New Low-Price Mass. Health Plans Too Good to Be True, Advocates Say

Health care activists say the low-cost health insurance plans unveiled recently by Gov. Deval Patrick – some with monthly premiums as low as $175 – sound too good to be true.

They point to what they say are the hidden costs in the plans, from hefty deductibles to the reliance on so-called “co-insurance” by some plans to cover some pricier medical expenses.

“The low premiums mask the real costs,” said the Rev. Hurmon Hamilton of the Greater Boston Interfaith Organization. “There are a significant number of folks who still can’t afford those products. This is movement but it is insufficient.”

The plans are set to be given the state’s seal of approval by the Commonwealth Health Insurance Connector board, the panel overseeing Massachusetts’ landmark health care law.

Hamilton said he was especially concerned that some plans bring down the cost of monthly premiums by relying on “co-insurance” instead of more traditional, fixed copayments to cover some expenses.

Copayments are a defined dollar amount for a specific service. Co-insurance is a percentage of the bill for services.

Under the lowest cost plan offered by Blue Cross Blue Shield, for example, a 37-year-old uninsured resident would pay $275 a month for an insurance plan that has no deductible, but requires 35 percent co-insurance for inpatient hospital visits.

That means someone with the plan who ends up in the hospital would have to pay 35 percent of their bill up to a state-mandated maximum of $5,000 for all out-of-pocket expenses, or $10,000 for a family.

The lowest cost plan offered by Tufts Health Plan, in contrast, has a $2,000 deductible. Instead of co-insurance, hospital stays are included in the deductible, after which the plan would pay the rest.

The inclusion of co-insurance in some plans is part of the balancing act insurers are performing as they try to drive down monthly premiums by trading off levels of benefits.

“We’re obviously not a big fan of this,” said John McDonough, executive director of the group Health Care for All.

McDonough said it’s one example of the importance of educating the public about the mind-numbing details of the plans.

Connector officials said the state also is mandating important consumer protections. In addition to the $5,000 a year individual cap on out-of-pocket expenses, the plans are barred from denying coverage for pre-existing conditions. Waiting periods also are banned.

“When you sign up and pay your premium you’re covered,” said Bob Carey, director of planning and development for the connector.

The panel also insisted that routine doctors visits – like annual physicals or well-baby check-ups – be included before any deductible kicks in, he said.

The lower-cost private health plans are intended for uninsured residents earning too much to qualify for subsidized care – about $29,400 annually for an individual. An estimated 160,000 to 200,000 people are uninsured and do not qualify for state-subsidized plans.

Perhaps the single biggest cost driver is age.

The $175 monthly premium cited by Patrick refers to a plan being offered by Neighborhood Health Plan, just one of seven plans to be given the seal of approval – and the only one with a monthly premium to come in under $200.

The monthly premiums quickly jump to $242 a month for Tufts Health Plan, $275 for Blue Cross Blue Shield and $288 for Harvard Pilgrim Health Care.

All costs refer to how much a 37-year-old resident would pay living in the eastern part of the state. While younger adults will pay less, the monthly premiums for older residents climb dramatically.

Those aged 56 or older will be paying far more – between $347 and $505 in monthly premiums – and that’s for the so-called “bronze” plans, those with the least generous benefits.

Under the “gold” plans also being offered through the Commonwealth Health Insurance Connector Authority, premiums for those over 56 range from $600 to well over $800.

Later ths month, the board is scheduled to decide whether the insurers can offer even lower cost versions of the plans without mandatory prescription drug coverage.

On May 1, if all goes as planned, consumers should be able to start signing up for the new plans through the connector. By July 1, all Massachusetts residents must have insurance or face tax penalties.