Legislator: Boost role of firms in health plan

A key architect of the state's healthcare reform law yesterday harshly criticized proposed rules governing what companies must contribute to insurance to avoid a $295 annual assessment for each employee.

Representative Patricia A. Walrath , Democrat of Stow, said the regulations proposed in June by the Romney administration do not require businesses to pay enough for healthcare reform. In addition, she said a company's contribution should take part-time employees into account. The rules drafted by the Division of Health Care Finance and Policy exclude part-time workers.

Under the proposed rules, a company is considered a ``contributing employer" if at least 25 percent of its workers participate in the employer-sponsored health plan." Companies that don't meet that threshold can also be considered contributing employers if they pay at least 33 percent of the premium for individual coverage. Businesses with fewer than 11 employees are exempt.

Both tests are too lax, Walrath wrote in a letter to Amy Lischko , commissioner of the healthcare division. She wants companies to pay at least 50 percent of healthcare premiums or have at least 35 percent of their employees signed up for coverage.

``The intent of the Legislature was that employers not only offer but contribute to employee health plans," she wrote, urging that the measures for premium contribution and employee participation be combined into a single test.

Walrath's comments came as the divide between business leaders and healthcare advocates over what constitutes a company's ``fair and reasonable" contribution to health insurance deepened yesterday. During a Division of Health Care Finance and Policy public hearing at the University of Massachusetts at Boston, healthcare advocates said the division's proposal would further erode employer health plans, leading to a ``race to the bottom."

``The proposed regulations make an already inadequate assessment even more inadequate," said Phil Edmundson , head of a private insurance company and chairman of Affordable Care Today's Massachusetts coalition.

Edmundson said the proposed contribution requirement doesn't set any standards for company health plans. He cited the case of Friendly Ice Cream Corp. of Wilbraham, which recently changed its health plan for many restaurant employees to a ``mini-med" plan, with limited benefits, which leaves beneficiaries liable for costs if they become seriously ill. In a statement, Friendly said yesterday that it has recently improved its insurance for restaurant employees, increasing hospitalization benefits to $10,000, with no deductible.

``With no quality requirement, these regulations could spread the use of mini-med plans," Edmundson said.

Like Walrath, several union leaders and healthcare advocates at the hearing urged that employers be required to contribute at least 50 percent of an individual employee's healthcare premium. The median contribution by companies in Massachusetts is more than 70 percent, they said.

``The regulations as they now stand take a minimal employer contribution and minimize it to the point where it is practically meaningless," said John McDonough, executive of Health Care for All, an advocacy group that pushed hard for healthcare reform.

The law is intended to provide healthcare coverage to the roughly 500,000 Massachusetts residents who lack coverage. The intent is to reduce the number of people using free care at hospitals and slow the rate of increase in health insurance premiums.

Business leaders praised the proposed rules and warned about the consequences of raising the standards for employer contribution to healthcare insurance.

``Attempts to alter the thresholds could . . . damage our competitiveness compared to other states," said James Boyle , assistant director of economic development for the Greater Boston Chamber of Commerce.

There was also disagreement about the intent of the healthcare reform law.

Michael J. Widmer , president of the Massachusetts Taxpayers Foundation, said the $295 assessment is intended to pay for free care given to residents without insurance.

``The assessment was not meant to be an employer mandate to provide healthcare, a requirement on an individual employer to make a minimum contribution, a dictate on employers as to whom they should cover, or a license for the state to set standards of coverage," Widmer said.

Additional public hearings on employer regulations for healthcare coverage will be scheduled by the state. The final rules are due Aug. 29.

Jeffrey Krasner can be reached at krasner@globe.com.