HEALTH BILL PREMIUMS MAY EXCEED PREDICTIONS Liz Kowalczyk, Globe Staff 6 April 2006 When Governor Mitt

Romney dramatically proposed a universal health insurance plan a year ago, a key element was providing low- cost, pared-down coverage for about $200 a month. But in the end, legislators were unwilling to adopt some of the measures that the governor and insurers had counted on to lower premiums, and lawmakers and an insurance executive said in interviews yesterday that they expect average premiums under the bill passed this week will be about $325 a month for individuals and as much as twice that for families. The landmark healthcare legislation, which is the first of its kind in the country, requires individuals who don't qualify for the state Medicaid program or for insurance through their jobs to buy low-cost private plans. The state will pay the entire premium for individuals and families who earn less than 100 percent of the poverty level and will subsidize premiums for those who earn between 100 and 300 percent of the federal poverty level; 300 percent is about $30,000 for a single person and $50,000 for a family of three. But the amount of those subsidies has not been determined, and the higher the premiums of health plans, the more the state will have to chip in to keep plans affordable. Uninsured residents with incomes over 300 percent of the poverty level, about 200,000 people, will be on their own to pay the full cost. A major question is whether this group will be able to afford coverage. "That is unknown," said John McDonough, executive director of Health Care for All, an advocacy group based in Boston. "We're still waiting for someone to show us what a plan would look like. Show us the money." In the legislation, lawmakers did not allow for very-high- deductible plans or for plans that drastically limit benefits such as mental health care and infertility treatments, approaches that would have cut premiums further. "We wanted to make sure the insurance policies are of high quality," said Representative Patricia A. Walrath, a Stow Democrat and co-chairwoman of the Joint Committee on Health Care Financing. "We didn't want people to be in health insurance plans that don't really provide health insurance."

Still, even at the higher cost, premiums will be affordable for the vast majority of uninsured single people and families and will be below current market rates, Walrath said. On its website, Blue Cross and Blue Shield of Massachusetts, for example, lists two basic plans for a single person in his or her 40s living in Boston, both of which cost in the $400-a-month range. Neither includes coverage for prescription drugs, however. Legislators said they were able to bring premiums below market rates by combining the small-group and individual insurance markets, which are now separate, and by allowing individuals to pay for premiums with pretax dollars. Timothy Murphy, Romney's secretary of health and human services, acknowledged that some of the assumptions of the Romney approach had been dropped in the final bill, but disagreed that premiums will be as high as $325. He said it is too early to say what they will be, because insurers have not yet proposed specific plans. "I believe that the insurance companies within the state can develop affordable products and that people who earn more than 300 percent of the poverty level will be able to buy these products," he said. James Roosevelt Jr., chief executive of Tufts Health Plan, said that insurers would have been able to push down premiums further if the Legislature had agreed to pay for reinsurance, essentially a separate insurance policy that would have covered catastrophic costs for individuals in the plans, and had allowed insurers to develop plans with limited benefits. The legislation does not allow health plans to charge deductibles to individuals and families who are below 300 percent of the poverty level. For people with incomes above 300 percent, it does allow plans with deductibles similar to those currently on the market, a maximum of $2,100 for individuals and $4,000 for families enrolled in HMOs. "As it came out there is not a lot of flexibility on benefits in this bill," Roosevelt said. "There aren't things that leap out at you, where you say we can do this in a low-cost plan." But he said Tufts won't know exactly how much the plans will cost until the insurer has thoroughly reviewed the legislation and developed insurance models. Blue Cross-Blue Shield and Harvard Pilgrim Health Care, two other large insurers, would not comment yesterday, saying they were still reviewing the new legislation. But based on conversations with insurers, legislators developed the $325 figure. The reform legislation does allow one major area of flexibility for insurers: They will be able to propose health plans with more restricted networks of hospitals and doctors than currently exist, including plans that include mostly community hospitals or

community health centers, where costs are generally lower than at large teaching hospitals. And, lawmakers said the legislation will provide extremely in expensive plans costing about $150 a month for one group of uninsured residents: 19- to 26-year-olds who cannot buy health insurance through their jobs. The Division of Insurance will decide what benefits those plans must include, but legislators expect they will have limited benefits. A new entity called the Commonwealth Health Insurance Connector, which will operate as an authority under the Department of Administration and Finance and will be overseen by a board of private and public members, will oversee the low-cost plans. Health insurers will propose their plans to the group, which will decide if they meet quality and affordability standards. The individual mandate to buy health insurance only applies if the Commonwealth Health Insurance Connector determines the proposed plans are affordable. Over the next year, this group will define what level of premiums are affordable for the uninsured. "We have no idea what affordable means right now," said Jonathan Gruber, an MIT economist who advised the governor and the House of Representatives on health reform. "This is a great piece of legislation. I don't want that to get lost. But it does leave some things uncertain." Michael Bonner, 37, a professional musician from Somerville who said he earns in the $50,000 to $60,000 range, said he could afford a premium of $325 a month. He's been uninsured for more than three years, partly because it's expensive. He said he probably will qualify for health insurance at his part- time teaching job at the Longy School of Music in Cambridge next year, which will cost him close to $300. Under the law, he will be required to purchase that insurance. "I sort of put it out of my mind, the worry that comes with not being insured," he said. "This encourages me to resolve things for myself. I think it would be a relief."