As costs soar, Mass. foresees change in health insurance rules

Many required to have it cannot afford coverage

By Kay Lazar
Globe Staff / March 12, 2010

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State regulators said yesterday that they will probably change the complex formula they use to determine how many Massachusetts residents face a tax penalty for not having health insurance, because spiraling costs are making coverage unaffordable for too many people.

Each year, the Massachusetts Health Insurance Connector Authority board updates the formula it uses to determine whether health insurance is affordable for individuals, couples, and families and whether people in each group should face a tax penalty for not having coverage.

The state’s landmark 2006 health law requires nearly everyone to have health insurance or to pay a stiff tax penalty.

But several board members said that since 2006, insurance costs have risen much faster than incomes. The affordability formula the board uses is pegged to income and the cost of health insurance plans that are available in each region.

“We need to look at how the percentage of income we are asking people to contribute to insurance has changed over time,’’ said Nancy Turnbull, an associate dean at Harvard’s School of Public Health and a member of the authority’s board. “Health care costs and premiums keep going up, and we will rapidly approach a cost that is beyond what everyone is willing to pass on.’’

Turnbull and others said it would be fairer to link the formula to the percentage of income a resident is paying toward health insurance. That is similar to the approach proposed by President Obama and the US Senate.

In the past, some board members have worried that loosening the rules too much would undermine the state’s health law, because it would result in fewer people being required to purchase health insurance.

The board chairman, Jay Gonzalez, who is also the secretary for administration and finance, said the board will begin studying a potential change in its formula “to try to develop a more rational approach.’’

The board voted to make only modest tweaks in this year’s formula for people who make more than three times the federal poverty level, which translates to $32,496 annually for an individual.

The vast majority of people, who get insurance through their employer, are unlikely to be affected by the change.

The thousands of people who receive state-subsidized insurance through Commonwealth Care will not face any premium increases this year.

Kay Lazar can be reached at