The parallels of the debate in Washington on health care reform and what we have experienced in Massachusetts over the past three years are uncanny. Many of the models replicate the Massachusetts experience, and armies of public relations executives have been working around the clock to convince everyone that our reform is either the best public policy initiative ever conceived, or the absolute worse. No matter where you come down on that position, most common sense observers can agree that the haste in which both were pushed or are currently being pushed could be too aggressive, opening doors not only for costly mistakes but also inadequate solutions.

The 2006 Massachusetts Health Care Reform was very much driven by both the potential for losing a pending federal Medicaid waiver, as well as to prevent a proposed payroll tax ballot initiative. The employer community was primarily playing defense, focused on preventing uncompetitive taxation and unaffordable mandates. That left a gaping hole for both health care expansion advocates and big health care providers to primarily play only offense in seeking policies which may have been prevented under a more thoughtful process.

The reform merged the non-group and small group marketplaces, resulting in relief for individuals at the expense of small businesses and their employees. The annual double digit increases for small businesses and their employees have continued even during these times of economic contraction. The promise of the Connector never materialized for small businesses due to the lack of negotiating ability for non-taxpayer subsidized plans.

Likewise, the continued legal and small group marketplace discrimination against small employers imposed a decade earlier by the prohibition of group purchasing exists to this very day.

And taxes now being placed upon employers due to complicated triggers create the puzzling and counterproductive reality that even those who offer health insurance may be liable for costly assessments. The fact is that you have employers who are offering insurance and making substantial co-premium payments for employees now being assessed because they had employees who turned down the offer because they were already insured by a spouse’s plan, a parent’s plan, or Medicare. This is troubling because everyone has to have insurance under the law, and we all know that big government and big business get the best rates in the marketplace, so if a family has multiple choices for their purchases, why penalize employers because some choose their coverage from less costly sources? Such a public policy is pure and simple a tax, not a “free rider assessment,” because it is all about raising revenue, not about achieving universal coverage.

So now the debate in Washington centers on employer mandates, free rider assessments, Connector-like “exchanges,” public options. And like the Massachusetts legislative experience in 2006, it appears that for political reasons this complex reform has to get done by the end of the year. Once again the employer community faces a situation in which they are more on defense rather than offense, and that creates an environment for mistakes and imperfect solutions.

A lot can be learned from the Massachusetts experience, including the vital need to deal with cost at the same time as coverage—not later. Real, affordable insurance solutions are needed for small businesses and their employees—not just for individuals and taxpayer subsidized plans. With 50% of the marketplace now self-insured under ERISA at presumably lower rates, let’s take a look at why this is happening and give more small employers and their workforce the ability to have equal rights and abilities under the law. Let’s allow insurance offerings to cross state lines in efforts to break existing near monopolies which allow for double digit cost increases.

Let’s slow this train down and let those who primarily pay the health care bill in this country—the employers—have adequate input on market based solutions, rather than having to primarily play defense against those seeking a quick bill to advance their agendas.

This new assessment comes to us by way of the state’s Universal Vaccine Program (4580-1000) which, new in FY10, will now be funded by a $52 million tax on “health insurance carriers, as defined by Chapter 176O.”

Now, the universal immunization program, which provides for the purchase of vaccines for all children in Massachusetts, certainly is a worthwhile and needed program – a program that serves the Commonwealth as a whole and should be supported by the Commonwealth as a whole and thus funded out of the General Fund or, at a minimum, be funded by all health care payers.

However, the language in the budget, referenced above, changes the funding mechanism to assess only those carriers as defined by Chapter 176O to pay for this program. This language ensures that the assessment falls squarely on small-and medium-sized businesses, which purchase health insurance coverage through health insurance carriers defined by Chapter 176O. Left out are the large companies and many Taft-Hartley union accounts, which typically self-insure. Such plans are governed by ERISA and would not be subject to the assessment. Because self insured plans under ERISA are exempt from assessments on health insurance carriers, funding for the vaccine program would fall only on those entities that obtain coverage through a licensed carrier. So, left in and hit by the assessment? Just the small and medium sized employers who are unable to self insure.

