Medford Pols Support Small Biz Healthcare Cost Control

State Representative Paul J. Donato (D-Medford, Malden) joined his colleagues in the Massachusetts House of Representatives in passing legislation designed to control health care costs for small businesses.

“Controlling health care costs is a major challenge for us all,” said Representative Donato. “This legislation focuses on helping small businesses control costs and is another step in the right direction of solving health care costs in general.”

The legislation requires carriers to submit rate filings to the Department of Insurance (DOI) at least ninety days before the effective date with sufficient detail so that the DOI may approve of the rates or disapprove if the rates are found inadequate, excessive or unreasonable in relation to the benefits provided.

Furthermore, the bill authorizes the Division of Health Care Finance and Policy (DHCFP) to review contracts for medical services between insurers and hospitals, physician group practices and imaging service providers to determine if payment increases are appropriate.

The bill also allows the Commissioner of Insurance to address instances of rate fluctuation. The Commissioner is permitted to annually smooth rate adjustments to prevent drastic increases in rates for individuals and employers.

According to information from State Senator Pat Jehlen (D-Somerville, Medford), the Senate version of the bill reduces premium fluctuations and requires insurers to offer affordable health plans.

Sen. Jehlen had proposed legislation to require insurers to spend at least 90% of their premiums on health care instead of administration and profit. The new law takes a first step in this direction, according. to Sen. Jehlen. DOI will review proposed premium rates and may disapprove rates, with a presumption that administration and profit should not be more than 10%.

The law requires carriers in the small group market to offer at least one reduced network plan with premiums 12% lower than those for a full network plan.

It also establishes a pilot program that provides a state enhancement of the federal tax credit program for small businesses that purchase health insurance through the Massachusetts Health Connector and participate in wellness programs. Eligible small businesses that demonstrate participation in a wellness program would receive an additional 5 percent state subsidy for eligible health insurance costs beginning 2011, bringing the total state and federal assistance up to 40% of employer health care costs per year.

– Information from Rep. Donato and Sen. Jehlen