Business and consumer groups debate minimum insurance standards

By Kay Lazar, Globe Staff

Business groups today warned that proposed state regulations to define the minimum health insurance coverage each resident must have, or face a tax penalty, would be too costly for some employers and would leave Massachusetts residents with fewer affordable insurance choices.

But a coalition of consumer organizations said the state's draft plan did not go far enough to protect patients and would leave many with insurance policies that do not adequately cover their needs, especially if they become seriously ill.

The business and consumer groups testified at a public hearing of the Commonwealth Health Insurance Connector Authority, a state board that regulates health insurance coverage. The Connector's draft plans are part of an overhaul of the state's health care system that requires nearly every resident to have health insurance.

The board is scheduled to adopt the new regulations in October, and they would take effect Jan. 1. The rules define the minimum benefits a health insurance plan must include to be sold in Massachusetts. Those minimum benefits include 10 areas such as prescription drug coverage, mental health services, radiation and chemotherapy.

The consumer coalition ACT! said the proposals need to be more stringently written so that health insurance companies would not be allowed to unreasonably limit the amount of services patients could receive within each area.

However, several business and insurance groups said the proposals are already too stringent. They said the proposal could severely restrict consumers' access to an increasingly popular insurance product called high deductible health insurance plans. Such plans charge lower premiums in exchange for patients' paying a larger portion of the bill for medical services until they reach a certain dollar amount, when the insurance kicks in.

Kevin S. Wrege, a Washington lawyer and consultant who represents the Council for Affordable Health Insurance, a national trade association for some insurers, said frustration is building in the business and insurance industries over the state's proposed mandates.

He said the proposals, combined with others that would require many employers to contribute more to their workers' health coverage, could trigger a federal lawsuit over violations of a federal law, known as ERISA, which sets minimum standards for most health and pension plans offered by private companies, and which trumps state laws.

Wrege and others have warned that Massachusetts' proposal to impose more regulations on employers and insurance companies could trigger a federal challenge, based on ERISA. Wrege said several Washington law firms are preparing for such a challenge.

"All they are lacking," he said, "is a paying client and a green light."