Today business and insurer trade groups weighed in with a letter (click here to read), opposing all new assessments to fund this year’s health reform shortfall.
While we like the logo salad in their letterhead, we’re disappointed at the unconstructive approach to the issue. We’ll respond to their specific arguments below. But what’s most disappointing is the failure to propose a reasonable alternative. OK, we can stipulate that no one likes paying more in taxes and fees. And I’ve never heard a business group say this is a good time to raise their assessments.
But after engaging in a shared responsibility process that started with a major increase in premiums and copays being charged to low income Commonwealth Care members, for key stakeholders to now say, “not my problem” is to turn their back on the achievements of health reform they can justifiably be proud of.
Click on the (more . . .) for our point-by-point commentary on the issues raised in the letter.
In their letter, the groups first wish away the problem. They claim that the recent flattening of CommCare enrollment indicates that no shortfall is likely. But most of the shortfall stems from higher than expected growth in MassHealth, not CommCare.
In any case, the stable net numbers in CommCare masks unabated growth in new members. The overall enrollment has been steady because the growth is matched with people moving off, an artifact of the first redetermination process for former Pool enrollees. This drop-off should be greatly reduced as the initial members are properly assigned. Part of the trouble we were in last year was due to the underestimation of enrollment. Now that they’re being asked to pay a bit more, the business community wants to play the same game they accused the administration of playing: budget based on hope.
The second claim is that assessing insurer reserves will lead to higher premiums. The proposal calls for assessing some $33 million in excess reserves. This is on a base of total 2007 net worth/surplus among Mass insurers of $2.7 billion. Reserves in excess of 60 days total $756 million (source). We don’t see why taking this slight amount would necessarily lead to immediate higher premiums. Insurers could absorb this, and get by with smaller reserves or cut other expenses. Given the huge growth in private insurance as a result of health reform, we think the modest assessment on the beneficiaries of that growth is fair.
The bulk of the letter addresses the main employer argument, that employers are already making a substantial contribution to health reform. Rick Lord of AIM also makes this point in his blog on WBUR’s site yesterday.
Health reform has increased overall employer spending for health reform. More workers are taking coverage when offered, and this increases those employers’ costs.
But the Governor’s proposal is not targeted at those firms. Instead, the proposal broadens the Fair Share assessment to hit companies that have very low takeup rates (under 25% of full-timers) or pay a small proportion of the cost (under 33%). These are not the companies that are already paying more because of health reform.
In fact, many employees at these firms are eligible for Commonwealth Care and other programs. These employers benefit the most from the state’s subsidized coverage programs. It’s particularly appropriate to ask these companies to make a modest contribution ($295 a year per worker, and probably less) to help fund programs that directly benefit their bottom line.
Finally, the letter asks that instead more be done to control cost growth. There’s an irony when payers and insurers ask government to do more on cost control, since they have far more influence on prices than anything state government could accomplish. Insurers and payers continue to pay providers using methodologies that encourages higher intensity specialized care, and that devalues prevention, wellness and other cost-effective care.
More to the point, the letter-writers know that major cost-control legislation has passed both branches and is should be enacted by the end of next week. Adequately funding health reform won’t interfere with this process.
In the end, the letter urges the state to take no action to meet the expected deficit. This is also ironic, coming from groups that preach honest budgeting. We urge the House and Senate to follow the responsible path of shared responsibility that is the foundation of our success so far.
Brian Rosman
I guess the problem with one group’s voice speaking for many businesses is that they end up speaking for both the socially responsible employers and the one’s that try to act as the “payer of last resort.” Hopefully, responsible business people will come forth to speak out against subsidizing the firms that get around providing health benefits and moan about having to pay even the pitiful “Fair” Share Assessment (Free Rider Assessment is more accurate).
Let’s be honest, what hurts bottom lines of many companies or the other employers that pad their profits by offering such low quality or highly priced insurance products that employees seek coverage from their spouse’s employer.
Until the employer community comes forth to demand higher employer taxes to help fund a single-payer system they need to either offer their employees insurance products which are affordable and high quality, or buck-up and send in the $295/year.
While I’m at it… The response of the insurers that they can’t dip into the huge financial reserves because of the threat of pandemic flu or a terrorist attack as well as the hospital association tying its support to the need to defeat mandatory nurse staffing ratios is just pathetic.
You state:
“Reserves in excess of 60 days total $756 million (source). We don’t see why taking this slight amount would necessarily lead to immediate higher premiums. Insurers could absorb this, and get by with smaller reserves or cut other expenses. Given the huge growth in private insurance as a result of health reform, we think the modest assessment on the beneficiaries of that growth is fair.”
One of the many problems with this argument is that since there are more people enrolled in insurance plans, there needs to be more reserves rather than less. It does not make sense to cut ~5% of reserves at a time when there has been “huge growth” in the number of people covered.
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