Health Care Cost-Control Law: Real Relief
Moore
The commonwealth's new health care cost-containment law provides a multifaceted approach to curbing rising costs, building on past reforms and offering innovative, market-based solutions that seek to ease the growing burden of health costs across society. The governor signed it with the expectation that slower growth in health care spending will free up funds for other important services and give businesses more money to expand.
Key to the effort to slow cost growth is the establishment of a cost-growth goal that will hold the health care sector to the level of state inflation, or projected gross state product (GSP), for the next five years, then pushing the goal downward by 0.05 percent for five years, ultimately returning to the same level as inflation. Since current projected GSP is about 3.6 percent, and health care spending growth is around 7.4 percent, achieving this goal could save businesses, government and families as much as $200 billion over the next 15 years. Even if this effort is only partially successful, the savings will be significant.
The law does not create major new bureaucracy or rigid, one-size-fits-all government regulation. It will be enforced by enhancing existing agencies, made independent of politics, that will seek market-based plans from health care providers that do not initially achieve compliance with the cost-growth goal. Beneficiaries will include self-insured businesses and those using commercial insurance plans. However, premiums should continue to decline, since the law continues aggressive medical loss-ratio requirements that force insurers to limit administrative costs.
There is much for small businesses to like in this law. Businesses employing 20 or fewer employees (as opposed to the current limit of 10) will be exempt from the 2006 reform law's “fair share assessment” as of July 1, 2013. This could become even more useful to businesses employing up to 50 as the Legislature reviews compliance with the new federal health reform law. And the new state law exempts employees with other insurance, such as a spouse's, from the “contributing employer” calculation.
The law also extends key provisions of the small business health insurance legislation (passed in 2010) that directs the Division of Insurance to ensure that small businesses and individuals have access to the most efficient insurance plans possible. The law also establishes a wellness tax credit of up to $10,000 for each employer that implements a recognized workplace wellness program, and insurers must adjust premiums for small businesses that offer them. Finally, small business insurance cooperatives, which are beginning to provide real premium relief to members, will be able to offer discounts of up to 10 percent without state pre-approval.
The Legislature is offering real relief to businesses and our economy through this cost-growth plan; it was approved with bipartisan support: unanimously in the Senate, and with all but 20 members of the House voting yes. Since health care costs must be curtailed in a responsible, phased approach, those who do not support the plan have an obligation to present a realistic alternative.
Richard T. Moore of Uxbridge represents the Worcester and Norfolk district in the State Senate. He is Senate chairman of the Legislature's Health Care Financing Committee and a primary author of the health care cost-containment law.
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