March 28, 2011 | last updated March 25, 2012 9:06 am
MAXED OUT

Benefit Caps Could Pose Problems For Young Adults | Health Connector plans don't meet some federal standards

In Massachusetts, residents and business owners can log in to a state website and compare dozens of health care plans side by side to find one that suits them.

The Massachusetts Health Connector is the among the first of 50 such exchanges nationwide prescribed by last year's federal health care reform. Here, the exchange has been hailed an easier way for consumers and businesses to compare various plans and pick one that suits them.

But when it comes to a number of plans for individual young adults available through the Health Connector, one feature could leave 18- to 26-year-olds in a lurch: benefit caps on some of the plans as low as $50,000 per year. That is 15 times lower than the $750,000 minimum annual cap required under the federal law, which mandates a $1.25-million minimum cap by September and the elimination of benefit caps altogether by 2014.

Plan Limits

In Massachusetts, more than 98 percent of residents have health insurance according to recent figures, and nearly 100 percent of children have insurance. Approximately 220,000 people, or 3.3 percent of the state's population, are insured through the Connector.

Massachusetts has certainly solved the health care access piece of the puzzle. Now, Gov. Deval Patrick has turned his focus to proposals that would attempt to improve quality and contain costs.

But is it a bad sign that some providers have determined that they cannot offer an alternative plan geared toward young people without capping annual benefits at 15 times less what they are required to be under the federal law?

The answer will depend on many factors, including pricing reform and plan design, said David Harlow, an attorney with the Newton-based Harlow Group LLC and a health care blogger.

"Is it possible to rationalize the current market with the ideal state that's conceived under the reform law?" Harlow asked. "It's a big leap to get from here to there."

The providers offering capped plans through the Connector have been receiving waivers from the federal government that allows them to do so. The Connector may seek more waivers come September, when the current waivers expire, said Dick Powers, a Connector spokesman.

The waivers were needed "to mitigate possible premium increases" and give the Connector time "to come up with new plan design," Powers said.

There are 24 young-adult plans offered through six different providers on the exchange. Only four, offered by Blue Cross Blue Shield, have a no benefit cap. The remaining 20 young-adult plans have caps of $50,000 and $100,000.

There are approximately 3,500 Massachusetts residents enrolled in capped plans in the Connector, according to HHS. Those people represent about 1.5 percent of the 220,000 total people receiving insurance through the exchange.

Marc Hymovitz of the Massachusetts chapter of the American Cancer Society Action Network said that he understands the rationale behind the young-adult plans. Generally, 18- to 26-year-olds don't make as much money as their older counterparts and most don't have serious ailments.

"Unfortunately, people in their early 20s still get cancer," Hymovitz said.

Cancer treatments can break the $50,000 cap in six months in some cases, so residents who sign up for a mini-med plan should understand the plan's limitations, he said.

"If you're one of the unlucky 20-somethings who get cancer and have one of those young-adult plans, you are in serious trouble both financially and healthwise," Hymovitz said. "Folks don't usually realize they're under-insured until they need the insurance."

Harlow, the attorney and blogger, said that benefit caps could lead to medical debt for a small number of Massachusetts residents, but noted that any 18- to 26-year-olds would likely have no health insurance at all if it weren't for the mandate.

Sudbury resident Dan Rippy said that the Connector denied him and his family coverage for the month of March after his payment arrived several days before the end of the month, past the 10-day deadline.

Rippy recently changed jobs and sought to get his family on a new plan. He said he found out he did not have insurance for March when he called the Connector after sending his payment to inquire about getting insurance cards. He said the experience was frustrating.

"I am dumbstruck by the fact that the state of Massachusetts mandates that people have health insurance and yet when you go to purchase it, you're told you can't get it," Rippy said. "I don't know many businesses that tell their customers, 'No you can't buy right now, come back in a month.' "

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