Soaring costs threaten effort to insure lowwage workers

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For workers at Kids Korner Childcare, a Mansfield day care center, the state’s Insurance Partnership program has been a godsend. “It’s been more than helpful,” says Keith Hayes, the owner of the center, which has 33 employees, 10 of whom are covered through the state program that helps pay for health coverage for lower-wage workers. “It’s the difference between some people having insurance and not having insurance. It’s as simple as that.”

Still, the Insurance Partnership has not exactly lived up to expectations. When it was launched in 1998, officials hoped it would might make a big dent in the population of Massachusetts residents without health insurance, currently about 460,000 people. But as of March, the program was covering just over 13,000 adults and children.

Ron Preston, the state’s secretary of health and human services, calls the Insurance Partnership a “modest success.” But the reasons for the partnership’s only “modest” success may prove relevant this year, as Gov. Mitt Romney, Senate President Robert Travaglini, and House Speaker Sal DiMasi tackle the problem of the uninsured, which they have all vowed to do (“A plan to control costs and insure thousands,” Argument & Counterpoints, CW, Winter ’05).

Part of the problem, say business leaders, is that subsidies to employers have not kept up with the soaring cost of health insurance premiums. Open to businesses with up to 50 employees, the program provides assistance for the coverage of workers earning up to 200 percent of the federal poverty limit, which is $37,700 for a family of four—the same standard used to determine eligibility for the state’s Medicaid program, MassHealth, which partially funds the partnership. While the program pays most of the employee share of the premium (a family of four pays just $24 a month), the subsidy to employers to offset their share (50 percent) has been fixed at $83 a month, or $1,000 a year, for a family plan since the program’s inception. Thus the employer subsidy represents an ever-shrinking portion of rising premium costs, which now average about $12,000 a year for a family of four.

“When you look at the cost of health insurance today, the subsidies are not big enough to make health insurance attractive,” says Richard Lord, president of Associated Industries of Massachusetts, the state’s largest employer association.

Indeed, the partnership’s best deal is for the self-employed, since they get both the employer subsidy and the more generous employee subsidy. This, in part, explains why nearly two-thirds of those enrolled in the Insurance Partnership are self-employed individuals—and why fewer than 3,300 employees of small businesses statewide are signed up.

Another obstacle to coverage under the Insurance Partnership is the program’s income guidelines, which some say are too low for a high-cost, high-wage state like Massachusetts, where many of the working uninsured have incomes above the cutoff. “The idea is a great one, but I think it’s been flawed from the outset,” says Cynthia Mitchell, executive director of Island Health Care, a Martha’s Vineyard community health center. “It’s not hitting the target group.”

Working with state officials, the island health clinic, which opened its doors last August, has applied for a federal waiver from standard Medicaid guidelines that would open Insurance Partnership eligibility on Martha’s Vineyard to workers earning up to three times the federal poverty rate, or $56,550 for a family of four.

AIM, the industry group, wants to see income eligibility for the Insurance Partnership raised to that level statewide. The group backed legislation two years ago to raise the income levels, and has had the bill refiled again this year. “The climate this year seems more hopeful,” says Lord. “People are talking about expanding access to health insurance. We think this fits in nicely.”

How nicely remains to be seen, considering that Romney has ruled out substantial new spending as the way to provide health insurance to the uninsured. By itself, raising the income cutoff or boosting employer subsidies for the Insurance Partnership “isn’t a reasonable way of solving this problem,” says Preston. Any expansion of coverage must be accompanied by aggressive efforts to rein in the costs of care, the human services secretary insists. The Martha’s Vineyard pilot program makes sense, he says, because it will be part of a comprehensive effort by the island’s community health center to deliver cost-effective care utilizing the best practices of preventive medicine and management of chronic conditions.

“The big enchilada in all of this is a dedicated delivery system,” says Preston. That sounds much like the old system of managed care that took such a beating during the 1990s backlash against HMOs (“Unmanaged Care,” CW, Health Care Extra ’04). “There is a certain back-to-the-future aspect to it,” Preston admits, but adds that a focus on care, not just cost, and a new understanding of disease prevention and management will make it possible to tackle the health coverage challenge without breaking the bank. He says there is “a very real possibility” that such an approach could include subsidies for workers in the higher income bracket the Island Health Plan plans to target on Martha’s Vineyard.

“Stay tuned,” says Preston.