Commissioner Murphy Explains Massachusetts Insurance Reform

Along with getting a sense of the size of increases small businesses are seeing in health insurance, one of the main goals of this week’s hearings around the state is to gauge response to Governor Patrick’s recnt reform plans for small-market health insurance.

“The Governor’s legislation provides tax credits for businesses that create new jobs, eases healthcare and unemployment insurance costs for employers and creates a new organization dedicated to providing businesses with the financial capital and resources they need to grow.

“Small businesses account for 85 percent of Massachusetts businesses, and for them this is an economic emergency,” said Governor Patrick at an address this morning to the Greater Boston Chamber of Commerce. “If we want new jobs, we need to focus special attention to meeting the needs of small businesses. That means addressing their need for access to working capital and credit, helping deal with escalating health care costs in the short term, simplifying necessary and eliminating unnecessary regulation, fixing the unemployment insurance system and helping to train ready workers.””

Throughout this week of hearings, we have heard business owners and insurance agents (many of whom are small-business owners themselves) express support for many of the Governor’s ideas – particularly limited provider networks, eliminating “jumpers and dumpers,” and aggressive review of proposed rates.

These proposed reforms would provide more affordable options for small businesses which are experiencing big increases. These increases are stifling small businesses and forcing them to make tough decisions. For example, today, Debbie Zabroski said her insurance was jumping from $522 to $750 per month. Self-employed, Debbie was considering making some home improvements this year, but after sitting down and reviewing her budget, realized she would need to spend the money on health insurance instead.

Many small business owners have talked about creating group purchasing cooperatives, which the Governor asked us to investigate. Christine Sullivan, Director of the Enterprise Center at Salem State College and former Secretary of the Office of Consumer Affairs and Business Regulation, spoke passionately in favor of cooperatives today. We continue to investigate cooperatives, the pros and cons, and the hazards of potentially segregating the market between healthy and non-healthy members. We expect to have a report on this issue later this month.

The Governor’s filed legislation includes the creation of selective network products, which would narrow provider choices but also provide lower-cost options in the small market. The legislation also includes creating limited open enrollment periods, which would discourage “jumpers and dumpers” – people who enter higher-priced plans only when planning on using expensive services, and then jump out when they are done. From what we’ve heard in the last four days, all of these ideas have captured the public’s attention and many small-business owners feel they can be part of a successful reform of health insurance in Massachusetts.

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