Legislature Hears Small Business Rate Relief Bill

On Wednesday, March 10, the Health Care Financing and Community Development and Small Business Committees heard testimony on the provisions of Governor Patrick’s small business bill dealing with health care cost control. The hearing opened with testimony from the Governor himself, who spoke before a packed room. Gov. Patrick shared stories from Massachusetts small business owners who were facing insurance premium increases of 35, 44, even 90 percent. Gov. Patrick made it clear that he had a very specific and immediate goal: to lower health care costs for small businesses, enabling them to free up the financial resources to add more jobs and build the economy. While he acknowledged that a larger conversation about cost control needs to happen, he emphasized that his bill was meant only to provide short term relief until comprehensive payment reform is implemented.

Speakers representing health industry experts, providers, physicians, and health plans largely agreed that systemic payment reform is the real solution. Most agreed that some provisions in the Governor’s bill were a step in the right direction. Provisions generally favored by these groups include the moratorium on new mandates, limiting enrollment periods to once or twice a year, regulatory review, and the availability of more affordable, limited network plans. However, disagreements were evident on other provisions.

Providers and insurance groups expressed concerns about capping premium rate increases, citing other contributing factors for rising health care costs. Some providers blamed Medicare payment rates, labor, and administrative costs. A few insurance groups attributed costs to pharmaceuticals, increased utilization of medical treatments, and provider settings.

Nancy Turnbull of the Harvard School of Public Health, the consumer representative on the Connector Board, appeared together with Rick Lord of Associated Industries of Massachusetts, the small business representative on the board. They jointly agreed to a package of market reforms, administrative savings and price oversight that could form the basis for a consensus approach to the issue.

Health Care For All appeared before the Committee on behalf of Massachusetts health care consumers. In our written testimony (pdf), we applauded Governor Patrick for recognizing the urgent crisis of rising premiums and for taking the bold step of filing legislation that seeks to control costs through increased accountability, transparency and public oversight.

HCFA supports greater oversight and public accountability of health plan and provider charges to make sure rate increases do not exceed reasonable standards. This should be implemented with flexibility, to allow for exceptional social and economic factors. Other changes to the individual/small group market can provide increased savings. We support the “rate shock bumpers” in the Governor’s bill to blunt the impact of high premium increases due to changing demographics. We can also reduce administrative costs if the Connector were the sole administrator of new affordable plans to small businesses. The establishment of a reinsurance program would spread the risk of high-cost patients and allow insurers to reduce premiums.

The Governor’s bill is a good step in the right direction to control health care costs. Its measures for short-term relief should be implemented as soon as possible. But let’s not forget that we need, above all, a long-term solution. Payment reform is the answer and we cannot afford to wait.
-Criselda Ruiz