Time To Drive Health Care Costs Down
Rising health care costs are a major barrier to economic growth, particularly for small businesses. Health insurance is typically their second or third largest expense and the continued increase in the cost of health care has limited the resources available for small businesses to hire more workers, fund capital expenditures, and make other investments that strengthen our economy.
Working with health plan leaders and area business groups, including the Worcester Regional Chamber of Commerce and Small Business Service Bureau, I recently filed legislation to help small businesses with their health care costs. The proposal would create The Affordable Health Plan, a new product that would reduce the premiums for many of the 800,000 people who get coverage through a small employer or purchase it on their own.
Cost Analysis
The Affordable Health Plan has three main elements. First, it would include benefits equivalent to those offered through the Health Connector’s Commonwealth Choice Bronze package, so small employers and consumers that enroll in the plan would enjoy the same benefits that everyone else in the Commonwealth does.
Second, it would cap reimbursements to providers for this product at no more than 110 percent of the rate paid to providers by the federal Medicare program. Nearly 90 cents of every insurance premium dollar goes to medical services such as doctor visits, prescription drugs and hospital stays, so the bill seeks to address those cost drivers to help small businesses. Finally, it would limit insurer surpluses on all products sold to small businesses and individuals to no more than two percent.
Statewide, the median monthly premium for family coverage through a small business is more than $1,000. Reducing the premium by 22 percent could save $220 a month or over $2,600 a year. Meanwhile, the lowest-priced Bronze package for a family of four, with two 40-year-old parents and two children living in Worcester, is $732. Cutting the premium by 22 percent would save $161 per month or more than $1,900 a year.
The proposal would also help to reduce the wide variation in reimbursement rates among providers and also improve comparison shopping for consumers, who could focus on quality and service knowing that the cost could be the same, regardless of provider.
The bill doesn’t solve every issue. As a member of the state’s Payment Re- form Commission, we recently issued a series of recommendations on how we pay for health care.
Some of the key details still need to be ironed out and the recommendations may take up to five years to implement.
Small businesses can’t wait that long. The Affordable Health Plan would provide them with some much-needed relief much sooner.
More than 90 percent of Massachusetts businesses are employers with fewer than 50 employees. So when we talk about what drives the state’s economy, small businesses are the engine to economic growth. The Affordable Health Plan will go a long way towards controlling health care costs for small businesses and help get the state’s economy back in gear.
State Senator Richard T. Moore (D-Uxbridge) is the Senate chair of the Legislature’s Joint Committee on Health Care Financing.
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