Readers of this blog are familiar with my arguments on behalf of a level playing field for small businesses versus big business and big government in the ability to group buy and negotiate for the purchase of health insurance. This is just another gross example of the small employer being forced to subsidize the costs of others. It simply is not right.

And remember that this assessment goes onto the backs of a small employer who now pays over $23,000 for a family plan, when the same plan through the GIC costs just over $13,000. The small employer in Massachusetts just keeps asking himself – when will it end?

Before the assessment is imposed, we need to revisit this issue soon and amend the language to at a minimum allow for the assessment, which funds a program that benefits all Massachusetts children, to be equitably distributed across all payers, by utilizing the Health Safety Net Trust Fund.

Otherwise, small Massachusetts employers will be getting a $52 million dollar bill soon that they simply cannot afford to pay.

Jon B. Hurst, President
Retailers Association of Massachusetts

We all know about the hundreds of millions of dollars cities and towns would save by joining in on the buying clout of the Group Insurance Commission. The GIC has been very effective in keeping their recent increases in the 3-5% range. Yet for some reason, policy makers and insurers have not acknowledged the need for a similar organization or mechanism for small purchasers to keep the marketplace fair and to prevent cross-subsidies. The common response you hear on that point is that: “Well, we do that through the local chambers of commerce.” Wrong! Yes you can buy through your chamber, or through similar organizations, but it is simply a buying service to show you what your options are with a variety of insurers and plans. There is no discount; there is no negotiation.

And then there is the response: “Oh, but that is what the Connector is for.” Wrong again! The Connector can and has been effective in getting discounts—even no increases—in the state subsidized plans, but has no authority to do that for the non-subsidized plans. In fact they must use the very same rates the insurers file with the Division of Insurance, when they do take the step to go beyond their current pilot program.

So why then haven’t we passed legislation to allow small businesses and small non-profits the ability to stop the double digit increases they have been facing year after year? Well, let’s examine the arguments our organization and other groups representing small employers—both for profit, and non-profit—have heard repeatedly over the last 8 years or so. The most recent legislation by Representative Steve Walsh has been amended to address each and every one of the opponents (insurers) red herring arguments.

“We have already tried that and it didn’t work.” Well let’s see; the Legislature under pressure from the big insurers prohibited that ability in 1996. Back then there were only very small buying groups, and health insurance for small businesses and their employers was a mere fraction of what it is today. It is likely no coincidence that small group rates have gone up double digit nearly every year since the repeal of the law, and the door has been swung way open to take premium dollars out of the pockets of small businesses in order to give the insurers the ability to give big discounts to big purchasers. That’s called cost shifting. The current legislation has been modified to create only one large buying group for small purchasers under an umbrella overseen by the non-profits representing those employers—essentially a small business GIC, at no cost to the taxpayer.

“But you will not follow all the state mandates.” Wrong. Unlike the options to avoid state mandates under federal law (ERISA) currently enjoyed by big business, the legislation specifically requires all mandates to be covered. It also requires regulations to be written and oversight to be done by the state Division of Insurance.

“But you will ’cherry-pick’ and only take the ‘best’ risks, leaving all the bad risks to see increases.” Obviously that statement ignores the very fact that members of trade associations, professional societies, chambers of commerce, and non-profits organizations represent a true cross section of society on health care price factors such as age and health status. With that diversity and the fact that such organizations are not in the habit of discriminating against their members, this argument is nonsense. But just to further address this red herring point and to take the argument off the table, the new bill clearly prohibits “cherry-picking.”

“We are very concerned about small employers and recognize the need to help them.” Then give them relief and equal rights. We need either more competition or more regulation in the small group marketplace. Right now we have very little of both, and such a situation means only one thing: the consumers (i.e. small businesses and their employees) are getting ripped off. Why should any small employer implement any of your late to the game wellness programs, when the savings created by having a healthier workforce simply stays in the insurers’ pockets, or is used to give even greater discounts to big purchasers instead of actually reducing small businesses’ premiums?

