Mass. Senate Approves Bill To Contain Health Costs

Wealthier hospitals would be required to make a one-time $100 million contribution to ease insurance premiums for smaller businesses under a bill approved Tuesday by the state Senate.

The bill would let businesses with 50 or fewer workers form cooperatives to purchase insurance at a lower cost. Another provision presses insurers to spend at least 90 percent of premium dollars on care and 10 percent or less on administrative costs.

Senate President Therese Murray said the bill, which passed on a 33-4 vote, will ease instability in the insurance market, smooth out annual fluctuations in premiums and require insurers offer affordable small business plans.

Under the bill, health insurers would have to file rate increases with the Division of Insurance three months before they are set to take effect. The division would be required to review the rates to see if proposed increases are reasonable.

Another part of the bill creates new yardsticks to help the public compare health care providers based on their costs and quality measures. Small businesses would be encouraged to adopt "wellness programs" designed to help workers avoid getting sick.

The bill also attempts to smooth out fluctuations in employer health care costs.

Under current rules, the age of employees is measured in five-year brackets. That can result in a jump in costs for businesses every five years when a worker crosses into a new, older bracket. The bill would end that system by requiring yearly age measures.

To slow premiums increases, the bill would require wealthier hospitals to pay into a fund to help ease those rising costs. Senate backers of the bill say the contribution of $100 million could reduce small business health care costs by 2.5 percent.

Supporters point to a report released by Gov. Deval Patrick's administration late Monday that the total net assets of Massachusetts hospitals exceeded $17 billion in 2008. The hospitals with the greatest unrestricted assets were Children's Hospital with $951 million and Massachusetts General Hospital with $710 million.

Senate Republicans sought to strip the $100 million hospital assessment from the bill.

Senate Minority Leader Richard Tisei, R-Wakefield, said the assessment amounts to a tax increase on hospitals. He said some bigger hospitals might be able to afford it, but smaller community hospitals might not.

Fellow Republican, Sen. Robert Hedlund of Weymouth, said calling the assessment a "contribution" was disingenuous.

"Is this the proper term to use when the Legislature takes money from one private entity to give it to another private entity?" he asked. "We're going down a troubling path."

Sen. Mark Montigny, D-New Bedford, backed the assessment, saying that just because hospitals are considered charities doesn't mean some don't also have deep pockets.

"All charities are not created equally," Montigny said. "There are some struggling charities in this climate ... and there are many in the exact opposite place."

The Republican amendment failed.

Murray conceded that the bill isn't "a permanent fix," but she said requiring contributions from hospitals and insurers will bring some temporarily relief while the state grapples with longer-term solutions to rising health costs.

The debate comes a day after the state's four major health insurers said they lost $116 million in the first quarter of the year because of an ongoing dispute with Patrick on small business premiums.

Insurers had proposed small business premium increases of up to 32 percent. The state Division of Insurance rejected most of the increases, and a Suffolk Superior Court judge later ordered insurers to use 2009 rates until the dispute was resolved.

Patrick fired back, saying the state's insurers have reported $2.6 billion in reserves at a time when many small businesses and families continue to struggle with health costs.