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Helping Small Businesses Afford Health Insurance

Massachusetts regulators took a step today toward reigning in health insurance costs for Bay State employers by rejecting major insurer's new premium increases for small businesses, according to a report on WBUR. (Here's a response from one of the major insurers, Blue Cross Blue Shield of Massachusetts, expressing surprise and disappointment about the Division of Insurance decision.)

Still, Jon B. Hurst, President of the Retailers Association of Massachusetts (RAM), says both short-term regulatory action and longer- term competition will be needed to make health insurance more affordable for small businesses:

There seems to be more focus today on small businesses and their unaffordable health insurance rates increases than in any time in my 20 years at RAM. And this is for good reason. Our recent survey of our members showed the following: an average 22% increase in ’10, on top of a 7% increase in ’09, on top of a 19% increase in ’08, on top of 13% increase in ’07, which was on top of a 12% increase in ’06—the year Massachusetts Health Care Reform was signed into law. That’s a cumulative 5 year increase of 73%, or an average of 15% per year. Those increases far exceed what big business or big government has seen over the same period of time—perhaps three-fold. The simple truth is that small businesses pay more for less coverage today than do big purchasers, and that is not fair in an environment in which the law says everyone must have health insurance. That’s simply wrong economically and politically for small businesses and their employees.

For the April 1 small business insurance renewals, Governor Patrick seems to be justifiably “drawing a line in the sand,” and telling the big insurers and the providers that this continued wealth shift from small businesses and their employees to big health care must stop. We are mired in an extreme economic downturn, and nothing is more important right now than to protect the jobs of our fragile small employers. The Governor is correct in saying that small businesses need and deserve “a seat at the table” with the big insurers, the big purchasers, and the big providers.

The important actions down at the Division of Insurance reflect the fact that for small businesses in Massachusetts there exists neither adequate competition or adequate regulation to ensure that they have the opportunity to get comparable coverage for comparable premiums. Predictably, the insurers are fighting efforts to create more competition in the Legislature at the same time that they are fighting new regulatory protections at the Division of Insurance. It’s time to choose: give small businesses equal rights and more competition in the marketplace, or accept new regulatory protections.

Perhaps the best answer is to seek short term regulatory solutions, and longer term competitive solutions. The DOI action should force insurers and providers alike back to the table to set reimbursements, rates and premiums which reflect current economic realities.

This immediate action will protect jobs and make big health care more responsive to the paying consumer. At the same time we must create new competitive pressures to prevent unfair pricing and unfair cost shifts. This is done by empowering small consumers so they can demand premium savings, comparable rights, and so that they can prevent unfair cost shifting from someone else onto them.

I believe there is something we can learn from the recently passed federal and its impact upon small businesses. According to a March 25 small business education piece released by Speaker Pelosi, the new law will benefit small businesses by allowing them for the first time “to pool their buying power” and to seek “lower rates like big businesses pay.”

Unfortunately, we didn’t make those marketplace reforms and didn’t create equal rights and opportunities when we passed our state law. Massachusetts small businesses and their employees have been relegated to second class citizen status in the Commonwealth while big business and big government retain all the advantages.

Small employers in Massachusetts can’t afford to wait until 2013 and 2014 for the federal law to kick in. We need the Legislature to pass Amended S446/H3452 today which will give small businesses that seat at the table by giving them the ability to group buy and negotiate with the insurers just like big business and big government do today. The reform will also give them the equal rights and abilities to implement innovative cost saving initiatives such as wellness programs which will benefit employer and employee alike. More than 40 small business and non-profit organizations support this important legislation. It makes common sense to pass the bill. And to not pass the legislation jeopardizes the life blood of our economy—small business. Truly, jobs and the very future of health care reform in Massachusetts hang in the balance if we continue to have an unfair marketplace and pricing discrimination.

Let’s get it done.

This program aired on April 1, 2010. The audio for this program is not available.

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