Hurst and Hudson Appointed By Governor Baker to Merged Market Advisory Council

Governor Charlie Baker in January appointed RAM President Jon Hurst and RAM Officer and member Wendy Hudson to the Merged Market Advisory Council.  The 13 member Council is tasked to study and report back to the Governor by the end of April recommendations on what to do about unfair cross subsidies and other market disruptions affecting small business health insurance premiums.  The Commissioner of Insurance Gary Anderson chairs the Council.

In 2006, under the “RomneyCare” health reform, Massachusetts became the first state to merge the “non-group” (individuals) risk pool together with the “small group” (50 and under employees) into one risk pool—the Merged Market.  At the time the Merged Market legislation was considered, RAM and several other employer groups strongly opposed the proposal as anti-small business.  Many in the insurance industry at the time—including the then CEO of Harvard Pilgrim, Charlie Baker—also opposed the concept. 

In the years that followed, individuals saw significant premium cuts, while small businesses and their employees saw dramatic increases.  This result was due to the typical experience that individuals have higher utilization and claims patterns than employees of small businesses, and may not be as good of consumers in looking at high value provider options. 

In addition, with the passage of the ACA nationally, many individuals were given taxpayer assistance to achieve far lower premiums—in some cases free—through the state exchanges.

Fourteen years after the state law change, and 10 years after the passage of the ACA, only one other state—Vermont—followed the Massachusetts lead by merging individuals together with small businesses.  Vermont’s step was part of their failed efforts to move to a “single payer” government run health insurance system. 

The fact that small businesses are arguably paying more than their fair share raises clear concerns on marketplace discrimination created by government.  Large businesses and large public employer purchasing groups do not have to cross subsidize the premiums of individuals.  Why then must the employees of small businesses?

In short, it has been the policy of the Commonwealth of Massachusetts that small businesses with 50 or fewer employees must pay higher premiums in order for individuals to pay less. 

The marketplace has begun to react by the creation of such vehicles such as Professional Employment Organizations (PEOs), and forms of self-insurance down to the smallest of employers.  Such federally regulated options avoid the state Merged Market entrapment and arguably state regulation.

Further, state efforts to help small businesses through Small Business Cooperatives (like RAM’s own RAMHIC) have been somewhat held back in delivering the right amount of value due to the intersection of state and federal (ACA) laws.  National versions of cooperatives (AHPs or Association Health Plans) designed to give small employers marketplace equality with big employers have not been given the green light to operate in Massachusetts.

All of these issues will be looked at in the Council.  In RAM’s opinion, you would be hard pressed to find a more anti-small business law in Massachusetts or any state, than the one which forced the creation of the Merged Market, and therefore the destruction of the Small Group risk pool.  And now is the time to seek real fairness under the law and in the market, and to eliminate government-imposed discrimination for Main Street Massachusetts. 

 As the Advisory Council has been tasked with reviewing a number of complex issues facing the merged market, a key focus of the study will be the impact of the merged market on the end consumer.

The Advisory Council therefore wants to hear from businesses like yours regarding challenges you face accessing affordable health insurance coverage.  A series of public listening sessions have been scheduled to provide impacted consumers with the opportunity to weigh in.  RAM strongly urges all members to attend a local session to share their health insurance concerns.  Members unable to attend in person may also submit written comments to the Advisory Council via email at [email protected].

Click on the following links to  learn more about the Merged Market Advisory Council, including the scheduled informational sessions and how to submit written comments.