MASSACHUSETTS: Kaiser’s Low-Income Subsidy Violates Law
State Insurance Commissioner Linda Ruthardt earlier this month "declared illegal" a Kaiser Permanente program that gives discounts of up to 85% on premiums for Massachusetts subscribers who earn less than 200% of the federal poverty level, the Boston Globe reports. Ruthardt's decision is "based on a new [state] law ... which requires insurance companies to sell individual health coverage to anyone regardless of their health status," and "says insurance premiums can vary only by the subscriber's age and place of residence," said Kevin Beagan, director of health policy at the insurance agency. "Because Kaiser's program varies its premiums based on a subscriber's income, it is forbidden under the new law," Beagan said. Debra Korta, Kaiser Permanente's director of government relations, said, "We are working with the Insurance Department as well as exploring legislative solutions that might be workable for everyone involved."
The Globe reports that the program, "regarded by consumer advocates as a source of relief for employed, uninsured families who could not afford to buy individual insurance, has been held up as a model by the attorney general's office, which has been pressuring nonprofit [HMOs] to offer programs that benefit the community." Valley Health Plan originated the subsidy program in Massachusetts. Kaiser purchased the health plan in 1987 and in 1990 "began offering the subsidy program nationally." This year, "the program is expected to grant $50 million worth of subsidies nationwide."
The Globe reports that patient advocates "are most worried about whether Ruthardt's decision might also affect the state's largest HMO, Harvard Pilgrim," which offers a similar program. "We're concerned that this ruling might discourage health plans from doing this program at all," said Rebecca Derby of Health Care For All, a Boston-based patient advocacy group. "We believe that the Division of Insurance is misinterpreting the law." Barbara Anthony, assistant attorney general, said, "This is not a time for a narrow, technocratic reading of the statutes. There are 700,000 uninsured people in Massachusetts. ... This is a program that should be nurtured and applauded, not obstructed." The decision affects 350 Kaiser Permanente policyholders in Massachusetts (Pham, 4/22).