A Plan To Ease Health Insurance Costs For Small Businesses

Health insurance premiums for small business owners in Massachusetts routinely increase twice as fast as those for larger employers. On Beacon Hill, House and Senate health care leaders say they have a plan to end that pattern. It's coverage that could be cheaper because it shifts more costs to patients and caps payments to hospitals and doctors.

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Quinta Andersen owns Andersen travel in Holliston. She has been absorbing double digit health insurance premium increases for years...

QUINTA ANDERSEN: But this one took me over the cliff. It was almost an immediate panic.

This year's increase was 22%. Andersen called her 11 employees together and together they agreed on higher co-pays to help bring down the cost.

ANDERSEN: But I'm fearful of the next anniversary date.

Andersen hopes a bill unveiled at the State House yesterday will relieve her fears. It aims to help individuals and companies with 50 or fewer workers avoid insurance premium hikes next year. Senator Richard Moore says the bill would create insurance that is 17-22% cheaper than some of the least expensive plans available now.

RICHARD MOORE: We need to encourage small businesses because they are the engine of the recovery. And we also need to make sure that they and their employees enjoy the same benefits that everyone else in the Commonwealth does.

But cheap isn't painless and may not even be cheap. The coverage could have high up front costs for patients...including deductibles up to $4,000 for families. That's more the expected 22% savings for an average family. This plan would also have larger co-pays than most Massachusetts residents are used to paying. But Tufts Health Plan CEO James Roosevelt says employers are looking for more affordable plans that don't cut benefits.

JAMES ROOSEVELT: Business owners, because of this economy, are moving towards skinnier benefits. But this is still real coverage for people.

MARIO MOTTA: This proposal is really a problem and the problem is it's based on Medicare rates.

Dr. Mario Motta is president of the Massachusetts Medical Society. He objects to another way this bill would hold down insurance costs. It would cap payments to hospitals and doctors at 10% above what Medicare pays.

MOTTA: Most of our primary care physicians either break even or lose money on every Medicare patient. If everyone underpays then the few primary care physicians we have left will be out of business.

The sponsors of this plan hope it passes this Fall so it can be an option for roughly 800,000 individuals and small business employees next year. It is only meant to be a short term insurance option. This coverage would end after legislation based on recommendations for health care payment reform become law. Senator Moore says he may roll this small business insurance plan into a bill that would begin the transition to global payments for Massachusettsa providers. Connector Director Jon Kingsdale says it makes sense to take interim steps towards broader change.

JON KINGSDALE: It just adds to the momentum that having covered most everybody, we really need to focus on the cost of coverage for most everybody.

The special commission on health care payments will likely recommend other interim steps in its major health care spending reorganization plan due out tomorrow.

Martha Bebinger