Business Sends a “Dear Jon” Letter
Here are excerpts from the letter three business leaders sent to Connector Executive Director Jon Kingsdale and other state officials today.
Dear Jon:
… we wanted to share our views on the issue of minimum creditable coverage (MCC). It is important to remember that MCC was meant to be a minimum and not a universal standard of adequacy. The law’s specific intent was to introduce more flexible and affordable products so individuals could choose among a range of options. Setting MCC too high undercuts the law’s intent, which was to support the individual mandate, give individuals the opportunity to select plans that reflect their particular needs, and build on the state’s high level of employer-based coverage.
To us, the biggest MCC challenges include:
1) Avoiding New Burdens on Existing Policyholders: Recent estimates suggest that 200,000 residents currently have health insurance policies which would not meet the MCC standards being considered by the Connector. We recommend against enacting MCC standards which would force existing policyholders to change their coverage. Such standards would raise costs for those individuals, force some of them to drop the coverage they currently have, and raise costs for their employers.
2) Avoiding High Premiums for New Policies: We believe the implementation of the individual mandate—something that has never been tried in the United States before—will be facilitated by MCC standards that result in affordable premiums for people buying health insurance for the first time. We do not have the expertise to suggest a premium level, but we think it is better to err on the side of more affordable rather than less affordable premiums. This approach will minimize fiscal disruption for people buying insurance, and will help maintain public support for Chapter 58.
We would like to see a variety of health insurance plans, including high-benefit plans, available to people complying with the individual mandate. Those individuals will be buying health insurance under penalty of law. The decision as to whether they enroll in the more expensive high-benefit plans or the lower-cost basic benefit plans should be theirs to make.
Sincerely,
Paul Guzzi, Greater Boston Chamber of Commerce
Alan MacDonald, Massachusetts Business Roundtable
Michael Widmer, Massachusetts Taxpayers Foundation
Couple of quick reacs:
First, why don’t Guzzi, MacDonald and Widmer say it? They want the minimum coverage level not to include prescription drugs. That’s the only coverage benefit now in doubt. Why so coy? Do the biz leaders think prescription drugs are unnecessary or not?
Second, “…Those individuals will be buying health insurance under penalty of law. The decision as to whether they enroll in the more expensive high-benefit plans or the lower-cost basic benefit plans should be theirs to make.” Unfortunately, the current proposal is that employers may only choose one level of plan to offer. Employers who choose to offer only MCC-level plans will not be required to offer a plan that includes drugs, if drugs are not included in the MCC-level plan. So in that case, where is the choice? Would the business leaders support requiring employers to offer at least two levels of coverage? One with drugs and one without? If not, where’s the choice that’s “theirs to make.”
Third, we note the biz leaders refer to the MA Assn. of Health Plans 200,000 estimate of those with coverage who would not meet MCC standards. MAHP officials continue to stonewall in their refusal to release any data backing up this estimate. Perhaps the biz leaders could ask their friends to release the data they continue to withhold — in the interest of transparency, of course.
February 13th, 2007 at 10:27 am
John–Why be so quick to pounce on the business letter? Those of us, including the Connector staff and most of its members, who are covered by the lavish benefits from the GIC and other large employers ought not to be so judgmental about what is adequate coverage from the point of view of the younger self-employeds and those in small businesses. The higher the MCC bar, the more these folks will leave the Commonwealth, or stay and ignore the law or swamp the Connector with hardship appeals.
February 14th, 2007 at 7:26 pm
The letter from the business leaders makes some points we’ve heard before, but neglects to identify the primary logic behind their point of view.
Our healthcare and our health insurance in Massachusetts is either the most expensive in the world or close to it. The MCC plans are intended to set a floor below which an insured person will be deemed in violation of a law whose functions are to expand access to healthcare and increase the affordability of health insurance.
As has been pointed out a number of times on this blog, insurance of any type first protects against financial loss that is indefinite as to the time of its occurrence and definite as to the nature of the risk covered. Neither Chapter 58 nor MCC plans endeavor to provide for payment of all medical expenses, nor should they. We may get to that point, but we are not there yet.
While listening to Connector Board members present views and advance arguments, it has become clear that there are those who believe MCC plans should first address prevention of the financial catastrophes of major medical expenses. Others have been equally steadfast in insisting that MCC plans provide low out-of-pocket coverages for some office visits and some drugs. If the choice were simply between these two categories–catastrophic coverage OR first dollar benefits—I believe the essence of MCC plans requires that it be the former. It may be true that catastrophe-only coverage may provide a disincentive for a covered person to seek care during the early stages of a severe condition, but no regulation or law can prevent this entirely. Ultimately, the individual citizen must decide whether to seek care or not. This imperative for prudence is inescapable, ubiquitous and entirely human.
If the final MCC plans were to cover only first dollar benefits we would have a situation that essentially endorses plans that are insignificantly different from the frequently-derided mini-med plans. No one on the Connector Board has proposed plans covering only first dollars.
It does seems that we are in danger of having MCC plans that are characterized by the pitfall of design-by-committee. After listening to much Connector Board debate I now understand how Medicare Part D plans acquired a “donut hole”: the only way to satisfy those demanding first dollar coverage and those insisting on catastrophic benefits was to exclude benefits in the middle.
It would be a pity to let MCC plan design fall victim to the same forces.
Business leaders represent their own best interests and we all have reason to consider that as we evaluate their letter to Jon Kingsdale. But there is nothing in that portion of the letter quoted here that does anything other than emphasize the need to make MCC plans affordable both now and in the future. Employers’ relationships with their employees are primarily financial in nature. It only makes sense that they should emphasize protection from catastrophes. The encouragement of preventive healthcare is laudable, but outside the purview of the employer and best left to the individual employee, especially where the coverage is “MINIMUM CREDITABLE”.
February 14th, 2007 at 7:35 pm
The first of the “quick reacs” points to an issue that has consumed much of the Connector Board’s time and emotional capital: drug coverage.
The current build of MCC plans already calls for large deductibles. The recently enhancements to Health Savings Accounts provide a significant tax savings to any working person who pays taxes. Why not use the federally-specified High Deductible Health Plans as the pattern for MCC plans? These plans make drugs subject to the same deductible as most other expenses.
This heresy will get me in trouble with some, but the safety of orthodoxy will provide cold comfort to those who choose an MCC plan with absolutely no drug coverage or to a state agency responsible for dealing with too many waiver applications.