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Blue Cross to scrap policy with low employer contribution

Firm: Patrick feared harm to state's plan

In an about-face, Blue Cross and Blue Shield of Massachusetts said it is scrapping a new policy that would have allowed owners of small businesses to contribute just one-third of the cost of their employees' health plan premiums.

Blue Cross said it made the change at the request of Governor Deval L. Patrick , who told the firm that such low premium contributions would hurt efforts to extend health insurance to all residents under the state's healthcare revamp law. Prior to the new policy, which took effect July 1, the insurer required a minimum 50 percent contribution to premiums from employers with 50 or fewer workers.

"The governor is responsible for the implementation of the healthcare reform law and he believed our underwriting guideline change would have an adverse impact on the implementation," said Chris Murphy , a spokesman for Blue Cross, the state's largest health insurer with about 3 million members.

The policy change had rekindled debate about how much a company must contribute to employee healthcare premiums to avoid paying an annual fee of $295 per employee that is part of healthcare reform. The Romney administration last year said a company would be considered to have made a "fair and reasonable" contribution to healthcare coverage and would not be subject to the fee if it paid one-third of a single employee's premium costs. The average contribution by Massachusetts employers is about 75 percent.

State Senator Richard T. Moore , the chairman of the Health Care Financing Committee, has asked the Patrick administration to revise the reform law standards, so that a 33 percent contribution would no longer be considered "fair and reasonable."

Patrick's administration believed that if Blue Cross allowed lower employer contributions, other companies might follow suit, sparking a race to the bottom in which employers contributed as little as possible to their employees' healthcare. Critics said that could ultimately make company-sponsored health insurance plans too expensive for some workers.

Under the healthcare reform law, if a company does not offer health insurance, some low-income workers can receive subsidized coverage under the state's Commonwealth Care plan. They are ineligible for that assistance, however, if their employer offers a company health plan, no matter what the company's contribution to premiums.

A spokeswoman for Harvard Pilgrim Health Care -- which last week said it was reviewing its policies in light of Blue Cross's decision to lower its minimum employer contribution to 33 percent -- yesterday said the insurer will retain its 50 percent threshold. With about 1 million members, Harvard Pilgrim is the state's second largest health insurer.

Jeffrey Krasner can be reached at