The real cost of health care reform
By robert flynn
With the new Massachusetts Health Reform Act upon us, employers, employees, business leaders, accountants, healthcare providers, municipalities and most Massachusetts residents feel confused and anxious about how it will affect them. Without taking time to analyze its effects, many will never truly understand the full impact of a bill that disguises the shifting of risk and cost.
The individuals and regulatory bodies involved in the development of this Act predict that individuals who currently purchase non-group insurance will see their premiums significantly reduced. What they neglect to mention is that small-group insurance markets (small businesses with up to 50 eligible employees) will subsidize those expenses. The new law merges non-group and small business risk pools and experts predict a premium increase from 2 percent to 8 percent. If we add that to our current medical and pharmacy trends, we could see cost increases of 16 percent to 22 percent in 2007.
The new law also addresses and extends health care for longer periods those who lose their IRS dependent status. Actuaries will have to include this risk into their rates, which will then be passed onto the employers.
As most employers in Massachusetts require their employees to contribute toward their health plan costs, many will unknowingly be paying these costs.
The law presses heavily on the introduction of Healthcare Savings Accounts (HSA) and other tax-advantaged programs. If citizens and politicians think that these programs will solve the health care problem, they are truly misled. These programs are complicated for employees to understand, and add another layer of administrative cost. These programs shift the health care cost from employer to employees and their families. Some might argue that these plans change consumerism, but most of the commercial carrier’s blocks of business run the same; 20 percent of the claims make up 80 percent of the expenses.
There are only a few proven methods to decrease health care costs. They have been around for many years: Preventive care and healthy lifestyle choices. This law includes neither of these approaches.
Massachusetts legislators and the citizens of the Commonwealth should look at reducing the waste in the current system and not spending resources on creative financing schemes. Massachusetts residents must ask what the costs are of implementing these programs and how much federal monies will go toward the health care system.
Massachusetts has the highest per capita healthcare cost in the nation, on average 30 percent higher than the national average. Within miles of where these laws are passed, we have the world renowned Harvard School of Public Health. Maybe we should rely experts there, for instance, to help us with the effective proven policies of reducing cost. I would rather be spending our tax dollars on proven methods.
Robert Flynn is vice president of Employee Benefit Group at Aisling Partners Insurance Brokerage, LLC in Hudson, an independent brokerage and consulting firm, representing 150 companies throughout New England.
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