Mass. Insurers, Businesses Balk at Plan to Hike Health Fee

By | July 22, 2008

Massachusetts insurers and business owners have one question for Gov. Deval Patrick: Why us?

Patrick is looking to tap insurers, businesses and hospitals to help close a looming $130 million budget hole in the state’s landmark 2006 health insurance law, which was designed to require nearly universal health insurance coverage for all Massachusetts residents.

The gap was created as more people than expected rushed to sign up for insurance.

Under Patrick’s proposal, employers would shoulder an additional $33 million, insurance companies would agree to a one-time $33 million assessment and health care providers would be tapped for another one-time $20 million assessment.

The state would make up the rest by transferring up to $35 million from a fund designed to cover health insurance payments for those receiving unemployment benefits.

Patrick’s plan, which must be approved by lawmakers, is being panned by those standing to take a hit.

“At a time when policy makers are grappling with rising health care costs, taxing health care to pay for health care makes no sense,” Dr. Marylou Buyse, president of the Massachusetts Association of Health Plans, said in a letter.

Buyse said simply pouring more money into the system does nothing to control costs. She also said increasing the cost of health care will only end up putting even more stress on the economy at a time of rising energy, labor and housing costs.

Businesses were even less enthusiastic.

Bill Vernon, state director for the National Federation of Independent Business, said Patrick’s plan would make it more difficult for small employers and individuals to obtain coverage.

“Small employers are already struggling in this shaky economy with high unemployment insurance costs, and skyrocketing energy and commodity prices,” Vernon said in a statement. “Now is the wrong time to impose a massive new fee increase with so many small employers barely treading water.”

Lynn Nicholas, president and CEO of the Massachusetts Hospital Association, was less critical.

The association “understands the financial circumstances under which the governor made his recommendations,” she said.

“The challenge for hospitals is that all are not equally well positioned to make additional contributions and we need to be watchful of unintended consequences,” she said in a statement. “There are limits to hospital resources.”

Others applauded Patrick’s plan.

Brian Rosman, research director for Health Care For All, a health care advocacy group, said Patrick’s plan is fair.

Rosman points out that some of Massachusetts’ poorest residents already have been asked to pay more in insurance premiums and co-payments by the board that oversees the health care law.

Under fee increases approved earlier this year, about half of those enrolled in Commonwealth Care, the state’s subsidized health insurance plan, will have to dig a little deeper. People who are just above the federal poverty level will have to make $18 co-payments instead of $10 for a visit to a specialist, while those making slightly more will see their co-payments for generic drugs delivered by mail increase from $20 to $25.

Between 35 and 40 percent of those in the subsidized program also will see their premiums increase. Those making less than the poverty level won’t see any increases.

“(Patrick’s) plan recognizes that low-income residents have already seen higher premiums and copays so the governor is asking that employers, insurers and hospitals similarly make modest new contributions to close the gap on health care funding,” Rosman said.

Patrick made the same argument when he unveiled the plan last weekend, as he signed a $28.1 billion budget for the new fiscal year.

“These increased contributions from other stakeholders join contributions already made by consumers through higher enrollee premiums and co-payments to Commonwealth Care,” Patrick said.

A bill that seeks to curb health care costs also is wending its way through the Legislature. Lawmakers hope to get the bill to Patrick’s desk before the end of the formal session on July 31.

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