Mass. proposes exemptions to healthcare law

The state yesterday proposed to exempt businesses from the $295-per-employee annual fee that is part of a healthcare overhaul if 25 percent of their workers sign up for a company's insurance plan or the company pays one-third of the premiums for an individual's coverage.

Officials said the proposed standards, which will be finalized by the Division of Health Care Finance and Policy later this summer, are fair to both employers and workers.

Amy Lischko, division commissioner, said the state did not set a minimum dollar amount because it does not want to interfere with how employers and employees negotiate compensation.

Healthcare advocates said the proposed minimums will let companies avoid paying the $295 fee by offering inadequate healthcare coverage to their workers. Some insurance plans offering minimal coverage can have premiums under $500 a year, which would allow a business to comply with state regulations by paying as little as $150.

The state's sweeping healthcare overhaul plan, which was signed into law in April by Governor Mitt Romney, is intended to extend health insurance coverage to the 460,000 residents who lack it. The law requires that companies with more than 10 employees pay $295 per employee if they don't offer ``fair and reasonable" healthcare coverage. Yesterday's proposal was intended to define the term.

John E. McDonough , the executive director of Health Care for All, an advocacy group that played an important role in shaping the healthcare bill, said the definition of ``fair and reasonable" doesn't require enough of businesses.

``An employer who contributes only one-third of the premium is not making a fair and reasonable contribution to the health-security needs of its workforce," he said.

The Division of Health Care Finance and Policy said yesterday that the assessment will generate $26 million a year, considerably less than the $45 million projected during legislative negotiations. The money will go toward subsidizing the healthcare premiums of low-income residents. The 25 percent-participation threshold cannot include employees who get their insurance from another source, such as a spouse's health plan. Also, under the rules, companies will not be penalized for not providing healthcare for part-time or seasonal workers.

Phil Edmundson , the chairman of Affordable Care Today and chief executive of an independent insurance brokerage, said his group recommended a 50 percent premium contribution. In addition, he said, the proposed standards do not specify what kind of health plan must be offered.

``If there is no minimum to the benefits in a plan, the whole law becomes a farce," Edmundson said. ``Employers will have motivation to move from comprehensive health plans to minimal plans as a way to meet the threshold. That will not improve the situation."

But Richard C. Lord , the chief executive of Associated Industries of Massachusetts, the state's largest business lobbying group, said the Division of Health Care Finance and Policy's proposed regulations ``won't penalize employers who are doing the right thing, which is providing healthcare to their employees."

John G. Macdonald , the executive director of the Massachusetts Business Roundtable, called them a ``creative solution to what's fair and reasonable. It's a solution we hadn't thought of and it's a creative approach."

A key legislator who helped craft the final bill gave the proposed regulations a mixed review. State Representative Patricia Walrath , Democrat of Stow, said she had hoped businesses would be required to pay more for employees' healthcare. Still, she said, the proposed regulations set ``a national precedent of a broad requirement for business to contribute something in the face of lobbying by all kinds of business groups."

``This isn't as much as we would have liked, but sometimes you don't get everything you want in a bill of this magnitude," said Walrath. She added that the funds raised by the $295 fee will constitute only a small portion of the state's insurance subsidies for low-income residents that also are built into the overhaul plan.

The Division of Health Care Finance and Policy will hear public comment on the proposed regulations at two meetings in August, and is expected to issue its final decision in September.

Richard Powers, spokesman for the Department of Health and Human Services, said the minimum standards would not lead many employers to cut back on healthcare benefits .

``There's nothing to stop companies from doing that now" before the assessment is in place, Powers said. ``The employers in the state have historically offered generous health plans to attract high-quality employers, and we don't see that changing."

In a separate issue, the healthcare division set rules under which companies will have to compensate the state for care provided to employees who don't have insurance. The amount they will have to repay varies from 10 percent to 100 percent of the costs .

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