Jobless Health Insurance Shy on Takers

At a time when state programs all over the country are suffering for lack of money, a Massachusetts health insurance plan for the unemployed faces a different dilemma: plenty of money, but few takers.

The Health Security Plan began two years ago, making Massachusetts one of the few states to offer health coverage to the jobless. Washington state and Hawaii have similar programs.

Massachusetts’ plan was expected to have an enrollment of 30,000 people; it has never topped 12,000. A state account holds $50 million, waiting for thousands of the needy to sign up.

Meanwhile, John Hancock Mutual Life Insurance Co. is benefiting from a contract making it sole provider of the coverage. The company has charged the state $16.7 million, more than half of it for administrative costs.

“We are perplexed. It’s one of the worst recessions ever. This is a program there’s clearly a need for,” said Mark Rukavina, an organizer for the watchdog group Health Care for All.

One of the few remnants of former Gov. Michael Dukakis’ universal health care law, the plan collects about $34 million a year through a special business tax. So far, Hancock has issued just 31,000 policies. People leave the plan when they find work or lose unemployment benefits.

Even allowing for people who might have insurance through family members or previous jobs, the number is far short of the 430,000 people who collected unemployment in 1991.

Last fall, state officials promised to revamp the program and promote it more heavily. But many acknowledged that little has improved.

Rep. Carmen Buell, chairwoman of the Health Care Committee, said Hancock got a “Cadillac contract.”

Melvin Glasser, director of the Washington-based Committee for National Health Insurance, called it a disgrace that 54% of Hancock’s fee goes for clerical work. “Administrative costs should certainly not run above 18% to 20%,” he said.

“This is a difficult population for us to communicate with, to get the word out,” Charles Taylor, who oversees the program for John Hancock, said in defending the contract. He also said the program had high start-up costs.

The agency responsible for the program, the Department of Medical Security, “is very, very small,” said spokesman Larry Collins. “We don’t have the people” to staff unemployment offices.

Legislators and administrators lowered fees and printed new brochures to promote the program. They also are considering easing eligibility guidelines. Under current guidelines, an unemployed single person who earned more than $19,860 in the previous year does not qualify. Income limits are higher for families.

Even with the revisions, many complain the state and Hancock have done a poor job of getting the word out.

Brochures are on display at unemployment offices, but often there is no one available to explain the program and help people fill out applications. Some unemployment recipients are told to call an 800 number for more information.

“The 800 number was a little intimidating,” said an unemployed architect, speaking on condition of anonymity. “Is it run by the state?”

Hancock’s Taylor said at least one Hancock representative rotates among the 40-plus unemployment offices in Massachusetts, and sometimes four or five travel. And Hancock is preparing a direct-mail campaign to reach people.

For a second time, Gov. William F. Weld has asked his staff to revise the program.

The situation frustrates Dukakis. “There are very compelling reasons to move ahead on this as aggressively as possible: People are out of work, they’ve lost their insurance, employers are paying into the fund,” the former governor said.