No economic hardship exception in Mass. health law

A recent court decision leaves workers who can't afford premiums of employer-sponsored plans without coverage and dependent on federal reforms for help.

By Amy Lynn Sorrel — Posted May 31, 2010

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A Massachusetts high court ruling highlights what some patient advocates are calling a hole in the state's landmark 2006 health reform law for individuals who cannot afford work-based health insurance. But they are optimistic that the federal reform law eventually will close that gap.

The Massachusetts Supreme Judicial Court ruled April 13 that the Commonwealth Connector was not required to consider whether a worker who could not afford the insurance his employer offered was eligible for a waiver allowing him to participate in the state-sponsored coverage program. Commonwealth Care provides free or subsidized health care coverage to low-income residents who otherwise don't have access to insurance.

Daniel Provencal and his wife argued that the state should have granted them a waiver because they could not afford their share of an employer-offered health plan, yet they were eligible for Commonwealth Care in other respects. Provencal's 2007 income was $24,239 -- roughly 177% of the federal poverty level and well below Commonwealth Care's 2007 eligibility cap of $41,076 for a household of two, according to court records.

But under the state reform law, workers who have an employer contributing at least 33% toward an individual health plan or 20% toward a family plan do not qualify for Commonwealth Care. Provencal's employer met those standards.

The Provencals, who would have had to spend 20% of Daniel's gross income on premiums, turned to the courts after the Connector refused to consider their waiver request. They argued that the state had a duty under the health reform law to set up such a way to opt in.

The justices, however, unanimously ruled that the statute gave the Connector broad discretion to determine whether and in what circumstances to waive the exclusion for individuals with access to employer-subsidized insurance.

"If the Legislature had intended to create an economic hardship exemption to the [employer-subsidized insurance] exclusion, thereby allowing individuals like the Provencals to participate in Commonwealth Care, it could have included specific language," the high court said.

Consumer advocates said the state's failure to establish a waiver program undermines the primary goal of health reform: to expand access to health coverage.

"One of the biggest groups left out of health reform was people with unaffordable employer coverage," said Brian Rosman, research director for Health Care For All, a consumer advocacy group that filed a friend-of-the-court brief in the case.

Patti Prunhuber, the Provencals' attorney, estimated that the ruling leaves as many as 40,000 people in this category stranded without coverage. The law may give the state leeway in developing a waiver program, but it does not allow them to ignore it, she said. "It's now quite clear there is a huge gap for working poor families."

Affordability issues

The high court said the law indicated only that the Connector "may waive" the exclusion, and "no implementing regulations delineate substantive criteria and procedural mechanisms for such a waiver."

But Prunhuber said the legislation does provide some direction, pointing to provisions that allow employers to pay to Commonwealth Care what they otherwise would contribute to a worker's private health coverage.

Officials for the Connector declined to comment on the decision, though the agency did study the waiver issue. The authority opted, however, not to institute such a program, due largely to financial constraints and potential disruptions in the private health insurance market, according to a June 2008 letter to state legislative committees.

The Connector projected that allowing low-income employees with access to work-based insurance into Commonwealth Care could cost an additional $338 million to $558 million by 2012, depending on how many employees would make the switch and the level of employer contributions.

As of April 1, the state-subsidized program covered about 157,000 individuals at a yearly cost of $800 million, according to the latest Connector statistics. As of spring 2009, only 2.7% of state residents were uninsured.

Financial considerations are valid, Prunhuber said. "But they can be addressed through the adoption of criteria that don't open the floodgates."

Health Reform For All has proposed a pilot project that would base access on an affordability scale, Rosman said. The Connector's 2008 letter said it would continue to examine such options.

Meanwhile, the federal health reform law might address the issue in a few years, said Victoria Pulos. She's a health law attorney with the Massachusetts Law Reform Institute, a nonprofit legal advocacy organization for low-income individuals.

Under the federal law, people whose insurance costs exceed a certain percentage of their income may qualify for refundable tax credits to purchase coverage through a health insurance exchange, said Pulos, who assisted the Provencals in their case.

The federal reform statute "recognizes that if people are offered insurance at work, they should take that first ... but at least everybody agrees affordability is a standard that makes sense," she said. "Unfortunately, Massachusetts may have to wait until 2014."

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Getting coverage on the job

A relatively large percentage of employers in Massachusetts offered health insurance benefits the year after a landmark coverage initiative took effect in 2006. But the portion of workers that took them up on the offer was slightly lower than the national average. All figures are for 2007.

Massachusetts U.S.
Employers offering health insurance 72% 60%
Employees enrolled in health insurance 78% 82%
Employer contributions to individual plan premiums 75% 85%
Employer contributions to family plan premiums 75% 73%

Source: "Health Care in Massachusetts: Key Indicators," Massachusetts Division of Health Care Finance and Policy, November 2009 (link)

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