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Mass. governor moves to control small business health care costs

E-mail|Link|Comments () February 10, 2010 11:52 AM

By Michael Levenson, Globe Staff

Governor Deval Patrick said that, beginning today, the state insurance commissioner will require health insurance companies to provide advance notice of any rate increases for small businesses and will reject those that he believes are "unreasonable or excessive."

Any increases that are "significantly higher" than the current level of medical inflation, 3.2 percent, will automatically be challenged by Insurance Commissioner Joseph G. Murphy, Patrick told a breakfast meeting of the Greater Boston Chamber of Commerce.

"This is aggressive," the governor said, "but we have to give small businesses some economic breathing room until we can implement the kind of payment reform that will curtail costs across the health care system."

The new rule received a mixed response from the gathering of business leaders at the Westin Copley Place.

During a question-and-answer session, Paul Guzzi, the chamber president, asked the governor “if this isn’t a bludgeon with potentially unintended consequences that can not only impact what many still consider to be a world-class health care system here, but can also impact one of the economic drivers of the Commonwealth.”

Patrick smiled at the tough question. “So Paul,” he said, “Do you want to give me your opinion?”

The governor acknowledged that the plan was likely to upset some in the health care industry. “I have a whole bunch of pals here who are in that health care field and I saw the color drain out of their faces,” he said.

But the governor said health care costs are crushing small businesses, defined as those with 50 or fewer employees.

“We have to dial up the sense of urgency,” he said. “If we actually want to revive this economy, we have to revive the small-business sector of the economy.”

Responding to Guzzi, he added, “I would call it a soft cap, not a bludgeon, thank you.”

Patrick said he would also seek additional authority from the Legislature to limit the rate increases that providers are passing onto insurers.

James Roosevelt Jr., president and chief executive of Tufts Health Plan, said after the governor’s announcement he understands it’s important that small businesses get some relief from health care costs so “the governor is dealing with the right problem but there may be a better way to do it.”

He said that out of the 730,000 people his company insures, about 100,000 work for small businesses.

“We don’t think there have been any rates that are excessive,” said Roosevelt, who is also chairman of the Massachusetts Association of Health Plans.

“What we have to deal with,” Roosevelt said, “is the underlying costs” passed onto insurers by health care providers

Bill Vernon, state director of the National Federation of Independent Business, which represents small businesses, said he welcomed the governor’s new rule.

“It’s been a long time coming,” Vernon said after the announcement. “Small businesses are in an emergency situation with regards to increased health care costs and insurance costs and it’s just very, very important that we take action. Small businesses need relief now.”

Patrick echoed the sentiment in his speech.

“What we can’t continue to do is this circular argument, this circular conversation, where we keep saying we know what the problem is but we can’t touch any part of the solution for fear of upsetting something,” he said. “We’ve got to get off the dime. And I think all over the Commonwealth, folks are looking to folks in this room to get off the dime.”