The state’s health coverage law is getting a much needed shot in the arm. The cost of state providing state subsidized coverage next year is coming in lower than expected. Health plans that provide Commonwealth Care have agree to hold rates essentially flat next year. The savings are critical to keeping the law affordable for individuals and the state. But tamping down rates in one part of the insurance market may push up rates for residents who buy private health plans.
(story transcript follows)
A zero percent increase in health insurance rates sounds like an oxymoron. But health plans that provide coverage through the state’s subsidized health insurance program, Commonwealth Care, have submitted bids that would essentially hold rates flat for contracts that begin July 1st.
PATRICK HOLLAND: I think the plans have had more time to go back and revisit their provider contracts and potentially get a better deal.
Patrick Holland, the Connector Authority’s CFO, negotiated these lower cost contracts with 5 health plans that offer free and subsidized coverage. In addition to holding down payments to doctors and hospitals, Holland, says the health plans are also getting better at managing the cost of these newly insured residents…many of whom have chronic diseases.
HOLLAND: All these plans have been putting together good, robust programs around specific disease states, you know, classic care management and I think that’s starting to bear some fruit.
RICK LORD: For the Commonwealth that means health care reform in 2010 should remain affordable.
As a member of the Connector board, Rick Lord is relieved to see the cost of Commonwealth Care under control. But Lord is also the CEO at Associated Industries of Massachusetts where the rising cost of health coverage is a big issue.
LORD: Small employers are still seeing increases in the 8-10% range, in this environment, those are difficult for employers to afford.
And the success of controlling health insurance costs for the state and residents in government programs might rebound in rising health insurance rates for residents with Blue Cross, Harvard Pilgrim or one of the other major private insurers. It’s a pattern called cost shifting. Hospitals and some physicians lose money caring for patients on Medicaid and make up the difference by boosting charges for patients with private health insurance. At a Connector board meeting yesterday, director Jon Kingsdale, said these new Commonwealth Care rates, which are up for a vote next month, may well trigger another round of shifting costs.
JON KINGSDALE: Until we have, and I’ll just go out on a limb here, an all payer system of some sort, we’re going to continue to see more cost shifting. So its even possible that our good results create more of a burden for some other rate payers.
In the all payer system that Kingsdale mentions…all hospitals would receive roughly the same payment from both public and private health plans, for say, removing a patient’s appendix. A special commission is considering this model for Massachusetts. But for now, the gap between what hospitals and doctors receive from public and private insurance plans is growing. The state’s Medicaid program…which covers more than a million residents…also expects to hold programs costs flat next year. But Massachusetts’ Medicaid director, Tom Dehner, argues…
TOM DEHNER: That dynamic is oversold. The problem is less about what the public sector payers are paying and more about certain hospital systems with market leverage that are able to use it to their advantage.
That’s using their leverage to demand higher payments that then drive up health insurance premiums. It’s not something Commonwealth Care members will have to worry much about next year. Individual premiums, based on these new contracts have not been set yet. But members, like Helena Fruscio, an artist in Pittsfield, can expect to pay just a dollar more or less than her current $39 a month premium.
HELENA FRUSCIO: I am shocked actually, I’m so glad. I would be in quite rough shape if I had to pay more than this. I think it’s so affordable and important to single individuals like me and also a lot of families that I know.
The total cost for Commonwealth Care may well still rise above the 880 million dollars in Governor Patrick’s proposed budget if the economy continues to slide. That number is based on adding about 10,000 more members than are currently enrolled. Some of those new members will likely enroll in insurance provided, for the first time, through Caritas Christi. The Catholic hospital chain is partnering with a for-profit insurance firm to increase patient volume by offering health coverage.
Martha Bebinger
I wish my small employer was only seeing an 8% – 10% increase…we are getting whacked with a 26% premium hike…while subsidizing all the legitimate CommCare memebers as well as the freeloaders (there are more of them than you think).
But tamping down rates in one part of the insurance market may push up rates for residents who buy private health plans.”
May push up rates?? How naive are you?
This is pushing up rates for small businesses.
pj and mcc are absolutely correct. Our small businesses are reporting increases in the 15-25% range–again. Small businesses are seeing their sales drop by double digits, yet big health care still hits them with double digit increases while giving the discounts to the big payers. MA “Health care reform” is heading for a train wreck unless this premium discrimination ends and small businesses are treated fairly in the marketplace. Either give them the market based competitive solutions which they are denied today, or impose strict rate regulation–NOW. Reforms planned for next year may be too late for thousands of small employers and their employees in this economy. The Governor should task the Division of Insurance to hold immediate rate hearings and demand reduced rates for small businesses.
Jon Hurst
Retailers Association of MA
If they reduce the increases on small biz, then the subsidized insurance pricing will increase. This will raise taxes for everyone. You can’t treat a group of 10 like a group of 400 for pricing and risk. The difference is that a group of 400 gets claims reports and can more to a self funded product. A group of 10 is being held by their ankles over the Tobin bridge. They have no options. Also, you can’t have a GI state with no rate ups(no rate up for smokers is absurd), the largest mandated benefit package in the country, and a history of programs that have had no deductibles without having a completely dysfunctional and broken system.
I can completely understand not charging an insured more if he/she has an illness. Some diabetes is congenital and some is diet based. That’s just the way it works sometimes. Smoking is a completely different situation. Smokers should absolutely, no questions asked, pay 50% more for their health insurance. Look at the stats. Smokers and smoking related diseases are a huge drain on the dollars spent on health care. I wonder how many people that receive free or heavily subsidized insurance are smokers. It would be interesting to know that stat.
I feel that I have fallen through a crack in this system. I contacted the Commonwealth Connector to try to enroll, because my insurance premium through my employer takes nearly 1/4 of my gross pay, reducing my take-home to a very low level.
I was told I’m not eligible because my employer provides a certain percentage of that coverage.
I was also advised that my income is low enough that I can forgo health coverage altogether and not pay the tax penalty. This is advice direct from the very office supposedly trying to get everyone covered by health insurance!
To add insult to injury, I learned via this news story that rates for Commonwealth coverage are not going up for next year, in part because of “cost shifting” onto….you guessed it- people like me who are private subscribers to one of the same companies.
Come on, Massachusetts!
MCC: Although I am not a smoker, you seem to be concerned about those smokers who should be paying 50% higher premiums. On the contrary, I think we should tax the living daylights out of the extremely healthy because they are the ones that end up as Alzheimer’s patients at age 85-95. The smokers pay very large sin taxes, and I certainly haven’t heard any complaints about the big cigarette company settlement that doesn’t pay for free nicotine patches or gum or prescriptions for smokers trying to quit. All us taxpayers were only to happy to take that cigarette money and spend it on anything but smokers.
Lucretia: Are you serious? So you think smokers do a good job at killing themselves? Smoking will be a smaller problem in the next decades but it is still a bad habit. There is a lot of tax collected on tobacco and it’s good to spend it on things non related to smokers, what else would you do with all that money.
is a plan like mass commcare the best we can expect if a public option goes through in washington?
do you think single payer is the way to go?