BUSINESS LEADERS DIVIDED OVER SMALL BIZ HEALTH INSURANCE PROPOSAL
By Amy Lambiaso
STATE HOUSE NEWS SERVICE
amy.lambiaso@statehousenews.com
STATE HOUSE, BOSTON, JUNE 28, 2005…..Business groups and other
stakeholders in the health care insurance and access debate are divided
over a plan that proponents say will give small businesses more
bargaining power in trying to negotiate lower health insurance prices.
The split was evident today on Beacon Hill, where legislative leaders
and Gov. Mitt Romney continue to explore and discuss reforms and
expansions to the state's health care system. Supporters of so-called
association health plans are hopeful that a comprehensive reform plan
will include this piece as a tool for smaller employers, although none
of the proposals put forth thus far include the measure.
The proposal, being pushed by a coalition of more than 40 trade
associations and small employers, would allow associations with at least
100 members to jointly bargain for health insurance. That effort,
supporters believe, will give them the same clout as large employers and
reduce overall health costs.
But opponents, which also include business groups, labor unions,
consumer advocates, and health plans, say such a system will do nothing
to lower health costs and will instead further destabilize the system.
"If we thought the legislation before you would result in a net
reduction in the number of people without insurance, honest to God we
would be here with the prior panel telling you it's a good idea," John
McDonough, executive director of Health Care For All, told members of
the Financial Services Committee during a hearing on the bill today.
McDonough is part of the coalition fighting the legislation, saying a
more creative solution to slowing the growth in health care costs for
small and large businesses alike is needed.
Sen. Mark Montigny (D-New Bedford), a member of the committee,
questioned whether the provision was left out of each health care reform
package as a "massive oversight," or as a "hint that it doesn't work."
"I find it hard to believe that it would have been an oversight," he
said. "In my experience, market-based reforms . . . usually are nothing
more than a smokescreen for no solution."
But supporters hope the release of a Beacon Hill Institute study today
will encourage lawmakers to pursue the proposal, particularly in the
Senate where it was included as a budget amendment last year.
According to the study, allowing small businesses to band together and
purchase health insurance, as is already allowed in Washington,
California and Connecticut - would reduce the number of uninsured in
Massachusetts by roughly 25,000. That figure includes nearly 15,000
individuals now employed by small businesses that do not offer insurance
or offer insurance that is too expensive for employees to afford.
Additionally, the study concludes that association health plans would
extend coverage to more than 10,000 firms, or 4,273 that did not
previously offer health insurance. By increasing the number of residents
with insurance, the study estimates that the state will realize $47.6
million in savings through the uncompensated care pool, which reimburses
providers who treat the uninsured.
By increasing productivity and creating a healthier workforce, the bill
would also improve the state's "health capital" by an amount ranging
from $44.4 million to $88.6 million, according to the institute.
"Nearly 60 percent of the state's uninsured workers work for small
business," said John Barrett, director of research at the institute. "By
permitting small business to pool risk in the same manner as big
business is permitted to do, the legalization of AHPs would level the
playing field and make a significant step toward reducing the number of
uninsured as well as the burden on the state's uncompensated care pool."
"Small businesses should be treated every bit as well as big business,
every bit as well as government," added Jon Hurst, president of the
Retailers Association of Massachusetts. "We're tired of being the last
ones at the table."
Hurst said that on average, members of his organization have seen
health care costs rise by 15 percent during each of the last three
years. The disparity between what large and small employers pay for
insurance is becoming greater each year without this tool, he said.
Massachusetts law allowed for association health plans between 1991 and
1996, when it was repealed because those trade groups began offering
insurance plans to only those residents that would bring costs down -
the younger, healthier workers, McDonough said. Often called "cherry
picking," bill proponents say the practice of discriminating against who
is offered coverage in the membership association is strictly
prohibited.
"Nothing can be further from the truth," Sen. Steven Baddour
(D-Methuen), chief sponsor of the bill, said of the claim that it
promotes cherry picking.
Opponents also argue that the current small business market requires
insurers to pool small employers into a single, large risk pool to
spread the costs of covering catastrophic care. With an association
health plan, as is proposed, that pool would become smaller and drive up
the costs of those left in the market, likely an older, sicker
population.
"Within this 100-member group, one high-cost hospital visit, procedure
or care of a chronic condition by a member would in turn raise the
premium rates for the group the following year since the insurance risk
pool is based on each individual association's participation," Eileen
McAnneny, vice president of governmental affairs for Associated
Industries of Massachusetts wrote in written testimony.
Dr. Marylou Buyse, president of the Massachusetts Association of Health
Plans, said there are clearly problems with a system that allows for
association plans, given the failure of the system a decade ago.
"This bill does nothing to control the cost of health care," Buyse told
the committee. "The reason the cost of insurance premiums go up is
because the cost of care is going up."
President Bush is pushing similar legislation at the federal level. In
a statement released today, Sen. Edward Kennedy noted his opposition to
that legislation and the one at the state level.
"Exempting association health plans from state regulation is not the
answer," Kennedy wrote in his statement, adding: "The bottom line is
that such proposals will do virtually nothing to reduce the number of
uninsured, and will cause premiums to rise for those remaining in the
small group market."
- END -
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