Small Business Health Premiums Keep Rising More Than Others; RAM Seeks Regulatory Fairness

Recently, the Massachusetts Center for Health Information and Analysis (CHIA) presented their 2018 Annual Report. The report was widely reported in the press for showing much slower overall growth in healthcare spending: 1.6% vs. the state’s 3.1% benchmark, and recent 4 year average of 3.6% increases. Yet, totally missed by the press and general public was how the increased costs were disparately distributed among a wide variety of consumers. Dissecting how the overall healthcare “pie” is divided is extremely important for small businesses, as important questions remain whether costs are being fairly distributed across all classes of purchasers.

Commercial, fully-insured premiums increased 4.9%, yet within that market, small businesses saw an increase of 6.9%. Subsidized individuals in the Connector saw a 3.0% increase, unsubsidized individuals saw a 3.8% increase, large groups saw a 4.1% increase, and the state Group Insurance Commission (the GIC; the buying group for state & local employees) saw a 4.4% increase. Meanwhile the state’s Medicaid program saw a drop of -0.2%.

But just looking at the disturbing and unequal premium trends isn’t enough, you also need to look at cost sharing and high deductible plans as you compare the fairness of the markets. Besides seeing a far higher than average premium increase than individuals and large groups, small businesses and their employees saw a greater increase in cost sharing and high deductible plan growth than other market sectors. While 28.2% of the commercial market are now in high deductible plans, 57.5% of small businesses are in that cost sharing space, while the state’s taxpayer funded GIC is at 0%.

So year after year, small businesses and their employees have seen disproportionate increases in their premiums, while receiving lower quality of coverage as their premium dollars have covered less and less.

What gives?

Are employees of small businesses less healthy than state employees, big business employees, Medicaid populations, or taxpayer subsidized individuals buying through the Connector?

Are they worse consumers than those other groups?

Or do they in fact face government imposed discrimination in the marketplace?

Two facts seem to indicate marketplace discrimination. Small businesses look like society: young, old, sick, healthy; and they are likely at least average—if not better—consumers. To be always well above the state benchmark (which is in fact an average across all classes of healthcare purchasing); and the fact that Massachusetts is the only state in the country which puts small group and individuals in the same risk pool, leads us to the conclusion that small business owners and their employees are paying more so others can pay less. This is a discriminatory playing field must change.

Government should not discriminate and pick winners and losers in the marketplace, yet that has clearly happened with health insurance.

Perhaps changes are beginning to occur. This past summer, the US Department of Labor (DOL) issued regulations to allow for Association Health Plans (AHPs), which would allow organizations like RAM to do what the GIC does for state employees, the Connector does for individuals, and self-insured big employers do for their workforces. For the purposes of procuring health insurance, RAM members would operate as one employer, instead of separate consumers.

Equality under the laws and the marketplace is the only sure way to make sure health care costs are being distributed fairly among all classes of consumers. RAM has attempted for six years to seek exactly that under state law through our health insurance cooperative—RAMHIC. Yet federal government rules under the ACA got in the way of fair and equitable savings for our members. We played by the rules, yet government changed the rules which made a state level form of AHPs to be less effective and less fair.

Therefore RAM will be seeking DOL approval to convert our state cooperative into a federal AHP. The flexibility to negotiate with insurers and providers,to create financial incentives to be healthier and better consumers, and to set fair rates, while not unfairly cross subsidizing others is what makes this federal reform so attractive.

We recognize the pain Main Street has felt on your health care costs. We hope our public policy leaders will similarly recognize the discrimination in the marketplace, and will work with us to make sure small business employees are no longer relegated to second class consumers under the law. In the weeks ahead, RAM will keep you informed of our important efforts to reinvent and take to the next level our health insurance cooperative—RAMHIC.

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