Since Massachusetts implemented health care reforms in 2006, followed by the National Affordable Care Act in 2010, access to insurance has become nearly universal. But where people get insurance is changing, and fewer people are getting insurance from smaller employers. The trend reflects growing competitive concerns for businesses that are the state’s economic backbone, and also threatens to increase costs for taxpayers.
According to the State Department of Insurance, the number of people covered by Massachusetts small-group insurance plans (which cover 2 to 50 employees) has increased from more than 800,000 in 2006 to the Affordable Care Act. It fell to 517,000 in 2014, when it was fully enforced, to 335,000. According to the Center for Health Information and Analysis, in 2021 alone, the number of insured persons in the small group market fell by 4.3%, compared to a 1.3% drop in overall employer-sponsored insurance coverage. Decreased.
The reason, employers say, is that costs continue to rise and the plans that small businesses can offer are of lower quality than those offered by larger companies. According to CHIA, in 2021, his 72% of people eligible for small business plans had a personal deductible above hers of $1,400, while his 43% of all Massachusetts residents % had commercial insurance. According to CHIA, plans offered by small businesses have slightly lower premiums on average, but those plans also have a lower share of health care costs, and employees are more likely to pay a higher share of premiums, especially for family plans. have to pay Also, premiums are rising quickly — the average small group plan saw a 5.3% annual premium increase from 2019 to 2021, while large companies did so by 3.2%.
Mark Cohen, co-owner of OPRSystems, a Wilmington-based recycling company with 18 employees, offers no-deductible and deductible plans each year, with the company taking 56% of premiums. Said it was a burden. This year, his total nondeductible health insurance costs are $40,000.
“Health insurance costs have exploded,” Cohen said. “This is another reason young families cannot live in Massachusetts.”
There are several reasons why small businesses struggle to provide affordable health insurance. Massachusetts he merged the individual market and the small business market in 2006. This was a policy decision aimed at making insurance affordable for individuals, and it worked. Small businesses are now subsidizing personal insurance.An advisory panel set up in 2020 studied the merger market and said in a January 2022 report that splitting the market would impact small business insurance premiums. are estimated to be reduced by 2-4%.
To help small businesses in its mergers, Massachusetts enacted a “rating factor” that requires insurers to set their corporate rates by considering factors such as industry and group size. As such, an accounting firm with a wellness plan that participates in a group buying co-op would pay less per person for her insurance than a 10-person commercial fishing business, based on the estimated health risk of the insured group. is lower. However, the Affordable Care Act established more restrictive rating factors and gradually eliminated benefits for small businesses.
Under state law, insurance products are designed differently depending on the size of the company. Larger companies’ pricing is based on their employees’ health care costs, so implementing wellness programs or incentivizing low-cost care lowers your premiums. For smaller companies, rates are based on demographics and the cost of everyone in the merger market and are non-negotiable.
Many large companies self-insure with arrangements that comply with federal law. These companies can bypass state compensation obligations, such as those required for autism treatment and children’s hearing aids, and save money.
Massachusetts Retailers Association president John Hurst worries that small business insurance coverage will “completely collapse.” “We need to understand what’s going on and find solutions to keep small businesses competitive,” he says.
The lack of good, affordable health insurance options puts small businesses at a disadvantage compared to their competitors (both large and out-of-state). And there are other public policy implications. Employers with fewer than 50 employees are not obliged to provide health insurance and may simply withdraw.
When insurance is not offered or premiums are high, more employees will move from employer-based health insurance to government-based health insurance, increasing costs for taxpayers. Legislators have launched a proposed pilot program that would allow anyone earning up to 500% of his federal poverty level (he is $150,000 for a family of four) to receive state-sponsored care through the Health Connector. Once started, this trend is likely to intensify.
Businesses are eligible for Health Connector’s cheaper and more limited network plans, and when younger employees most likely to be interested leave, corporate-sponsored plans are left to older workers, driving costs even higher. I’m afraid it will rise.
There is also a growing movement by small businesses to join professional employment organizations that allow them to participate in self-insured pools. This means fewer businesses will have to comply with state mandates.
“The concern here is a death spiral,” said Josh Archambault, a senior fellow in health care policy at the Pioneer Institute, who has served on the Merger Markets Advisory Board. “Anyone who can retire is left with only the sickest of small employers.”
No magic bullets. Then-Governor Charlie Baker proposed making it easier for small businesses to form cooperatives that pay premiums based on their claims experience. The Massachusetts Retailers Association supports a bill that would give rebates to small businesses based on some of the state’s previous rating factors. The Consolidated Market Advisory Board report raised numerous policy options without endorsing them. One is to create a state-based reinsurance program. This is paid when the costs from the merged market exceed a certain amount. Another is to eliminate the merger market and separate individuals from small businesses.
Insurance products with limited networks and incentives for price shopping can lower costs, but employees tend to dislike limited networks and price shopping is difficult without transparency. By giving small businesses more information about what is driving healthcare spending, insurers could help businesses target solutions to reduce spending.
Underlying these concerns is the need to bring down healthcare costs, which benefits all segments of the market.
David Auerbach, senior director of research for the Massachusetts Commission on Health Policy, calls the lack of coverage in small businesses “an indicator of the canary problem in the coal mine” that health care is too expensive. “It’s getting worse and worse,” he said.
Editorials represent the views of the Boston Globe Editorial Board. Follow us on Twitter. @grove opinion.