State may give insured more time to upgrade

The ambitious goals of the state's universal health insurance law collided with reality again this week, as officials struggled to balance broad coverage for the uninsured with concerns about forcing those who already have coverage to buy more.

In the end, state officials yesterday recommended dropping one of their key requirements for comprehensive basic insurance and allowing residents extra time -- perhaps more than a year -- to obtain higher-quality insurance. All state residents, however, will still have to buy some insurance by the July 1 deadline set in law or pay a penalty.

"It's a balancing act," said Jon Kingsdale, executive director of the Commonwealth Health Insurance Connector, which is overseeing implementation of the new law. "It took two to three years to get the law enacted. It will take two to three years to implement it."

Kingsdale sent revised recommendations yesterday to connector board members for the minimum coverage that all state residents must eventually have. The board is scheduled to vote on the proposals Tuesday.

House Speaker Salvatore DiMasi, one of the architects of the law, said yesterday that the delay in full implementation is "not ideal," but would not derail the overall goal of universal coverage. "It's a matter of taking extra steps to get to that goal. We're moving to universal insurance and then toward insurance that has substantial benefits. That's the key."

The new proposal would allow insurance plans that cap lifetime spending on individual patients' healthcare, even though some board members and staff are concerned that those financial limits could restrict access to care. The change was made after officials learned that more than 360,000 state residents have insurance with those limits and would have needed to buy coverage with no cap, or pay a penalty.

Kingsdale and his staff, however, decided to stick with a recommendation that all plans cover prescription drugs, although that would force more than 86,000 people with insurance to buy additional coverage. And they proposed sticking with other rules that would require about 164,000 additional people with insurance to upgrade their coverage.

Those rules include barring annual limits on coverage, as well as limits per illness. In addition, if there is a separate drug deductible, it would be limited to $250 for an individual.

To ease the transition to the new standards, the connector staff is proposing that the requirements be phased in to give employers time to upgrade the insurance they offer employees. Employers are not required to provide insurance that complies with these rules, but officials expect many will in order to retain their employees. Since employers typically have only one brief period during the year when they allow employees to alter their health plans -- and that time is different for each employer -- Kingsdale estimated it could take more than 12 months to make the changes.

Earlier this week, Kingsdale suggested to the board that the deadline for complying with minimum standards be delayed from July 1 until Sept. 1, 2008. Residents would still have to get insurance by July 1, or pay a penalty of about $200, but for the first year, they could buy any coverage on the market that meets existing state and federal rules. Yesterday, Kingsdale said the staff would present other options for possible deadlines to the board on Tuesday.

The new proposals are the first that involve adjustments to accommodate people who already have coverage. Observers said the law could founder if its implementation jeopardized too many of their insurance plans.

"A major disruption would put both employers and individuals into an impossible situation," said Michael Widmer, president of the Massachusetts Taxpayers Foundation, a business-funded group that helped secure passage of the law. "Health reform could not survive under that scenario."

Louis Malzone, a connector board member who represents private health plans jointly managed by unions and management, said he realized at a board meeting earlier this week that about 90 percent of those plans would run afoul of the proposed ban on lifetime caps. Major employers, including the cleaning company Unicco and Caritas St. Elizabeth's Medical Center, have union health insurance plans with limits, he said.

"We realized it would cause tremendous disruption," he said. "And they're not the plans we're really concerned about because most provide adequate coverage."

Board members had been focused on setting high standards for basic coverage for the 160,000 to 200,000 uninsured individuals who make more than $29,400 a year. (Subsidized plans are already available for the uninsured who earn less and whose employers do not provide coverage.)

The staff's recommendation to press ahead with requiring drug coverage resulted from the strong feeling "that drugs have become so important to medical care that it seems anachronistic to exclude them," Kingsdale said . The staff is working on another proposal, which may be presented to the board Tuesday, for stripped-down drug coverage that would cost less by providing only those drugs deemed essential to prevent illness or treat chronic illness.

Richard C. Lord, chief executive of Associated Industries of Massachusetts, the state's largest business lobby, said requiring drug coverage presents a problem for many workers.

"There are up to 200,000 people in Massachusetts who don't have drug coverage or have drug coverage subject to a deductible which might not meet the standard," said Lord, who is also a member of the connector board. "The employees will be out of compliance or the employers will feel obligated to spend more to buy drugs. I don't think we should be taking that step at this time."

Some employers said any changes that affect existing insurance plans would be problematic.

Jim Crosby, owner of Crosby's Markets, a six-store chain based in Salem, said he's not sure whether the insurance he provides for 115 employees qualifies under the new proposal.

"The whole idea of healthcare reform was to take care of uninsured people," he said. "Instead, they're screwing around with people that already have coverage. Our employees are basically happy with the health plan."

Jeffrey Krasner of the Globe staff contributed to this article. Alice Dembner can be reached at Dembner@globe.com.