Campaign Desk used the Web site to try and find policies available for a family of four living in Pittsfield, a city in the western part of the state. Family coverage for husband and wife, both forty-four years old, would run between $820 and $1005 a month for a Bronze policy, $1026 to $1419 for a Silver policy, and $1477 to $1813 for a Gold version. This year, the state says that a family with kids and an income of $66,150 (300 percent of the poverty level) can afford to spend as much as $364 each month on health insurance, or $4368 a year—about seven percent of their income. All but three of the fourteen Connector policies cost at least $1000 a month, or $12,000 a year—eighteen percent of their income. The Abrams problem again! With premiums like these, it’s no wonder that 42 percent of the 22,000 people who have bought coverage through the Connector chosen Bronze policies. Only seven percent went for the Gold.
We asked how the state determines affordability, since what’s affordable to one family may not be to another. Connector Authority spokesman Richard Powers explained it this way: “The affordability schedule is based on data and analyses regarding the price of health insurance, what families can afford, income growth, and yearly changes in federal poverty level brackets.” The Web site explains that if the monthly premium for the lowest-cost plan is higher than the amount considered affordable, a person may be exempt from the tax penalty. The state has not yet released the number of people exempted in 2008.
Rates vary by where a person lives—a reflection of the costs of medical care in a particular area. Premiums for a family of four living around Harvard Square in Cambridge may spend a couple hundred dollars more than the same family in Pittsfield. Premiums also vary by age; the law allows carriers to charge older people twice as much as they do a younger person for identical coverage. Insurers must take everyone regardless of how sick they are, so varying premiums by age becomes a proxy for taking health status into consideration after all. Older people are more likely to have health problems that, in an insurer’s eyes, justify higher rates.
Kay Lazar, who has been doing a fine job covering the state’s health reform for The Boston Globe, revealed how the age rating is hurting state residents. She wrote that AARP Massachusetts has been hearing a growing number of complaints from members fifty and older who are having trouble affording coverage in the state. The Globe reported that data from Commonwealth Choice show that as enrollees in the private offerings get older, they choose cheaper and less comprehensive coverage, leaving them vulnerable as they get sicker.
We did a little shopping on the Connector site and found that Blue Cross Blue Shield is charging our hypothetical Pittsfield family, husband and wife both age fifty-four, a monthly premium of $2,252 for its HMO Blue Premium policy and $1,628 for its HMO Blue Value with Basic Rx. If the husband and wife are both thirty-four, premiums are hundreds of dollars cheaper—$1649 and $1,192.
Consumers who shop for policies undoubtedly look first at premiums. Once the Connector approves policies, it makes no judgments about how approved policies stack up against one another. Variations in copayments, coinsurance, and other features make it virtually impossible to pick the best policy overall. But unless the policies are judged equally against some benchmarks showing how they would treat people with different sets of predetermined health problems and use of medical services (which is how we rated health insurance policies at Consumer Reports), shoppers can’t really know which combination of coinsurance, copayments, and deductibles results in the best policy.
Consumers also have a hard time estimating their risk levels. Since it’s not easy to predict what ailments you’ll get, you won’t know whether a policy is a good financial deal until you get sick. Powers says that the Connector may consider adding some information about quality of care that would be specific to the insurer, not a particular policy.