State health plan underfunded

The state's new subsidized health insurance program will cost "significantly" more than the $869 million Governor Deval Patrick proposed in his 2009 budget just two months ago, the state's top financial official said yesterday, after insurers were granted an increase of about 10 percent.
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To close the gap, the Patrick administration has asked insurers, hospitals, healthcare advocates, and business leaders to propose ways to cut costs and raise revenue. During two closed-door meetings in the last two weeks, several dozen proposals have been put forward, including raising assessments on insurers, hospitals, and businesses health club. The goals are to solve the short-term funding problem for next year and ensure the long-term survival of the state's near-universal health insurance initiative.

Leslie Kirwan, secretary of administration and finance, declined yesterday to discuss specifics of the proposals or the size of the budget gap, but said that without changes, the state doesn't expect "to be able to live within" the proposed budget.

A state panel yesterday approved a contract to pay insurers about 10 percent more for each person enrolled in the subsidized insurance program, starting July 1. The insurers had asked for about a 15 percent increase, but agreed to take less after weeks of negotiations. Still, the state's cost is higher than was included in the governor's budget. Under the contract, the state also would assume more of the financial risk if the enrollees were to use more medical care than expected.

To partly offset the increased costs, the panel yesterday also voted to raise premiums by 10 percent for some of the 176,000 people enrolled in Commonwealth Care, and to increase copayments for many more. Starting July 1, the lowest premiums will range from $39 to $116 per month health club.

"We have closed some of the fiscal gap here, but we have not closed most of it," Kirwan said during the meeting at which the Commonwealth Health Insurance Connector approved the contract and premium increases.

Kirwan said the gap also is because of increased enrollment, now expected to exceed projections for both the current fiscal year and the next, which will begin July 1. Paradoxically, enrollment dropped slightly last month, because the state has begun disqualifying people who became ineligible because of changes in income or access to other insurance. But that is expected to be a temporary downturn. The budget figure of $869 million already was significantly higher than projected by legislative architects of the plan because of the enrollment boom.

Healthcare advocates vehemently had opposed increased premiums and copayments for enrollees, which were first proposed in February health club. They argued that the insurance would become unaffordable for many of the low-income people it was designed to serve and that it was unfair to ask enrollees to pay more without also asking more of businesses, hospitals, and insurers.