Free health insurance available for Pa. residents - but buyer beware

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Hundreds of thousands of Pennsylvanians and up to 7 million Americans could be eligible for a "free" health care policy via the much-maligned Obamacare health insurance exchange, after federal tax credits are figured into the math.

Partly because the Affordable Care Act's HealthCare.gov website has been such a train wreck, and partly because insurers and federal officials don't want to trumpet the availability of "net-zero" premium plans, the availability of such plans largely has escaped notice.

But according to consulting firm McKinsey & Co., between 15 and 25 percent of Pennsylvania's uninsured population of 1.3 million could be eligible for a zero-premium "bronze" plan, which is the plan that carries lower premiums but higher out-of-pocket costs and deductibles when a patient needs care.

There is "much better coverage at much lower cost" than most people realize, said Erin Ninehouser, education and outreach director at the Pennsylvania Health Access Network, an advocacy group seeking to expand health coverage.

So why not scream it from the rooftops, particularly given the website's glitch-plagued October rollout and, more recently, the thousands of policy cancellations running counter to President Barack Obama's pledge that "if you like your health care plan, you'll be able to keep your health care plan"?

The biggest reason is that the zero-premium bronze plan, in all likelihood, won't be the best health plan for a particular customer, especially when a silver plan might cost just a few dollars more a month. While it could be a good option for those who just want minimal coverage to satisfy the law, a bronze plan means higher costs over the course of the year for those who go to the doctor often and use a lot of care, so the "free" premium could be quickly offset by other health expenses.

"They're leaving a lot of money on the table," said Karen Pollitz, a senior fellow at the Kaiser Family Foundation, which studies health policy issues. "You're getting [a] relative bare-bones policy for nothing."

The existence of low-premium and no-premium plans suggests -- at least to supporters of the Affordable Care Act -- that the 2010 health care overhaul is accomplishing one of its goals: making health insurance affordable for the millions who don't have employer-provided care and aren't eligible for Medicaid or other state-subsidized health programs.

"It's been really frustrating" that the affordability message can't gain any traction, Ms. Ninehouser said.

In Philadelphia, according to The New York Times, Independence Blue Cross is offering at least four plans that could be free, depending on the subscriber's income and the tax credit received.

And in Western Pennsylvania, Highmark Inc. says one of its bronze plans would be free for some individuals and families at the federal poverty level, depending on age.

In Allegheny County, a family of four (assuming two adults aged 21, and two children) earning 100 percent of the federal poverty level (which is $23,550 for a family of four) could buy Highmark's Shared Cost Blue PPO 5500 Community Blue plan for no premium.

The plan costs $4,463 annually, or $371 a month, but the tax credits for the plan would be $4,748 annually, or $395 a month.

In other words, the subsidies are greater than the cost of the plan.

Individuals can qualify, too -- a single 21-year-old nonsmoker earning poverty-level wages ($11,490 for an individual) can buy Highmark's lowest-priced bronze plan for $113 a month, which is offset by a federal tax credit of the same amount, according to the insurer's own analysis.

"There are a lot of variables to get [a customer] to that zero premiums," said Highmark spokeswoman Kristin Ash. "Each individual has to determine their circumstances. ... A mass campaign wouldn't be in everyone's best interest."

In the states that are expanding Medicaid to accept people and families who earn up to 138 percent of the poverty level, as envisioned by the Affordable Care Act, someone making 100 percent of poverty wages would be steered toward Medicaid.

But in Pennsylvania, which has yet to make adjustments to its Medicaid program, an uninsured person making poverty-level wages or above would be eligible for the subsidies and would be able to buy a plan on the health exchange.

"I don't think [free plans were] intended to be a selling point," Ms. Pollitz said. "Medicaid was really supposed to have paved over this income level."

Those making below 100 percent of the poverty level are not eligible for any subsidies at all, because the Affordable Care Act presumed people in the lowest income brackets would be covered by the act's Medicaid expansion provision.

The act is offering to pay nearly all of the costs for states that expand Medicaid, but many states balked after the U.S. Supreme Court ruled that the expansion should be optional, rather than mandatory, as the ACA was originally written.

There's wide variation in plan pricing from region to region and state to state.

According to McKinsey, a 40-year-old can get an individual bronze policy for as little as $115 a month in Minnesota, but the cheapest such plan in Colorado costs $400 a month, before subsidies. Because of the competitive plan pricing in the Pittsburgh market, the silver-level plans are cheaper than they are elsewhere, meaning the tax credit is smaller than they would be elsewhere.

The good news is that while the subsidy is smaller, the plans here are more affordable to begin with. In Pittsburgh, the poverty-level individual could buy the silver plan for just a few dollars more than the "free" bronze plan, but could potentially save thousands via the plan's different deductible levels.

"For $20 a month, the 21-year-old who could get a zero-premium bronze plan [can] get a platinum plan," thanks to cost-sharing incentives, said Ms. Pollitz.

Buyers earning 250 percent of the poverty level or less could also be eligible for cost-sharing subsidies if they decide on the silver plan, making co-pays and deductibles more affordable. Also, credits get larger as the insured get older, because the price of the second-cheapest silver plan available will go up, too. "Older [non-Medicare-aged] people are eligible for larger subsidies than are younger people, increasing the likelihood that they can obtain a zero-net-premium product," the McKinsey report says.

Under the Affordable Care Act, those without health coverage are supposed to apply for it by March 31 or face tax penalties. The so-called "personal mandate" to buy insurance, one of the most controversial elements of the law, was deemed constitutional by the U.S. Supreme Court last year.

Bill Toland: btoland@post-gazette.com or 412-263-2625.


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