And then there is the one: “But ‘so and so big business organization’ opposes your bill!” Any organization truly concerned about small employers—both for profit and non-profit—and which represents exclusively the “payers” of health care costs rather than “receivers” of our health care premiums, supports this concept of marketplace fairness.

It’s time for the big insurers to face the music. A rotten economy, an insufficient competitive marketplace, continued double digit small group premium increases, recent outrageous increases in broker commissions, and a faulty and discriminatory law all mean it is time to decide which route we are going to take to save our small employers. Either we must give them the tools to create their own savings and new competition, or the state regulators must finally get off the sidelines and clamp down on small group insurance rates to ensure that they are no higher than the average large group rate. Which will it be?

Jon B. Hurst
President
Retailers Association of Massachusetts

Can somebody—the insurers, the regulators, anybody please explain what in the world is going on here? In this environment of mandated health insurance coverage; in this environment of a terrible economy with small businesses and small non-profits struggling to keep their doors open, this continued premium disparity situation is a borderline scandal.

And although some good state regulatory activity is expected to occur beginning this fall, can we really anticipate that small businesses and their employees will see any relief from that activity before spring of 2011? Where is their immediate relief from double digit increases at a time when their revenues in this recession are plummeting by double digits?

In January, the Governor raised the possibility of rate hearings at the DOI. We enthusiastically endorse such a concept and hope the Commissioner will consider such an effort. Questions must be asked why small businesses seem to be carrying more than their fair share of the burden, and just what are the profit margins of the insurers for small purchasers versus big business and big government.

If you think of health care reform as a three legged stool, the first leg of 2006 on access and full coverage has been an outstanding success. The second leg dealing with overall costs was dealt with in the Senate President’s bill last summer. Yet, the benefits of that bill unfortunately are still off in the distance—not in the current economic downturn. And the final leg of the stool—insurance premium fairness—has yet to be dealt with, and that fact truly threatens to cause the stool to collapse.

Whether it is market based reforms creating more competition and allowing for group buying clout and options for small for profit and nonprofit businesses (i.e., a “GIC” type purchaser group for small employers), or more state regulation seeking more premium parity for all sizes of groups, it is imperative that this issue be tackled now, not this fall or next year. Too many small employers and their employees won’t be around to benefit from delayed action.

Jon B. Hurst
Retailers Association of Massachusetts

It is encouraging that public acknowledgement is growing about the need to fix the cost side of health care in order to save the access side. Yet, although I am pleased with the growing attention health care costs are beginning to get, I remain frustrated that the equally important issue of cost apportionment among payers and consumers remains ignored. Health care providers have long complained that government payers—Medicare and Medicaid—do not adequately reimburse the true costs for procedures, creating cross subsidization from private insurance subscribers. True enough. But what about cross subsidies within the ranks of private payers?

Some questions to ponder: If it is true that the GIC is saving the state and now municipalities hundreds of millions of dollars through their group buying efforts, isn’t it also possible that other payers are picking up the tab for those savings? If it is true that the Connector will be holding the line on rate increases at 2% for their Commonwealth Care plans (taxpayer subsidized), isn’t it possible that others will be paying more in order keep those increases in check? If it is true that the merger of the non-group market with the small group market saved individuals money on their premiums, isn’t it possible that small group employers and their employees are now paying more to compensate for that merger? If it is true that large group rates are not regulated and the rates are not even filed with the Division of Insurance, isn’t it possible that those rates are less than the filed small group rates? If it is true that the health insurance marketplace is now about 40% self-insured with those employers holding significant purchasing efficiencies and the ability to avoid certain state mandates, isn’t it possible that fully insured smaller companies and their employees do not enjoy similar savings and flexibility? If it is true that group buying discounts and insurer negotiation is permitted in health insurance markets other than small group, isn’t it also true that small group buyers are discriminated against under the law and in the marketplace by not having the same rights and abilities? If it is true that Blue Cross Blue Shield reimburses Partners the same amount for the same procedure no matter whether you are a firm of 5 or 5000, shouldn’t the insurance premiums be in the same ballpark? If it is true that everyone under the law must buy health insurance in the Commonwealth, shouldn’t they at least have the opportunity to get similar products and similar pricing as the big business or big government purchaser? And finally, if small groups can’t buy comparable coverage at comparable pricing, are they then unfairly cross subsidizing someone else, thus raising the question whether the current health care mandate is truly sustainable politically and economically?

When I raise these issues with certain opinion leaders, I often hear the answer that “the Connector” is where we are leveling the playing field for the little guy. And therein lies “the disconnect on the Connector.” The Connector was never intended to be a cost saving group buying entity for small businesses and their employees although many assumed it was. In fact, the rates the Connector is beginning to use for their long awaited Commonwealth Choice pilot program are the very same rates the insurance companies file with the Division of Insurance. There is no discount, no negotiation. In fact, there was never any intent to do that. The purchasing pool that was to become the Connector was intended to reduce administrative costs and increase choices for the individual and for the taxpayer subsidized purchaser. The Connector simply does not have the negotiation and bargaining authority for small employers in the small group, non-subsidized marketplace.

Give the Connector staff credit as they roll out the Commonwealth Choice pilot program—they will be making the shopping easier and pricing more transparent within the small group market. That is a very good thing, and can create more competitive pressures within the small group market. They even curbed, but unfortunately didn’t eliminate brokers’ commissions even for those small employers not using a broker.

The bottom line cost and competitive problem for small businesses, small non-profit employers and their employees is that although the small group market is regulated within itself, nothing exists to ensure that those consumers are getting fair rates as compared to those outside small group. So what are the solutions? There are no silver bullets, but here are a few ideas that should be considered. They range from creating more competition and flexibility to more state regulation.

Have the Division of Health Care Finance & Policy immediately implement the insurer transparency section of the health care cost containment bill passed last summer, showing pricing across various types and sizes of health plans. That will provide evidence as to whether the cost disparities exist, and at what cost to the little guy.

Reestablish small business health plans which were repealed in the 90’s as a “reform,” not coincidently just prior to the 8 year run up of double digit small group premium increases. These plans—a norm in other states–allowed group buying through established non-profit organizations such as chambers of commerce and associations, and served to level the playing field with bigger purchases by creating more competition and giving small purchasers negotiating leverage with big insurers.

Require health plans to file rates for large groups, and aggregated costs for self-insured plans. Then if necessary, create bandwidths across all fully insured lines.

Mandate that small group discounts equal to brokers’ commissions are made available to the purchaser when a broker is not used in the Connector.

Small employers and their employees are the backbone of our economy. They need to become the focus of the next phase of health care reform.

Jon B. Hurst is the President of the Retailers Association of Massachusetts

Yet despite the economic uncertainty, we are on the cusp of further mandated state health care costs and penalties which could make a difficult situation even worse. The possible imposition of a more restrictive Minimum Credible Coverage (MCC) standard at this time is one decision that may significantly delay any hopeful recovery for our families, our employers and our economy. Increased tax penalties on families struggling to decide whether or not they can afford to purchase health insurance may also be ill timed in a recession, and at a time that big health care continues to hammer all of us with double digit premium increases.

Quick, somebody call a time out! Before we go any further, let’s step back and look at our current situation. We do not want to make bad decisions now which will hurt our residents economically and imperil our important health care reform in this state!

The Connector’s Board of Directors faces a vote later this week at which they may decide to unilaterally increase the health insurance costs for hundreds of thousands of Massachusetts residents. I, for one, hope they practice restraint, and do what is right for our consumers, employers, taxpayers and for the future of health care reform. The unprecedented mandated drug benefit is a great political win for Big Pharma, but it is unwise and extremely costly for consumers. In addition, efforts to derail the availability of important choices on high deductible health plans and health savings accounts ignore the reality of how small businesses and individual consumers live in times of no income growth.

To create costly new standards which take away choice and options to save money is counterproductive to the ultimate goals of health care reform. New MCC standards create a situation which seems to say that we in Massachusetts know better than anyone else and that we believe everyone should live up to our standards, regardless of whether they are capable of paying the price tag.

I hope the Connector Board will do the right thing when they meet and will call a time out to put on hold all of these changes proposed for January, 2009. They need to imagine themselves in the place of a struggling small business, just trying to stay open, stay in the black and make payroll, while being told by the state that their health insurance offerings need to be more extravagant and costly. They need to imagine themselves in the place of a family, struggling to pay their mortgage, heating bills, groceries and tuition, while being asked to step up even more on their unaffordable premiums.

And if the Connector Board does not do the right thing to save choice, options, and cost savings for Massachusetts residents, then the Legislature needs to step in on the behalf of the payers of health care dollars. The Legislature must look at the insurance mandates, as well as the tax penalties under the law. We need to create triggers going forward which would prevent tax penalties or even mandates if health insurance premiums rise more than the rate of inflation. Such triggers would pressure our unregulated health care industry to control their spending, and will help protect our consumers from continuing this wealth shift from us, as payers, to them, as unrelenting receivers. Consumers and employers should not be penalized going forward because big health care has not fulfilled their promise of lower costs.

As we move forward with health care reform in uncertain economic times, let us resolve that if we must err, we must err on the side of the payers of health care dollars, not on the side of the receivers.

Jon B. Hurst is the President of the Retailers Association of Massachusetts

Family health insurance policies for those at the bottom of the purchasing food chain are as much as $23,000 today. For small businesses, those rates are unaffordable and they have not yet seen steps to reverse the trend. What they have seen are unnecessary and unaffordable teaching hospital expansions, with recent regulatory activity to curb these new facilities coming several years too late. They are too well aware that they pay far more for the same coverage than do big purchasers, thus creating a disproportionate funding of the health care system by small businesses than by large companies or by government payers. They see group purchasing discounts for public employers, while the law actually prohibits such opportunities for them. And unfortunately the Connector still hasn’t delivered on the promise of low cost small business plans for them, focusing to date only on taxpayer subsidized plans. They see exemptions under federal law from the multitude of costly state mandates for large self-insured employers, many of which they have to compete against in the marketplace. They see subsidies and exemptions for those individuals that can’t afford the coverage, while they suffer through double digit premium increases and increased participation rates in their small group. They see tax-exempt health care providers simply demand more premium dollars and tax dollars to fund their operations, while no one seems particularly concerned if non-health care related small businesses keep their doors open. And unfortunately they perceive more political, business group and media deference given to the receivers of our health care dollars, rather than to the payers of health care dollars—businesses, consumers, and taxpayers.

When you couple the frustration small businesses feel over health care costs with a bad economy, pessimistic consumers, the highest electricity rates in the continental United States, and current gasoline, fuel oil and food prices, it is easy to see why many today are struggling and may not even survive this downturn. Barely staying in the black, they get frustrated hearing from some who have never had to make a payroll that “employers are not doing their fair share.” And rather than steps to ease their health care costs and mandates, they are now looking at a far greater likelihood of state imposed health care tax assessments on top of their growing premiums.

Early this week it became clear that an effort will be made to change the triggers (25% participation rate/33% premium payment) which determine whether employers must pay the $295 health care tax. A “simple” change of the word “or” to “and” will throw countless small businesses into a position in which they will not only be paying disproportionately higher insurance premiums, but they may also be paying the state a $295 per employee tax for those on their payroll that do not take their offer of coverage. Many small employers–including stores, restaurants, services, tourism entities, and non-profit organizations—have work forces composed of retirees (on Medicare) and secondary wage earners (on parents’ or spouses’ plans). In those cases, it is very difficult to achieve a 25% participation rate. Thus the 33% premium trigger becomes important to them. Changing “or” to “and” mandates the 25% participation rate trigger.

For those affected, the consequences will range from dropping their offer of coverage all together and just paying the tax—something that hasn’t happened to date primarily because of the existence of the dual trigger—to discriminating in the hiring process, to giving up and closing their doors.

In the real world, government mandates can determine winners and losers in the competitive marketplace. This proposed mandate will result in small business losers, and that will result in less support for health care reform in the business community, less offers of insurance by small employers, and less jobs in the economy.

