May 25, 2015

ACA exemption can help small businesses in Mass.

In 2013, the percentage of Americans without health insurance had climbed to 18 percent from 14.6 percent just four years earlier. The Affordable Care Act helped drop that number to 12.9 percent late last year.

Lowering that same number on a statewide basis was also one of the chief goals behind health care reform in Massachusetts in 2006, based on the idea that getting everyone insured would help the whole system become more effective. That change, along with a drive for more affordability, would go a long way toward eliminating the massive downside risk of the number of uninsureds that could take down the system with too many catastrophic illnesses. In Massachusetts, only 4 percent of residents were uninsured in 2013, the lowest among the 50 states.

But the long-term gain of health care reform will not come without some short-term pain. Today, many businesses, especially in Massachusetts, are feeling that pain through significant price increases in their health insurance offerings. As more people have purchased insurance, more seek care, which leads to more insurance claims. That's what's increasing the costs of insurance for both businesses and their employees, especially small businesses that don't have the negotiating leverage of larger, better-heeled companies.

As the ACA comes to ascendancy and replaces many of the guidelines in the Massachusetts law, the issue of costs for small businesses must be addressed. That's why we endorse Gov. Charlie Baker's efforts to press the Obama administration for some flexibility within the ACA to allow Massachusetts to continue to define its small businesses (also known as the "small group" market) as having no more than 50 employees. Effective next year, the ACA's definition would double that ceiling to 100 employees. The difference is significant because of the rating factors that determine insurance premium pricing, such as age and tobacco use. But Massachusetts employs additional factors in rate setting, such as industry and wellness program participation. Those additional factors help insurers determine rates more precisely, and fairly, giving more small businesses a chance to qualify for more competitive plans and a savings that can be critical to their survival and growth.

"Decreased use of the rating factors has already led to significant premium swings that have disproportionately affected small businesses," Baker wrote in a letter last month to U.S. Health and Human Services Secretary Sylvia Matthews Burwell. The elimination of the state's rating factors, he added, "will lead to further disruption and instability in the marketplace."

Since its passage in 2010, the ACA has withstood strongly partisan attacks and a major legal challenge before the U.S. Supreme Court, with another high-court challenge pending. Much of the criticism is off target and purely political, and much of it is justified. However, it is widely recognized that our polarized Congress is unwilling to patch many of the most obvious holes in the legislation, leaving any changes dependent on delays or approved workarounds. Facing stiff criticism, the administration has shown great flexibility of late with the law's implementation. According to the Galen Institute, a tax and health policy research organization, the ACA has undergone 50 changes, 31 of them made by the Obama administration. A change such as the one Baker is requesting may be another workaround, but it makes a lot of sense, and will likely provide some needed relief to the Bay State's small-business sector.


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