The biggest issue for small business
IT’S DIFFICULT just to get a smart idea on Beacon Hill’s radar screen. It’s even tougher to push it to passage. But after years of effort, the Retailers Association of Massachusetts has finally succeeded in focusing policy makers on the skyrocketing health-insurance costs burdening small businesses.
“There is really no bigger issue for small business right now,’’ said Jon Hurst, the association president. “Health insurance is becoming unaffordable, yet the law says you have to buy it.’’
Consider: Health insurance premiums for small businesses have risen about 15 percent annually for the last five years, Hurst says, while the Group Insurance Commission, which negotiates plans for state employees, has seen average yearly increases of about 5 percent. (He uses the GIC for comparison because there’s little public information about rates for big companies.)
Hurst maintains insurers are charging small enterprises more to make up for the lower rates large employers use their bargaining clout to secure. Thus the retailers want the ability to band together to buy health insurance. By pooling their employees, they think they’ll be able to bargain for better rates.
The Senate has agreed to experiment with that approach. A health care bill the Senate recently passed would allow for three nonprofit co-ops, with 15,000 members each, for the purpose of buying health insurance. (Full disclosure: My wife works for Tufts Health Plan.)
In a subject as complex as health care, however, there are many different solutions — and agendas — at play.
The Patrick administration has focused its immediate attention on insurer premium increases, rejecting those it considers unjustified. The problem there is that, according to Attorney General Martha Coakley’s office, the really significant drivers of cost increases are not the insurers, but big and powerful hospitals.
Indeed, the major insurers recently reported significant first-quarter losses, while a study showed the providers sitting on more than $17 billion in total net assets as of September 2008, with Partners HealthCare, the big Boston-area hospital network, accounting for about a third of that total. For their part, the hospitals say they need significant reserves to compensate for underpayment by the public sector.
Whatever its merits (or lack of same) as policy, Governor Patrick’s populist move has played well in an election year. And to be fair, the administration stresses that its push against the payers is only a first step. The governor has also filed legislation to give the administration regulatory authority over hospital costs.
Some of the insurers, meanwhile, hope to create a cheaper plan for small business by pushing legislators to limit provider rates. With a weather eye on that front, Partners, the most potent of the providers, has offered $40 million to a fund to help with short-term rate relief for small businesses. The Senate legislation would force other providers to pony up as well.
So most everyone has a favored proposal, some of which seem designed more to score political points or make another stakeholder the target of cost-control efforts than to address cost issues in their totality.
But though the retailers have given uneasy support to Patrick’s approach as a short-term remedy, their own nostrum doesn’t seek a special deal. Rather, it would simply let small businesses maximize their bargaining clout within the existing system. For its part, the administration is agnostic on the idea.
“It is certainly another option to be considered if you are trying to provide lower cost options,’’ said Insurance Commissioner Joseph Murphy. He says his agency will issue a report in a week or so laying out the pros and cons surrounding association plans, but without advocating for or against them.
That’s time enough — but only if lawmakers display a sense of purpose in the crazy, hazy daze of a legislative summer. The Legislature will go out of formal session on July 31, after which no controversial legislation can be considered. Meanwhile, whispers abound that this issue could become a casualty of a House-Senate standoff over different approaches to casinos.
That would be a shame. This is a promising market-based approach. Given the difficult situation small businesses face, it deserves a chance.
Scot Lehigh can be reached at firstname.lastname@example.org.