Jon Hurst: The Mass. Health Law Hurts Small Business

One of a series of analyses on the 10th anniversary of the 2006 Massachusetts health care overhaul. Jon Hurst is president of the Retailers Association of Massachusetts.

Health care and political powerbrokers lobbying to pass the “landmark reform” said its mandate would accomplish several objectives:

expand access by securing federal Medicaid dollars;

lower costs by requiring personal responsibility and ending free riders;

cut the use of high cost emergency rooms, ending the uncompensated care pool;

and benefit small businesses by creating a marketplace through an exchange.

Ten years later we have to ask whether those promised objectives were achieved, who benefited, and who was actually hurt by the reform.

Coverage grew, and initially, so did emergency room visits, and the uncompensated care pool was renamed, not repealed. Individuals and consumers receiving taxpayer assistance certainly benefited. But not so consumers working for and receiving coverage through small businesses.

Some providers benefited. But today many are concerned that the overall size of the health care pie has grown faster than the rest of the economy. Provider disparities in pricing and utilization are important topics. Drug prices, including generics, are up sharply now that consumers are mandated to buy that coverage.

Yet equally disturbing as the size of the pie is how that pie is cut and distributed.

The reform made Massachusetts the only state in the country to force individuals and small businesses into the same risk pool. Discriminatory and preemptive requirements of the Affordable Care Act magnified that mistake, forcing employees of small firms to unfairly cross-subsidize individuals, while holding nearly harmless those working for large, experience rated or self-insured firms. Over the last 10 years, the average annual premium increase for our members has been 12 percent. Compare that to the Group Insurance Commission average of 4.5 percent; the Connector’s subsidized plans average of 1.76 percent; the state cost benchmark of 3.6 percent; and the average inflation rate of 1.97 percent.

Risk pools, unfair cross-subsidies, consumer choices and tools have a lot to do with those wide disparities. And adding to small business premiums are new state mandates and assessments that are not equally applied and often avoidable by the 56 percent of the marketplace that is self-insured. Since 2006, 21 new state mandates or state assessments have been added in the state. Nine state mandates are not covered at all by over 90 percent of self-insured companies in Massachusetts. Small businesses that are not self-insured must cover these mandated benefits, which increase premiums.

Innovative consumer and economic tools such as limited networks, state small business cooperatives and premium incentives for job growth have all been set back due to bad policy coming out of Washington under the ACA -- truly ironic since we were the model for the law. The Connector is primarily a marketplace for taxpayer-subsidized plans, not for small businesses. And consumers still don’t have the transparency tools and the financial incentives to swing the market power in their direction and away from the providers.

If we are to continue to mandate insurance coverage, then it’s time for a dialogue about real reforms which will create equal opportunities for all consumers, particularly those which have been hurt the most: small businesses and their employees.

Health Law Turns 10: What Analysts Say: