Any reevaluation of the employer “fair share” provisions, as suggested by Senator Moore, should consider the specifics of the agreement reached on this issue as part of the health reform legislation. The “fair and reasonable” test to implement the fair share requirement has been widely misinterpreted as setting a minimum standard of employer coverage. That is simply not the case.
Rather, the fair share contribution was specifically tied to equalizing the obligation on employers to pay for free care. Massachusetts employers that provide employee health insurance contribute to the funding of uncompensated care through an annual $160 million insurance surcharge; the very small number of employers that don’t provide coverage, don’t contribute. The agreement captured in Chapter 58 was to level the playing field by having “non-contributing employers” with 11 or more employees pay for the uncompensated care costs of their uninsured employees. The $295 was the per-employee cost of free care in 2005 for all employees working for employers who made no contribution toward their health coverage. Using this same methodology, the amount of the fair share assessment will be calculated each year, an amount that should decline over time as the use of free care decreases.
The law charged the Division of Health Care Finance and Policy with setting a standard that will differentiate between employers that do contribute to uncompensated care and those that do not – the so-called “fair and reasonable” test. The two-step test established by DHCFP – at least 25 percent employee participation in the employer’s plan or a minimum 33 percent employer contribution to the premium – appropriately reflects the intent of the law. The definition was never intended as a standard for what employers should provide; rather, it is a way to determine whether or not an employer is making a contribution to free care.
Those who argue that a 33 percent contribution threshold is too low miss another point. A new employer contribution to employee health coverage, at almost any level, is preferable to a fair share contribution toward uncompensated care; an employer that wants to start offering employee coverage but can only afford to make a modest contribution shouldn’t be discouraged from doing so. A “race to the bottom,” where large numbers of employers that already provide coverage drop their contribution levels to 33 percent, would be a legitimate concern, but with average employer contribution levels now at 75 percent, that’s a dire and, at present, unsupportable prediction.
As I pointed out in an earlier entry, the beauty of Massachusetts health care reform law is that it represents a true partnership of shared responsibility among government, employers, and individuals. The fair share contribution is only a small part of the additional employer responsibilities under health reform.
Michael J. Widmer is President of the Massachusetts Taxpayers Foundation
Mr. Widmer,
The proposed change in the minimum employer contribution by BCBS will start us on an even faster slide to more people without health insurance, and upset the balance of responsibility under the health reform law (which many believe is not too equitably shared to being with.)
I don’t think there are many folks outside of the business community who thought that health reform would lead many, if any, new employers to offer health insurance. The facts in this regard are quite clear: the $295 annual assessment is much cheaper than offering coverage, and the assessment doesn’t even apply to most of the employers that don’t offer coverage. We did expect that some people who are eligible for employer coverage but don’t take it up would now do so if they were subject to the mandate, because employer coverage would most likely be the cheapest way to get coverage. There’s been discussion of this effect already, both by you and in press stories about employers like nursing homes that are anticipating budget problems because of an increased take-up of insurance among their employees.
But many were deeply concerned that Chapter 58 not further fuel the erosion of existing employer coverage that is already underway nationally and here, both in terms of increasing employee premium contributions and copayments for employees and tightening eligibility for coverage. But that is what will happen if BCBS reduces its minimum employer contribution to 33%. First, all of the other health plans will have to adopt a similar underwriting guideline lest they be competitively disadvantaged. Second, some employers will indeed reduce their contributions to 33% (or 45% or 40% or 35%), so that they can meet the non-discrimination standard in the statute and because it will help them deal with rising premims. (For example, my sister’s employer, a small business, just got a 50% premium increase from BCBS and it’s going to be a struggle to keep offering coverage for them.) This change will make insurance less affordable to workers. This will also dilute the reach of the mandate, since it will shift some workers out of the bounds of the affordability schedule adopted by the Connector (as rising premiums will do also). If any employers do newly offer insurance to some workers because of this change (and the non-discrimination provisions of the law), it will likely also have the effect of making some people ineligible for Commonwealth Care, since you can’t get Commonwealth Care if you are eligible for employer coverage to which your employer pays at least 33% of the premium.
This proposed change is yet another troubling aspect of the individual mandate: BCBS would not even be considering altering this long-standing underwriting guideline if there weren’t now a mandate on people to buy insurance because it would be too worried that it would experience “adverse selection,” or the tendency for a disproportionate number of less healthy people to enroll in its products. That’s the reason for the 50% minimum employer contribution, which is used by all health plans: insurers figure that the employees who are most likely to be willing to pay for insurance if it costs them more than half the premium are those who need it the most.
So relaxing the guideline will have all kinds of negative public policy effects: lead other plans to adopt the same policy; make insurance less affordable to workers (particularly those with lower incomes); dilute the impact of the individual mandate; and begin to drain existing employer money out of the health insurance market. And, perhaps most damaging of all, it just gives more pause to many who supported health reform, despite deep concerns that the “shared responsibility” was not really very equitably shared. At some point, the broad coalition that has supported reform, despite it being far from a perfect law for any of us, is bound to begin to break apart. Through the individual mandate, we’re already requiring many uninsured people to pay more for crummier coverage than most of us have. Now we might sanction making coverage crummier for everyone else. If this change goes unchallenged, it might just be enough to tip me over that edge.
When the 33% contribution standard was first adopted, it seemed almost irrelevant because the standard practice of insurers was 50%. But if the market won’t keep a more reasonable standard in place any longer, government needs to act.
[...] Also add to the must-read list is a response to Widmer from “Peter”, who comprehensively responds to Widmer’s points and summarizes the arguments for [...]
The invited “posters” on this blog have gone beyond making me, and many others in this state and across the U.S., sick, as they continue to obstruct needed reforms of the U.S. healthcare system.
Below is a comment on this topic from the real world. To Mr. Widmer and others, the MA “Fair Share” assessment is yet another symptom of our perverted and dysfunctional non-system that you, for some reason, seem bent on perpetuating. Please get out of the way and let the people decide what’s in our best interests.
Statement from Ann E Malone
My sister was kicked out of the hospital the day her private insurance ran out. This happened was when she was still acutely ill, very symptomatic and frightened, and was undergoing treatment adjustments with powerful medications.
Her insurance ran out so she was kicked out. 20 years ago. But as a nurse I know that these things continue to happen. Every day. The film SiCKO is actually the G-rated version of these kinds of obscenities that occur in the U.S. .
So to the negative pundits I say that this film is excellent and it accomplishes much of what its makers hoped for: raising consciousness and inspiring activism on the healthcare issue.
The outrage and anger over our wasteful, dysfunctional and often inhumane non-system is being channeled into constructive action.
This film will help foster a growing political demand/call to action from voters on their elected representatives to tackle this issue in a head on and serious way to achieve large scale reforms of U.S. health care financing and delivery system.
We must demand fundamental overhaul; the kind of incremental “reform” tinkering (much of it fake reform, in fact) that’s taken place over the past 2 decades is just making things worse.
In addition to my personal family experience I’ve worked in healthcare for 30 years, the past 15 as a master’s prepared nurse and a clinical nursing instructor. I’ve worked in hospitals and in community settings.
Over the past 20 years I’ve been a dedicated advocate for fundamental health system reform, working with groups such as PNHP, Families USA, and the Alliance to Defend Health Care where I live in Massachusetts.
The huge amounts of money involved in HC have a deleterious effect on efforts to reform the system in the ways that are needed.
Groups that used to push for the far-reaching reforms have either been bought off by the healthcare industrial complex (ie Insurance Co “Foundations”) or have crossed over to the the dark side to champion “incremental” reforms that often just make the porblems worse but provide those groups and their founders ego gratification and funding streams.
Follow the money trail, connect the dots, and speak truth to power are essential ingredients for building the social movement we require.
I warmly invite people from all walks of life to join in this work for a humane, quality and responsibly financed healthcare system- it certainly will not be achieved by wonks in ivory towers or internet geeks alone.
This issue calls for the “We” to step forward to demand the healthcare system improvements that we need and deserve and to not let up until it has been achieved. Resources below. Thank you.
Visit http://Healthcare-No...
and
http:http://www.SickoCure…
Campaign for America’s Future – who’s now working with MoveOn.org on healthcare reform
at this link
http://straighttalk….
July 9, 2007 3:14 PM
Statement from another U.S. citizen on this issue:
I’ve been a advocate of single payer reform for the past 2 years or so. It’s a good first step. Is there any other insurance system that can apply the necessary leverage to the medical community to become more cost effective? Can any other system enforce consistent standards and protocols based on quality control and long-term cost reduction?
I’d also like the government to take over the malpractice insurance system and replace it with a specialized arbitration system.
Finally, I don’t buy the argument that reducing utilization (rationing) is the only way to control costs. The entire system is tremendously inefficient and way behind other industries. There is plenty of room to do more with less. They have few incentives to reduce costs and don’t compete on anything other than perceived quality and medical headlines.
Our fragmented private insurance system is part of the problem. Not part of the solution.
-CM
July 10, 2007
Michael Widmer has missed the point, and Peter has it exactly correct. The “Fair Share” contribution was developed as a compromise in order for the House to drop its proposal for what many considered was a form of payroll tax. When we settled on the “Fair Share” contribution it was understood that the average employer share in Massachusetts was 75% and that no plans were written below a 50% employer share. The Romney Administration regulations setting the definition of “fair and reasonable” at 33% employer premium subsidy and 25% employee participation set the bar too low, and both Rep. Pat Walrath and I, along with advocates, publicly told the Administration that they were eroding employer responsibility.
To their credit, Blue Cross has listened to those of us, including Governor Patric and Secretary Bigby, who expressed concern with their plans to drop the premium contribution to 33%. This week, Blue Cross agreed to retain the 50% rule. If they, and other companies has moved to the 33% level, we would certainly have to revisit the $295 fee. Now, before Mike Widmer responds that the law caps the fee at $295, I would remind him that he was told by the Conference Committee that we could not bind future legislatures from changing that provision. The Committee on Health Care Financing will review the need for the 50% contribution at a legislative hearing scheduled for July 18, 2007. We may decide that this needs to be fixed in the law.