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State targets gap in federal health care coverage

Supports subsidies for family coverage

Colleen MacRamos, with Jack, 1, and Maggie, 5, said she and her husband can’t afford family health care insurance.

Gretchen Ertl for The Boston Globe

Colleen MacRamos, with Jack, 1, and Maggie, 5, said she and her husband can’t afford family health care insurance.

WASHINGTON — A congressional mistake that could cause nearly 4 million people to be ineligible for federal subsidies in President Obama’s health care law has prompted Massachusetts officials to launch a new effort to try to close the gap.

Under what has become known as a “glitch” in Obama’s health plan, eligibility for insurance subsidies will be based on how much it costs workers who buy an individual plan, not the far more expensive family plan. The glitch would affect uninsured spouses and an estimated 460,000 children of workers who cannot afford the family coverage offered through employers.

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Although that was not what lawmakers say they intended, partisan congressional gridlock has closed off efforts to fix the glitch before the ambitious overhaul aimed at universal coverage kicks in fully next year.

So officials in Massachusetts, where the framework for the national law was first enacted, are stepping in, saying they want to fix the glitch to help those affected in the Bay State. Advocates say they hope Massachusetts’ efforts will focus new national attention on the problem.

Governor Deval Patrick’s administration has proposed a pilot program to allow workers at small businesses who cannot afford family coverage under their employer-sponsored health plans to qualify for subsidies, offered through the state’s Medicaid program, starting in January 2014, said Glen Shor, secretary of the Executive Office for Administration and Finance and former chief of the state’s health insurance exchange program.

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The state sent a letter to federal officials last week asking permission for the expansion.

“The pilot program may give us an opportunity to help some people who do fall through the cracks,” Shor said. “In the event this does wind up being a problem for people, we can address it within the resources we have to do so.”

The Massachusetts pilot program, which is estimated to cost $33 million and would be paid for with state and federal dollars, is still a proposal that is winding its way through the state budget process, Shor said.

State officials could not say how many people in Massachusetts will be affected by the glitch.

The failure of Congress to correct the law’s wording to address its own mistake has frustrated health care advocates.

“The problem is Democrats won’t want to open up the law for meddling, and Republicans don’t want it to succeed, so it’s hard to envision making any changes to improve the law in the hyper-partisan Congress we have now,” said Drew Altman, president of the Kaiser Family Foundation, a nonpartisan organization that analyzes health policy.

The Obama administration issued final regulations on who would be eligible for insurance subsidies earlier this year. It determined that the standard of eligibility would be based on whether people could afford to buy individual coverage under plans offered by their employers, not family coverage, which typically costs three times as much.

Under the Affordable Care Act, those for whom employer-sponsored individual coverage costs more than 9.5 percent of their household income would receive a government subsidy to buy insurance through their state’s health exchange — an online insurance marketplace debuting in January 2014.

But the law does not make allowances for people whose premiums for family coverage exceed 9.5 percent of household income — as a family policy could do — even though the federal Government Accountability Office had recommended last year that the administration consider basing the criteria for insurance subsidies on affordability of family coverage.

House Democrats wrote a letter to the administration clarifying their intent, saying that the cost of family coverage should be a factor in determining affordability, according to a Democratic aide involved in the legislation.

“The decision of the administration to interpret the affordability test in a narrow way that did not take into account the cost of dependent coverage was unfortunate,” said Representative Henry Waxman, a California Democrat and a leading advocate of national health reform. “I believe the failure to protect dependents and allow them access to affordable coverage was a misinterpretation of the intent of the law.”

The White House declined to comment.

While increased cost may have been a factor in the administration’s narrow reading of the law, Tim Jost, a law professor at Washington and Lee University who specializes in health law and the Affordable Care Act, said, “There’s going to be a huge disappointment when people who thought they were going to get health coverage find out they still can’t afford health insurance.”

Amy Whitcomb Slemmer, executive director of Health Care For All, a consumer advocacy group in Boston, applauded Massachusetts’ plan. “We point to this as yet another way that Massachusetts is committed to making sure that the Affordable Care Act works for as many consumers as possible,” she said.

With little political will for a federal fix, an estimated 3.9 million people across the country will be denied access to affordable health insurance, according to a Kaiser Family Foundation analysis.

On average, the families affected would have to pay 14 percent of their income toward employer-sponsored coverage. Many of those affected fall into the working class, making three times the federal poverty level, or about $70,000 for a family of four.

Federal officials have estimated that the glitch will result in 460,000 children being left uninsured.

For Colleen and Phillip MacRamos, of New Bedford, buying family coverage would cost the couple 24 percent of their yearly household income of $49,000 — a luxury they cannot afford.

Colleen, a photographer, has been uninsured since turning 26 in September and no longer could be covered through her mother’s plan. Her husband is a supervisor at a picture frame factory, where he is able to purchase health coverage only for himself.

“It’s just unfortunate that we’re in that income bracket where we aren’t poor enough to qualify for subsidies but aren’t rich enough to be able to afford private health insurance,” said Colleen MacRamos.

Representative Michael Capuano, a Massachusetts Democrat, said that Republicans should accept health care reform as “the law of the land,” given its affirmation by the Supreme Court last summer, and fix the glitch.

“It’s time to stop the nonsense of obstruction and focus on implementation,” Capuano said. “That includes clarifying the law’s intent where necessary.”

But Senator John Thune, a South Dakota Republican, said the glitch is more evidence of the law’s failings.

“Add the ‘family glitch’ to the list of broken promises and unintended consequences of Obamacare,” Thune said.

“It is time for Congress to repeal the law and enact common-sense, step-by-step reforms that actually reduce health care costs and increase access to quality care.”

The glitch stemmed from the fact that the health care law was passed in a hurry following the death of Senator Edward M. Kennedy, a Massachusetts Democrat and key health care champion, and the election of Republican Scott Brown, who had vowed to block the law, to Kennedy’s seat, health policy experts said.

Instead of forming a conference committee to clean up the legal language and resolve technical issues, Congress moved health care reform through the reconciliation process, a budget mechanism that allows a bill to pass with only 51 votes in the Senate, avoiding a filibuster.

“There was no opportunity to review the bill and fix areas that weren’t perfectly aligned,” said Judy Solomon, vice president for health policy at the Center on Budget and Policy Priorities, which has been pushing for a fix. “Now with the final regulation having been released, it would require a legislative change. The House just passed a bill to repeal it but to do anything to make it work better seems impossible at this point.”

Tracy Jan can be reached at tjan@globe.com. Follow her on Twitter @GlobeTracyJan.
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