One of the Governor’s shared responsibility proposals to meet the health reform shortfall includes a one-time assessment of $33 million from excess insurance company reserves.
Employers and insurers oppose the idea. Insurers claim every dollar of their reserves are needed in case of a catastrophic health calamity. Employers claim that this will cause insurers to raise their rates to replenish their reserves. Apparently the employers feel they, the purchasers, are forced to pay whatever rates the insurers demand.
Harvard School of Public Health insurance expert and former DOI official Nancy Turnbull has definitively answered the objections of the insurers and employers. In her response to a comment on the WBUR Commonhealth blog, Nancy explains why the proposed assessment is fair and can be easily absorbed by the insurers. Her post has the financial details, showing how our major carriers have some $1 billion in reserves above the level needed for adequate solvency. The bottom line:
An insurer assessment is a reasonable and fair way to ask health plans to contribute to the financing of health reform. Health plans have benefited enormously from the coverage expansions created by the law (more than 300,000 new members in Commonwealth Care and private insurance plans). They have also benefited from the MassHealth payment increases (designed to raise hospital and physician rates more than $500 million in the first three years of the law). Health insurers supported these MassHealth provider payment increases, which were designed, in part, to reduce cost-shifting by providers to private insurers.
Health plans can afford a $33 million assessment with no risk to their financial health. And the state can and should ensure that any assessment paid by the health plans doesn’t raise premiums. In the case of the major Massachusetts health plans, all of which are not-for-profit, public charities, their net worth has been created solely from the profits and investment income that health plans have made from the premium payments of employers and consumers. So, we’ve already paid. It’s time for insurers to join us.
Nancy’s last point deserves amplification. Excess insurer reserves means the insurers have overcharged us in the past. A modest assessment just reclaims our premiums for a public purpose. It’s our money.
Brian Rosman
