Navigating the health care maze

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Even a self-described data nerd like Peter Kim was nearly undone by his hunt for health insurance.

Kim left the corporate world in 2005 to become an independent consultant, losing employer-sponsored insurance for his family of four. But researching individual health plans proved astoundingly complicated, he said. And most were too expensive, to boot.

”It was impossible to compare plans,” said Kim, 42, who lives in Cambridge. “I ultimately gave up trying.”

He and his wife resorted to catastrophic coverage, paying out of pocket for routine medical care — until they discovered the health insurance exchange that Massachusetts set up in 2006. A linchpin of the state law passed under Mitt Romney as governor, which requires most residents to have health coverage, the exchange is essentially an online marketplace meant to simplify buying insurance and thus help people find a plan they can afford.

If the Supreme Court upholds President Barack Obama’s federal health care law in a decision expected this month, proponents say that exchanges will be a crucial tool for extending insurance. Debate over the law has centered on the individual mandate, the lightning-rod provision that requires most Americans to have health insurance by 2014.

But once the court decides whether the law is constitutional, the focus could shift to exchanges.

The law requires every state to establish an exchange, but many are balking, complaining about everything from the expense to the perceived federal intrusion. Some, like Louisiana and Maine, are refusing. Others are deferring crucial decisions until the court rules and the November election plays out.

So far, only about 15 states and the District of Columbia have established exchanges, with California and Maryland among the furthest in their planning.

The experience of Kim in Massachusetts, which with Utah is one of only two states with an exchange up and running, illustrates how exchanges are ideally supposed to work. After just an hour of research on the exchange’s website, he says, he found a better deal. He enrolled in a plan through Harvard Pilgrim for which he pays $1,086 a month for his family.

The exchange, called the Health Connector, has been operating since Massachusetts passed its own individual mandate in 2006. For all the criticism that has been hurled at the state’s health plan during this year’s Republican presidential primaries, surprisingly little attention has been paid to this piece of the law.

Even if the Supreme Court strikes down the federal mandate, many people believe that some form of exchanges could still be crucial to expanding coverage in a number of states.

In Massachusetts, insurers bid to participate in the Connector — offering plans that include some level of hospitalization, prescription drugs, maternity care and other services deemed essential by the state — and the Connector uses its market leverage and unique guidelines to promote innovation and competition among them.

”It can — and it has — helped people find more affordable options than they otherwise knew existed,” said Glen Shor, executive director of the Connector.

But for all Kim’s satisfaction, Connector officials acknowledge that they need more consumers like him — full-paying customers who do not qualify for a government subsidy to offset their premiums. So far the program has drawn only about half of that population in the state’s individual market, according to Connector officials.

Instead, about 82 percent of the roughly 224,000 people insured through the Connector have incomes low enough to qualify for state and federal subsidies. They pay a modest premium or none at all.

This is precisely what many opponents of exchanges fear: that instead of a free marketplace they will become something resembling an extensive public welfare program.

The Connector has struggled mightily to attract another important constituent of the national health care overhaul efforts — small businesses, which have long complained of being priced out of the health insurance market.

While the Massachusetts law requires that many small companies offer coverage to their employees or pay a penalty, many have seen no incentives to buy insurance through the Connector, said Joshua Archambault, director of health care policy at the Pioneer Institute, a conservative research organization here. About 1,700 small businesses currently insure a total of 4,320 people through the Connector — only a minute fraction of that market.

”It means that an entire group that was promised reform has not seen it,” Archambault said.

Shor said the Connector was taking steps to attract more small companies, this year adding more “popular, brand-name” insurance carriers to the options for small businesses, including Blue Cross Blue Shield of Massachusetts. It also added a wellness program that allows rebates of 15 percent off the employer’s share of premium costs if certain conditions are met.

Amy Whitcomb Slemmer, executive director of Health Care For All, an advocacy group in Boston, said she was worried about the large number of customers in the nonsubsidized program — 52 percent of them — choosing so-called bronze plans, which have the lowest monthly premiums. Those plans tend to have high deductibles (up to $4,000 for a family) and maximum out-of-pocket costs, meaning that people who get sick often end up paying a lot.

”We are growing increasingly concerned about high-deductible plans that seem like a short-term solution to folks,” Whitcomb Slemmer said. “We spend a tremendous amount of time helping people understand what risk they’re taking.”

For Andrea Cunningham of Watertown, a bronze plan was the most realistic option. She quickly found insurance for her family of three through the Connector after her husband lost his job in February. Sitting at her dining room table with a laptop, Cunningham, 30, typed in her age and that of her husband, their ZIP code and the number of people in their family. Within seconds, her options — several dozen plans in all — popped up.

The best part, she said, was how simple it was to compare the standardized plans — how much each charged in co-pays for prescriptions, doctor visits and hospital stays, for example.

”It was super-easy to take a quick look and figure out which price range we wanted,” she said, “and then dive down deep into one or two of them.”

She chose a bronze plan for which she and her husband, who is still out of work, pay about $900 a month.

The vast majority of the people who have gotten insurance through the Connector since the economic downturn began have not had to worry about deductibles because they qualify for subsidized coverage. In that program, the big challenge has been keeping costs down as enrollment has steadily climbed.

If the Supreme Court upholds the national health care law, the Connector will face significant changes in its customer base. Many of its subsidized customers will be shifted to Medicaid under the law’s expansion of that program. So attracting more customers to the nonsubsidized program will be crucial, said Nancy Turnbull, an associate dean at the Harvard School of Public Health who sits on the Connector’s board.

”For the exchange to continue to be a big purchaser and have market clout,” she said, “we’re going to need to be successful at adding more small employers and potentially other populations.”

For First Church in Cambridge, which enrolled its seven employees in Commonwealth Choice this year after facing a 10 percent rate increase on its old plan, the switch has been worth it.

The church is still paying 3 percent more than last year for its new policy, through Tufts Health Plan, and employees are paying more for nongeneric drugs than under their old plan. But the Rev. Karen McArthur, affiliate minister of stewardship, said the church hoped to save 15 percent by joining the new wellness program.

”Even though there were a lot of things we had to do to make our internal policies work for what they were offering,” McArthur said, “there was some energy for doing that. We really wanted to participate in this, because we really believe in it.”

Also seen in, Insurance News and Honolulu Star.