Mass. Consumers Cannot Keep Canceled Health Plans

Massachusetts' top insurance official said Monday that the state won't allow consumers to keep health insurance policies that fall below the minimum requirements of the federal health care law.

State Insurance Commissioner Joseph Murphy said in a letter sent Monday to the Obama administration that substandard insurance policies are "virtually non-existent" in Massachusetts because of its first-in-the-nation health care law that took effect in 2007.

In a reversal of policy, President Obama announced last week that millions of Americans would be allowed to renew individual coverage plans that otherwise would be cancelled under the federal law in 2014.

Murphy wrote that unlike most states, Massachusetts has had a minimum benefit level for six years and that almost all health insurance policies are at or above the new national standard.

"To change course at this time, and delay certain market reforms, could cause confusion and significant market disruption," Murphy wrote.

Murphy said in an interview that about 100,000 Massachusetts residents will need to change to what he called a slightly modified health insurance plan. For example, some consumers might have to change to a lower deductible, he said.

He also wrote to Obama that the state is working to "seamlessly overlay the additional benefits" of the federal law over the state's existing health care law. He said the state has been granted a three-year transition to make sure that additional changes don't disrupt the progress the state has made in expanding insurance.

Massachusetts' 2006 health care law became the blueprint for the federal law signed by Obama in 2010. Massachusetts has the highest percentage of insured residents of any state.

"Thanks to the success of health care reform here in the Commonwealth, sub-standard plans are not part of our marketplace," Gov. Deval Patrick said in a statement Monday. "Our experience shows why minimum insurance standards are necessary to assure adequate coverage for all."

That experience stretches back to 2007, when the state began translating its health care law into reality.

The board charged with putting the state law into effect created what they termed "minimum creditable coverage" referring to the most basic health insurance that the state would recognize under the law.

Anyone whose coverage fell below that minimum standard would be subject to tax penalties under the state version of the "individual mandate."

In an echo of the troubles facing the federal law, however, the board that oversees the Massachusetts law voted in early 2007 to delay key elements of the law by 18 months to give residents and businesses a chance to ramp up their health care coverage to meet more stringent requirements.

Officials at the time said that was needed to give employers, workers and insurers more time to adopt the "minimum creditable coverage" standards, including the requirement that everyone be covered for prescription drugs.

The state still maintained the requirement that virtually all state residents have some insurance plan by July 1 of 2007, as required by the law, or face fines.

Associated Press writer Bob Salsberg contributed to this report.