Briefing: Health Care Cost Legislation
Last week Gov. Deval Patrick signed legislation reforming some aspects of small business and individual insurance markets. The reforms target costs of the insurance plans and how often customers can enroll in the plans. It was a continuation of a months-long dispute between the insurance industry, hospitals and the Patrick administration.
What exactly are the changes?
The bill calls for insurers to offer select network plans to small businesses and individuals that are at least 12 percent less expensive than a comparable full-network plan. The new law also allows only two open enrollment periods per year this year, and only one open enrollment period beginning in 2012. It also calls on hospitals to have increased reporting requirements.
Who do the changes impact?
The bill covers individuals who buy health insurance and small businesses of less than 50 employees, or about 720,000 people.
Why are the changes needed?
Limiting open enrollment is one area that both hospitals and insurers have been considering. Previously, individuals could sign up for coverage when they were sick, then drop it after getting treatment, leading to a problem of “jumpers and dumpers.” The new legislation restricts that.
What’s the reaction been?
Both insurers and hospitals have generally supported the new law. The Massachusetts Hospital Association issued a statement saying the reforms are “a responsible compromise.” The Massachusetts Association of Health Plans said on the whole the legislation is good, but it missed an opportunity to address the underlying factor contributing to health-care increases, which they argue is the market clout hospitals have, allowing them to charge unfair prices.
What’s the history between the insurers, hospitals and the Patrick Administration?
Earlier this year Patrick signed an executive order giving the state Division of Insurance authority to reject health-insurance rate increases that it believes are excessive. As part of the April 1 health plan filings, the state rejected 235 of the 274 increase requests by the insurers, or 86 percent. Many of the increases have now been allowed, but some are still being appealed in court.
Related links:
Press release on the legislation
Massachusetts Association of Health Plans
Massachusetts Hospital Association
Massachusetts Division of Insurance
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