Three years ago, the Commonwealth of Massachusetts enacted a far-reaching health reform law that politicians and the media hailed as a model for other states and the federal government. That law has become the major blueprint for health system change on a national scale, and its advocates, with Sen. Edward Kennedy at the top of the list, are aggressively marketing some variation of the Massachusetts plan as the reform of choice. Until recently, there has been little analysis of how the law has worked. This is the fifth in an occasional series of posts that will explore the Massachusetts law, with an eye toward helping the press and the public understand the flashpoints as legislation based on the Bay State’s experiment winds its way through Congress. The entire series is archived here.

Perhaps the most informative segment in last March’s otherwise off-the-mark Frontline documentary, Sick Around America, concerned Dale and Alison Abrams of Great Barrington, Mass. The Abrams’s story illustrates what many people in the state are beginning to realize—that affordable health insurance is beyond their reach even under the health reform law, and that the state’s much touted shopping/brokerage service, called the Connector, may not help much.

The Abrams’s income, about $63,000 per year, was a bit too high to qualify for subsidized coverage when the law took effect. (The cutoff for state help was just over $60,000.) The state’s affordability schedule indicated that families with annual incomes of $63,000 a year should have been able to spend up to $352 a month on premiums. But Frontline reported that when the Abrams’s searched the state web site, the cheapest monthly premium available for them through the Connector cost $800. They finally choose a policy costing around $1100, nearly twice the family’s mortgage and three times its food budget. Eventually Alison got a job with benefits.

The law established the Connector, the brainchild of the conservative Heritage Foundation, to make it easier for residents to shop for the insurance they are required by law to buy. All residents (with some exceptions) must carry insurance or pay a tax penalty, this year about $1000 per person. Those with incomes 300 percent above the federal poverty level, or $66,150 for a family and $32,496 for an individual, receive full or partial subsidies to help buy insurance. An independent, quasi-governmental agency with a budget this year of $33 million, the Connector contracts with managed care organizations that provide coverage for residents receiving subsidies. It also offers a kind of Good Housekeeping seal of approval for policies sold through its Web site, a program called Commonwealth Choice.

It was hoped that the state’s insurers would compete through the Connector for the new business generated by the mandate, and people like Dale and Alison Abrams would have their pick of lower-premium policies. But premiums for many are still sky high because medical costs are so high. “I don’t believe if you just give consumers an outpouring of information that it will be possible for them to be in the driver’s seat and make changes in the marketplace,” says Nancy Turnbull, an associate dean at the Harvard School of Public Health. “Consumer-driven health care is based on so much misconception, and yet that’s what many of the high deductible plans in the Connector are.”

Policies have to meet minimum standards and offer what the state calls creditable coverage, and most adults must have a policy with coverage for inpatient hospital care, physician services, diagnostic tests, outpatient care, and prescription drugs. Deductibles cannot exceed $2000 for individuals and $4000 for families. That still presents a huge out-of-pocket expense for middle-income wage earners, who have to pay those amounts for care before their Connector policies kick in. Preventive care is not subject to the deductible, and the most a family has to pay out-of pocket is $10,000 ($5000 for individuals). Those, too, are high, but still offer some protection against catastrophic expenses. Outside of those parameters, insurers are free to design the policies anyway they like—with copayments and coinsurance applied to different kinds of services such as mental health, drugs, or hospital inpatient stays.

Commonwealth Choice policies are expensive even with their high deductibles, and a few offer a limited choice of providers to keep the cost down. Shoppers can choose among Gold policies that cost more and offer more; Bronze policies that are cheapest and may not cover as much; or Silver policies that fall somewhere in between. There are also special policies for young adults, with somewhat smaller benefit packages.

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.

For some stakeholders, the Connector hasn’t brought as much new business as was expected. Blue Cross Blue Shield has captured about one-third of the new business; Harvard Pilgrim about one-quarter. Harvard Pilgrim’s chief operating officer Bruce Bullen says “enrollment is far less than people anticipated. We thought it would be good because of the flexibility and a leveling of the playing field.” Bullen said the hope was that there would be more flexible products that “would involve a lot of cost sharing and higher copays and deductibles.” Bullen identifies the tension inherent in the Massachusetts Connector and the state’s reliance on a private, insurance-based system. Cheaper policies may be easier to sell, but increased cost sharing can leave policyholders holding the money bag when illness strikes. Finding that balance is tricky and controversial.

In January, the Connector plans to offer more high deductible health plans that are compatible with health savings accounts, in an effort to attract new customers. This year it has a $1.5 million contract with Weber Shandwick, a leading PR and communications firm, for broad-based outreach to young adults, people who’ve lost their jobs and insurance, the self employed, and early retirees. As part of the effort, the Connector is soliciting testimonials from residents satisfied with their Connector coverage. “Tell us why you are happy to have health insurance,” the Web site says. “If you have a compelling story, you may soon find yourself in Fenway Park!” The best storyteller wins two tickets to a Red Sox game.

There’s another story to be told, and that’s the story of the Connector—its pros, cons, its ability to expand coverage, and its limitations. It’s an important story for the press because all the bills floating around Congress call for a similar Connector arrangement. If that story is told, the winners will be the American people, who need to know just what may be in store for them.

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Trudy Lieberman is a fellow at the Center for Advancing Health and a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR’s healthcare desk, which is part of our United States Project on the coverage of politics and policy. Follow her on Twitter @Trudy_Lieberman.