For many without workplace health coverage, premium costs rising

Federal health reform is supposed to give nearly all Americans access to health insurance by 2014, but for many without employer-sponsored insurance, the options until then are getting more costly.

As of today, federal subsidies to help laid-off workers keep their health insurance have expired for nearly all recipients. The subsidies, which were available for up to 15 months for people who lost their jobs between September 2008 and May 31, 2010, cut consumers’ out-of-pocket costs to continue receiving coverage through their former employers.

The subsidy expiration coincides with an increase in premiums in the state’s Charter Oak Health Plan, which was launched in 2008 as an affordable insurance option for adults who would otherwise have no coverage.

In both cases, coverage is still available, but it becoming substantially more costly, making it more difficult for some people to stay covered.

That’s the problem Loren Beaudoin of Shelton is facing as her Charter Oak premium rises 64 percent. Beaudoin and her husband work for a small construction and landscaping business that doesn’t contribute to their insurance premiums; getting coverage through the business would cost around $1,500 a month.

Instead, Beaudoin gets coverage for her children through a portion of state’s HUSKY health plan for people who earn too much to qualify for Medicaid, and she and her husband are in Charter Oak. Their premiums are subsidized by the state, but their out-of-pocket costs are rising from $202 to $332 each.

Beaudoin paid this month’s premium, but isn’t sure how much longer it will be affordable.

“I think we’re probably going to have to pay what we can for as long as we can,” she said. “Definitely I would never let the children go without insurance. I would keep them covered. But if it came between paying mortgages or things like that and paying insurance, I’d have to drop the insurance.”

People who lost their jobs and received federal subsidies to continue their employer-sponsored insurance could face similar choices.

Most people who lose their jobs are eligible to pay to maintain coverage for 18 months or more through a provision of the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly referred to as COBRA. People who do so must pay the full cost of the insurance–far more than most workers pay, since employers tend to heavily subsidize their health benefits.

Through the stimulus act of 2009, the federal government began subsidizing COBRA coverage for people who had been laid off, leaving them to pay only 35 percent of the cost of their coverage.

Soon after, the rate of COBRA participation rose dramatically, according to an analysis by the human resources firm Hewitt. The firm surveyed 200 companies with 8 million employees and found that the COBRA enrollment rate doubled–from 19 percent to 38 percent–in the months after the subsidies became available.

Nationwide, as many as 2 million households received COBRA subsidies in 2009, costing more than $2 billion, according to the U.S. Department of the Treasury. In Connecticut, more than 52,000 households received the subsidies that year, at a cost of more than $40 million.

The treasury department has not yet completed a final report on the program, and it’s not clear how many people used it overall.

Jeannette DeJesús, special advisor to the governor for health care reform, said the subsidy expiration is likely to add to the number of people without insurance.

“That’s a very, very big concern,” she said, adding that additional people without insurance will likely increase the reliance on safety-net health care providers like community health centers and levels of uncompensated care at hospitals.

While most eligibility for coverage expired Wednesday–15 months after the deadline for being part of the program–some people could still receive subsidies if they were laid off before May 31, 2010, but as part of their severance packages, maintained their health care coverage without having to pay COBRA rates for a period of time. In those cases, the subsidies would continue until 15 months after the person began using COBRA, unless he or she becomes ineligible–by qualifying for another group insurance plan or Medicare–first.

State Healthcare Advocate Victoria Veltri called the COBRA subsidies “a huge lifeline for a lot of people.” But she said it’s important to remember that while the subsidies are ending, some people could still be eligible for COBRA coverage, as long as they can pay the unsubsidized premiums.

The costs people losing the COBRA subsidies will face will vary based on the plan, although they will likely all be nearly triple the rate. According to the Kaiser Family Foundation, someone with an average-priced employer-sponsored health plan would see their monthly costs rise from $144 to $410 for an individual, and from $398 to $1,137 for family coverage.

Veltri said her office is available to discuss options with people trying to decide what to do. She advised anyone still deciding to continue paying their COBRA premiums until they make a decision, because any missed payments can lead to losing coverage.

“The thing is to be very certain of your options before you decide you’re not going to pay a COBRA premium,” Veltri said. “You really want to know if you’re qualified for any of these other programs because you don’t want to go without insurance at a risk to you if you really need it.”

According to Veltri and the Connecticut Insurance Department, state residents have several options, although some might be costly.

One is Charter Oak. “Although it’s more expensive than it used to be, it’s still coverage,” Veltri said.

For new enrollees and people who joined the plan after May 31, 2010, Charter Oak premiums are now $446 a month, up from $307. The state Department of Social Services has attributed the increase to the cost of health care claims in the program, which has attracted an older, sicker population than initially anticipated, and a new provision passed as part of the current biennial budget requires the plan’s premiums to reflect the cost of medical claims.

Another insurance option is the state’s Pre-Existing Condition Insurance Plan. PCIP was created as part of health reform, and is federally subsidized. Enrollment has been limited, in part because federal rules prohibit anyone from joining PCIP if they have had health insurance in the past six months and in part because it has been more expensive than Charter Oak for anyone 30 and older. As of today, however, its monthly premium has been lowered to $381, and Charter Oak won’t enroll anyone who qualifies for PCIP.

People with medical conditions can also get coverage through the state’s high-risk pool, run by the Health Reinsurance Association. The premiums are higher than PCIP–with the exception of low-income men under 40–and Veltri noted that people who can’t afford COBRA rates might not be able to pay the high-risk pool rates either.

People also can buy coverage from insurance carriers that have been approved to offer individual coverage in the state. Under state law, individual-market plans must cover pre-existing conditions as long as the customer had insurance that covered the conditions within 120 days of the new plan taking effect.

“But that doesn’t mean the premium will be cheap,” Veltri said.

There’s also Medicaid for those who qualify. Parents or caregivers of children under 18–and in some cases, 19–who earn up to 185 percent of the poverty level can receive free coverage through the HUSKY Medicaid program.

Regardless of family income, children can qualify for another part of HUSKY, known as HUSKY B. Families with higher incomes must pay premiums.

Low-income adults without minor children could also qualify for Medicaid if they earn less than $508.48 a month (or $617.44 in southwestern Connecticut).

Cheryl Fish-Parcham, deputy director of health policy for Families USA, a left-leaning health care advocacy organization, said families can pick and choose their coverage, such as having some family members covered by public programs or cheaper policies while retaining COBRA for those who need it most.

“The other solutions are all very imperfect,” she said. “In 2014, more people will be able to get help for affording insurance when things like this happen. But until then, there’s really not much there.”