Jon B. Hurst is the President of the Retailers Association of Massachusetts

Right now in Massachusetts we are on the cusp of an economic downturn not seen since 1990. We are in danger of job losses that will hurt our families by putting people in unemployment lines which disproportionately will hurt the least fortunate among us. Yet, some are beginning to point fingers at some of the very communities which are desperately needed by our most struggling families for jobs and income.

Some are saying that employers are not doing their “fair share.” But they are ignoring the fact that employers are shouldering the majority of the annual double digit insurance premium increases, as well as the fact that employers are picking up the costs of thousands of newly insured lives pushed into insurance plans under the state’s individual mandate.

The employer report showed me several things, including the fact that public entities (i.e., the Commonwealth of Massachusetts and the City of Boston) are large employers too, and are facing some of the same realities as private industry. Like many in the private sector, public employers are large employers with thousands of employees. Some of those employees are part-timers, secondary wage earners, or individuals that don’t wish to buy into costly health insurance. Furthermore, public and private employers alike face the quandary of whether to even offer part-timers health care coverage. Doing so makes them ineligible for the very generous, yet relatively affordable, taxpayer-subsidized plans of Commonwealth Care.

There is a delicate political balance that exists in trying to make health care reform a long term reality in Massachusetts. If that balance is upset, there will likely be significant ramifications. The proper course of action for all now is to allow the law to further mature, and to put all of our focus on lowering health care premiums. Long term, reining in the cost monster is the only way to make this law acceptable to employers, consumers and taxpayers.

Jon B. Hurst is the President of the Retailers Association of Massachusetts

This consumer benefit has been a long time coming. In any industry you must have either competition or regulation to protect the consumer. To be fair, health insurance and health care providers have been strictly regulated for decades, keeping our increases in the low single digits in most years, and granting us rate reductions in other years. This has worked relatively well for consumers, yet now allowing for more rate setting flexibility like what occurs in other states is bringing in new insurers and new competition, and forcing dramatic rate reductions for most of us.

In my own experience, I am moving to a new health insurer this month that will save me about $800 per year. It was just four years ago I was paying about $4000 per year for my health insurance premiums. Now back then I was insuring three teenage sons—notoriously bad health insurance risks. Today I still have two college aged sons on the policy, yet my new rates will be roughly half what they were just four years ago. In this bad economy, I am ready to break out the champagne!

Now contrast the health care and health insurance marketplace with the less scrutinized auto insurance industry. With auto insurance you really haven’t had regulation or competition in Massachusetts. This incredible situation has lead to double digit increases each and every year for the smallest of purchasers for nearly a decade. Yet this auto insurance cost increase situation hasn’t received any where near the legislative, regulatory or consumer group scrutiny as health insurance.

Why the difference in rate directions and public scrutiny? Maybe it is because the auto insurance industry and repair industry are all “non-profit.” Yet that non-profit status hasn’t precluded the seven figure packages at the largest insurer, nor five figure board fees. Unfortunately it appears that historically too many groups and opinion leaders have taken the side of the receivers of our auto insurance dollars out of misplaced trust, rather than taking the side of the payers of those dollars.

Maybe it is because auto insurance premiums are generally paid for by the employer or the taxpayer—unlike health insurance that comes out of our checking account each month. This situation has allowed for unfair rates, including prohibitions on group buying for small purchasers, while large purchasers negotiate their premiums, get discounts and don’t even file their rates with the state. In addition, self-insured purchasers operating under federal law protection (representing 40% of the market) don’t have to follow the expensive state mandated coverages. That loophole exists while the small business purchaser is forced to take costly, unnecessary coverages–like auto detailing services.

Maybe it is because in the auto insurance industry you have to have “Cadillac” coverages for everyone, which is great for the insurer, the repair shops, the part suppliers, and for heavy users of the system; but it hurts the poor consumers who want to manage their risks and control their costs. Many of those consumers are not only safe drivers; but they would also rather “self-insure” for part of their coverages, and pay out of pocket for tune-ups, oil changes, minor fender benders and for generic parts. That “self-insurance” practice keeps the money in the consumer’s hands, not in the industry’s, and helps prevent unnecessary cross subsidies from good risk to bad.

