Senate backs bill to contain health costs

By Steve LeBlanc
Associated Press / May 19, 2010

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Wealthier hospitals would be required to make a one-time $100 million contribution to ease insurance premiums for smaller businesses under a bill the state Senate passed yesterday.

The bill would let businesses with 50 or fewer workers form cooperatives to purchase insurance at a lower cost. Another provision presses insurers to spend at least 90 percent of premium dollars on care and 10 percent or less on administrative costs.

Senate President Therese Murray said the bill, which passed on a 33-to-4 vote, will ease instability in the insurance market, smooth out annual fluctuations in premiums, and require insurers to offer affordable small-business plans.

Under the bill, health insurers would have to file rate increases with the Division of Insurance three months before they are set to take effect. The division would be required to review the rates to see whether proposed increases are reasonable.

Another part of the bill would create yardsticks to help the public compare health care providers based on their costs and quality measures. Small businesses would be encouraged to adopt wellness programs designed to help workers avoid getting sick.

The bill also attempts to smooth out fluctuations in employer health care costs.

Under current rules, the age of employees is measured in five-year brackets. That can result in a jump in costs for businesses every five years when a worker crosses into a new bracket. The bill would end that system by requiring yearly age measures.

To slow premium increases, the bill would require wealthier hospitals to contribute to a fund to help ease those rising costs. Senate backers of the bill say the contribution of $100 million could reduce small-business health care costs by 2.5 percent.

Supporters point to a report released by Governor Deval Patrick’s administration late Monday that said the total net assets of Massachusetts hospitals exceeded $17 billion in 2008. The hospitals with the greatest unrestricted assets were Children’s Hospital, with $951 million, and Massachusetts General Hospital, with $710 million.

Senate Republicans sought to strip the $100 million hospital assessment from the bill.

Richard R. Tisei, Republican of Wakefield and the Senate minority leader, said the assessment amounts to a tax increase on hospitals.

Senator Robert L. Hedlund, Republican of Weymouth, said calling the assessment a contribution is disingenuous.

“Is this the proper term to use when the Legislature takes money from one private entity to give it to another private entity?’’ he asked. “We’re going down a troubling path.’’

Senator Mark C. Montigny, Democrat of New Bedford, backed the assessment, saying that just because hospitals are considered charities does not mean some do not also have deep pockets. “All charities are not created equally,’’ he said. “There are some struggling charities in this climate . . . and there are many in the exact opposite place.’’

The Republican amendment failed.

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