Sen. Moore leading Senate sponsor of bill that paves way towards broader reforms

July 31, 2010 ... The Senate’s principal leader on health care, Sen. Richard T. Moore, D-Uxbridge, joined his colleagues in the Senate today in approving a compromise conference committee report on legislation that will reduce small business health insurance costs and promote job retention and job creation.  The conference committee report reduces premium fluctuations in the market and requires insurers to offer affordable health plans. The conference report was filed last night and will await final action in the House of Representatives, having been unanimously approved by the Senate.

“The crushing burden of health care costs on small businesses is unacceptable,” said Sen. Moore, who is Senate Chairman of the Joint Committee on Health Care Financing. “While this compromise bill is not as comprehensive as the Senate's original proposal passed in May, it sets the foundation for better cost cutting through better data collection, simplified administrative procedures, uniform quality measures and reporting mechanisms that will ultimately lead us toward an effective and meaningful systemic change in the next session.”

The legislation delivers an estimated premium relief of at least 10 percent that small businesses can save and reinvest in their operations and workforce. It also establishes standardized transparency measures for provider pricing and annual public reporting to shine a light on the marketplace and collect important financial information for ongoing policy discussions about long-term system reform. It also establishes a Special Commission on Provider Price Reform.

“I am pleased that we found some solid, common ground between the Senate and House bills to bring much-needed relief to small businesses in the Commonwealth,” Senate President Therese Murray, D-Plymouth, said. “Small businesses are the main job producers in Massachusetts, and we need to give them the boost they need to stay open and grow as our economic recovery continues. This bill is a good place to start, and will bring immediate results, but we must continue our work on long-term payment reform and cost-control measures. That will be at the top of my agenda next session, and I expect a strong commitment from everyone. Long-term reform is an absolute necessity for the future stability of health care and our economy.”

“This was an enormously successful conference committee effort that is going to result in significant savings for hundreds of thousands of people in Massachusetts,” said Sen. Mark Montigny, D-New Bedford, Senate chairman of the conference committee. “The Senate has been one-hundred percent committed to passing health care reform legislation and providing relief for small business owners and employees. I’m honored to have been selected chief negotiator and delighted we produced such a comprehensive bill.”

The bill requires insurance carriers to file premium rate increases with the Division of Insurance (DOI) 90 days before their effective date. DOI will review proposed premium rates and, for the following two years, may disapprove rates based on the inclusion of excessive administrative costs or surplus margins. The rigorous review process will ensure that small businesses and individuals receive the most efficient product possible.

Addressing the issue of market instability, the bill closes existing loopholes in the system that drive up premiums for everyone. By moving to an annual open enrollment period, it ends the so-called “jumpers and dumpers” practice of individuals who purchase coverage only for expensive treatment and then drop the coverage.

“While small businesses will not see as much guaranteed relief as they would have with the original Senate legislation, this bill will provide various mechanisms for businesses to realize some savings,” said Sen. Moore.  “Maintaining the status quo is not the answer for our thousands of small businesses that are reeling from health care costs and the effects of our great recession.”

The legislation controls year-to-year rate volatility that leads to 30 to 40 percent increases in health care premiums for some small businesses. The cost-spiking practice of measuring the age of employees in five-year increments would be eliminated, replaced with a yearly measurement of age to smooth out the annual increases as an employee group ages.

Additionally, the legislation provides more affordable health care products to small business employers by requiring carriers in the small group market to offer at least one reduced network plan with premiums 12 percent lower than those for a full network plan.

According to the Retailers Association of Massachusetts, small business advocates urged the establishment of small employer cooperatives designed to give those with 50 or under employees the same marketplace rights as larger business or government entities—a provision that was ultimately included in the final legislation. 

Sen. Moore was successful in securing in the final report the use of “moral obligation bonds.”  Other states have utilized the bond system, which does not legally mandate repayment by the issuing state, and that instead utilizes the state’s credit rating for capital investment projects .  The financial market has recognized this mechanism and there have been no defaults to date.

The bill also establishes a pilot program that provides a state enhancement of the federal tax credit program for small businesses that purchase health insurance through the Massachusetts Health Connector and participate in wellness programs. 

Eligible small businesses that demonstrate participation in a wellness program would receive an additional 5 percent state subsidy for eligible health insurance costs beginning 2011, bringing the total state and federal assistance up to 40 percent of employer health care costs per year. Additionally, as Sen. Moore cited during Senate debate on the report, approximately 81,300 small businesses with fewer than 25 employees will qualify for similar tax credits established through national health reform.

The bill allows for providers to negotiate with insurance carriers about making voluntary contributions back into the system for small business relief. No funding will be transferred to the state. DOI will work with the institutions to ensure that every dollar is targeted to premium relief, with refunds going to small businesses this year.

The bill also:

• Authorizes small businesses to group together and purchase health care plans at lower prices;

• Prohibits anti-competitive contract provisions between insurance carriers and health providers that restrict product innovation or tie reimbursement rates to those received by other providers; and

• Reconvenes the “Payment Reform” commission to investigate the rising cost of health care insurance and the impact of reimbursement rates paid by health insurers to providers. The Commission shall examine policies aimed at enhancing competition, fairness and cost-effectiveness in the health care market through the reduction of reimbursement disparities. The work of the Commission will provide the necessary foundation for future action on this important issue, as highlighted by the work of the Attorney General and the Division of Health Care Finance and Policy. 

The legislation will be sent to the Governor today upon final enactment by the House of Representatives. 

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