Maybe it is because no one is questioning the need for or the cost of an unprecedented expansion of high end motor vehicle repair shops, particularly at a time of flat or reduced population levels. The positive spin is that I guess the building boom is good for the construction industry if not the rate payers.

Maybe it is because there are basically only four auto insurers in the state—one of which has so much of the marketplace, it would be considered a monopoly in any other industry. Contrast that with our newly robust health insurance market, where national players are now seeking market share.

Maybe it is because in the auto industry the insurers and the repairs shops are a bit too cozy and do not have that same adversarial relationship that exists in the health care industry. Insurers are supposed to protect their client—the consumer—not work together vertically on roadmaps for putting more money into a growing industry black hole. Furthermore customers are not adequately lead away from having their cars repaired at the higher cost dealerships, which use only the “genuine” manufacturer replacement parts, and are so high on all the hot new costly products like synthetic motor oil. In contrast, in the health care industry, the most costly may not be considered the best option nor does it ensure quality. Billings are uniform and records are high tech. And in health care the negotiations and pricing for reimbursements for providers are all out in the open and are fully competitive.

Maybe someday we can have in the auto insurance marketplace what we have in the health insurance marketplace. But until then, I guess we have to live with $20,000 annual family auto premiums contrasted with $2,000 health insurance premiums.

Oh well, with a friendly wink to my friends in both industries, I wish you all a Happy April Fool’s Day!

Jon B. Hurst is President of the Retailers Association of Massachusetts

But I take exception to one point that Steve made, that the “business community was largely left off the hook.” This is an inaccurate notion that some in the access, mandated benefits and health care provider communities would like to perpetuate. That conclusion is certainly not what I am hearing from our 3000 small business members! Insurance premiums continue their double digit annual climb; take up rates with employees are obviously going up due to the individual mandate, further raising the employer’s premium costs; and compliance requirements and thresholds, such as defining full-time as 35 hours rather than 40, or requiring prescription drugs and lower deductibles, further escalate costs and limit alternatives.

Small businesses in Massachusetts are struggling in this economy, and basic operating costs like rising health insurance and energy bills are slashing or eliminating profitability. Health insurance premiums are causing enormous frustration and pain for those barely able to keep the doors open. But it isn’t just the actual cost of their premiums that frustrates them, it is also the lack of transparency of insurance costs for big business—their competitors in the marketplace.

As I have noted before in this blog, small employers are prohibited from group buying arrangements in order to achieve discounts and economies of scale. Furthermore the insurers are not required to file their rates for large, fully insured employers, nor for self-insured companies. No one—including the state—knows how much premiums can vary between the smallest of purchasers and the largest purchasers. Nor does anyone know whether big, national, self-insured employers that are exempted from state regulation under ERISA follow all of the current state mandates. Since they don’t have to cover the mandates, we can only assume many do not include all in their plans. So large purchasers of health care quite likely pay far less for their individual and family policies than do small employers and consumers for two reasons—their shear buying clout and their greater flexibility in avoiding state mandates granted under ERISA.

In this new environment under which everyone must have health insurance, it is surprising that we don’t have a better understanding on premium pricing disparities from the smallest to largest purchasers. Aggregated transparency filings by the insurers and plan administrators would help show whether premium rates are similar enough or unfairly skewed; and whether the lack of buying clout and the existing state mandated benefits are disproportionately hurting local, small employers. If there are disparities in price and compliance, common sense dictates that small businesses and individual consumers should be afforded new opportunities, lower prices, more flexibility and less regulation which is already granted to big business and big government. Certainly in a time of mandated insurance coverage, it is incumbent upon state government to make sure that current or future health care requirements do not create winners and losers in the marketplace.

As the debate on cost containment goes forward, it is important to not only stop this incredible wealth shift from consumers, employers and taxpayers to the health care industry, but to also make sure that everyone is being treated fairly under the law and in the marketplace.

Jon B. Hurst is the President of the Retailers Association of Massachusetts