bear huge costs up front, they delay needed treatment and preventative medicine to the point where care becomes less effective and more costly,” said Balber. “Insurance that delays patient care cannot be considered affordable.”

According to the state’s own figures, many consumers over 55 and families with children cannot afford the lowest-priced existing health plan, even before taking out of pocket costs into consideration.

“Families with children and older consumers — who some consider most in need of health insurance — should not fall through the cracks of health reform,” said Balber.

According to the affordability schedule, the cheapest health plans currently available are not affordable for any person, of any age, who earns just above 300% of the federal poverty level, including:
– Individuals making $30,000 to $35,000 cannot afford the lowest cost plan
– A couple making $41,071 to $50,000 cannot afford the lowest cost plan
– A family and children bringing in $51,511 to $70,000 cannot afford the lowest cost plan

The cheapest currently available health plans would also not be affordable for:
– Families with children, whose parents are 40 or older, making $51,511 to $90,000 a year
– Couples over 40, unless their income is above $60,000 a year
– Singles over 55 making less than $40,000 a year

Even the bare bones coverage of the young adult plans (in which an insurer’s yearly payments are capped at $50,000, no matter how serious the illness) would be too expensive for some couples, including:
– A young couple between the ages of 19 and 26, making $41,071 to $50,000, could not afford the lowest cost plan

Affordability cannot be achieved without requiring HMOs and insurers to justify costs and get approval for rate increases, said FTCR. Similar requirements in California’s auto insurance market have saved drivers $23 billion since 1988.

Legislation to regulate health insurance companies was introduced in California yesterday, where Massachusetts’ insurance mandate has been used as a model for several health insurance proposals. Authored by California Assemblyman Dave Jones (D-Sacramento) and supported by FTCR, the proposal would require insurers to justify overhead costs and excessive profits before raising rates. Proposed rate increases would be denied if they were deemed excessive or unfair. Rates would not be set by the state, but the transparent process of public review would assure that increases are justified.

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FTCR is California’s leading public interest watchdog. For more information, visit us on the web at: www.ConsumerWatchdog.org.