FOR IMMEDIATE RELEASE
Senate Passes Legislation to Bring Immediate Relief to Small Businesses Struggling with Soaring Health Care Costs
BOSTON – The Senate on Tuesday approved legislation to help spur economic growth by providing small businesses the immediate health care cost relief they need to retain and create jobs and start hiring again. The comprehensive bill requires insurers to offer affordable health plans, reduces premium fluctuations and promotes wellness programs for small businesses.
The legislation delivers an estimated premium relief of 10-to-15 percent with the possibility of more for small businesses to save and reinvest in themselves and their workforce. It also establishes standardized transparency measures for comparing provider prices and requiring annual public reporting to shine a light on the marketplace and collect important financial information for ongoing policy discussions about long-term system reform.
“Small businesses are the job producers in Massachusetts, and they have been suffocating under the mounting costs of health care,” Senate President Therese Murray (D-Plymouth) said. “This bill brings the relief they need to start growing again, and it ensures a shared sacrifice from insurers and providers to bring relief in the short-term as we continue to work on complicated, long-term cost-control measures. It is not a permanent fix, but it will have an immediate and positive impact on small businesses that cannot be ignored.”
The bill requires insurance carriers to file premium rates with the Division of Insurance (DOI) prior to their effective date for review and gives insurers the option of filing rates under an Efficiency Guarantee.
The Guarantee ensures that at least 90 percent of their premium dollars will be spent on actual care and not administrative costs, such as marketing, salaries or profit margins. If carriers choose not to file rates with the Guarantee, they would be subject to a DOI review to determine if premium increases exceed medical inflation, which would not be allowed.
Addressing the issue of market instability, the bill closes existing loopholes in the system that drive up premiums for everyone. By moving to an annual open enrollment period, it ends the so-called “jumpers and dumpers” practice of individuals who purchase coverage only for expensive treatment and then drop the coverage.
The bill also controls year-to-year rate volatility that leads to 30- to 40-percent increases in health care premiums for some small businesses. The cost-spiking practice of measuring the age of employees in five-year increments would be eliminated, replaced with a yearly measurement of age to smooth out the annual increases as an employee group ages.
Additionally, the legislation provides more affordable health care products to small business employers by requiring carriers in the small group market to offer at least one reduced network plan with premiums 10 percent lower than those for a full network plan.
The bill also establishes a pilot program that provides a state enhancement of the federal tax credit program for small businesses that purchase health insurance through the Massachusetts Health Connector and participate in wellness programs.
Eligible small businesses that demonstrate participation in a wellness program would receive an additional 5 percent state subsidy for eligible health insurance costs from 2011 to 2014, bringing the total state and federal assistance up to 40 percent of employer health care costs per year.
Finally, the bill requires hospitals and other large health care providers with healthy reserves and a profit margin (revenues that exceed patient care expenses) over 2.5 percent for the past two years to make a one-time, shared-sacrifice contribution to help alleviate rising health costs for small businesses and bridge the gap to long-term system reform.
Providers will negotiate with insurance carriers on the specifics of the contributed transfer back into the system for small business relief. No funding will be transferred to the state. The Division of Insurance will work with the institutions to ensure that every dollar is targeted to premium relief, with refunds going to small businesses over a two-year period.
A $100 million contribution from the provider community would reduce small business health insurance costs by an additional 2.5 percent.
Other provisions in the bill:
· Authorize small businesses to group together and purchase health care plans at lower prices;
· Prohibit anti-competitive contract provisions between insurance carriers and health providers that restrict product innovation or tie reimbursement rates to those received by other providers; and
· Establish a Mandated Benefit Expert Review process whereby the Division of Health Care Finance and Policy must conduct a comprehensive review of the cost, public health impact and clinical efficacy of all existing mandated benefits every four years.
The bill now goes to the House of Representatives.
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p>(foo’)
45% of Student healthcare payments goes to profits for insurers in some plans now.
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p>We as a family dealt with the fact that colleges students – even unemployed, emancipated, over 25 year olds – are not eligible currently for Connector Insurance, and must buy these expensive, undercoverage, high profit plans. The Umass plans at the time were the worst, especially Aetna.
is it a distinction without a difference?
The one at UMASS is just as bad. Of course I’m sure both the state and colleges get funds back from these plans. I don’t think the UMASS plan passes for the minimum as required by the State. You think the state could coordinate with the state ?
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p>That being said the student plans HAVE NOTHING to do with our current health care crisis.
if he were stupid enough to go route # 2. P.S., great choice of name with “Manichean Tea Bag route”
I’ll actually be shocked if he didn’t do something like that.
I don’t.
would be Baker’s incompetence.
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p>The quote this morning from him on WBUR was unbelievable. Bob Oates said: “Why don’t you tell the RGA to stop running these ads?” Baker: “I can’t coordinate with the RGA.” Worst possible answer.
why he hasn’t denounced these ads is beyond me.
Sorry if I skip the Charlie Baker part, but the Senate’s bill really doesn’t do much. I am not sure why she rolled it out before the other part (Health Reform part 3B, if you want to quote Senator Moore).
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p>The idea that this 90% threshold is somehow a big change, is just not true. There are some insurers in Mass. that are up around 91-92% already. BC&BS are just under at around 88%, Harvard is down to 87%. And these numbers fluctuate each year. Putting the 90% number in the general laws is something, but it isn’t newsworthy.
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p>They’re also talking about a reinsurance pool, which without the infusion of external dollars is just a reshuffling of money.
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p>Finally the biggest idea to assess hospitals $100m for a one year cut to small business costs is so shortsighted. It changes nothing. It doesn’t lower rates longterm, or control costs. If you want to cut small businesses a break, offer a tax cut. The whole idea of a hospital in “good standing” is so laughable… those numbers can fluctuate year to year… or over five years. Because they have a surplus to day, she wants to raid it and use it for a one year small business cut? In three years when the same hospital is now in trouble and the one-year cut is long gone, what’s the plan.
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p>I really hope the House doesn’t pass this… it is the exact opposite of comprehensive reform. Granted some of the transparency can’t hurt… but really this is nothing more than a press release.
$#$#$?% rates are unavailable and our plan is coming due. What a great idea, break the insurance markets.