MassAHU’s concerns with SB 2437

| June 16, 2010 | Comments (0)

MassAHU would like to acknowledge and support the following in Senate President Murray's Bill, SB 2437, An Act to Promote Cost Containment, Transparency and Efficiency in the Provision of Quality Health Insurance for Individuals and Small Businesses.  MassAHU supports addressing stabilizing and controlling cost in health care insurance: the Move to an Annual Open Enrollment, to Eliminate Age Factor Brackets, to Reduce Inappropriate Use of Individual Coverage and to Establish a High Risk Reinsurance Pool.   However, we have significant concerns over several sections of Senate Bill 2437, specifically Sections 23, 24, 26, 27, 37, 38, 41, 42, 44 and 54 and concerns in Section 13 in the Amendments relating to the allowance of Association Health Plans for small businesses in Massachusetts.


Any legislative initiatives in Massachusetts on plan design should be considered in light of how they will deliver value, enhance competition and provide choice in the market place.  MassAHU recommends that licensed producers be used in the distribution of products in the state, both individual and group, including all Connector products.  Health plans use agents in 90% of their product distribution as the most cost effective means because the role of the agent as a licensed (and regulated) professional provides value at a minimal cost.  For the most part, health insurance products and plan designs evolve around market research and consumer demand.  

a.   Requiring health plans to offer selective network plans is dictating a solution to the market legislatively rather than allowing innovation and market responsiveness to develop solutions to pricing concerns.   MassAHU therefore recommends that provisions such as found in Senate Bill B 2437, Sections # 23 and # 24 should not be included in legislation.

b.   Capping HMO deductibles limits choice by consumers and by employers who may be interested in offering consumer directed high deductible health plans. 

c.    Requiring everyone to obtain prescription coverage as part of the minimum credible coverage requirements limits choice by consumers who may prefer holistic medical approach and/or who wish to self insure their prescription needs.  MassAHU recommends passage of an endorsement to MGL of 956 CMR 5.03(2)(a) through (h)  to allow consumers to purchase MCC without prescription coverage.

d.   Restricting the number of plans and/or design of such plans to be offered in the market serves to limit choice and competition in the market, both of which ultimately impact the price of such insurance products.  MassAHU recommends removal of provisions found in Senate Bill 2437, Section #54.


2)   MassAHU’s position is that the Connector should not duplicate distribution of products in the employer-based market, should not have exclusive products or pricing arrangements in the market, and should not use taxpayer dollars to solicit currently insured persons.  The Connector needs oversight to ensure the scope and reach of its products and services are appropriate to the task of assisting the uninsured to find insurance.  Special attention should be paid to other Connector/Exchanges models which focus on directing people to insurance, based on financial need, medical need, etc.   Brokers have played a vital role in the communciation, implementation and on-going support of the landmark healthcare legislation of 2006.  As a trusted source, licensed agents are invaluable in the communication channel.

a.   Regarding Section 40 in SB2437, on the Commission Study on Connector Exclusivity, MassAHU recommends implementation of the Oversight Commission should be immediate with report of findings to full legislature on 10/31/10. 

b.   No wellness discounts that are not also available in ‘standard’ distribution market.  MassAHU recommends amending the SB 2437, Section 38 to allow health plans to include wellness discounts in their standard pricing regardless of the market through which products are distributed. In Section 38 (c), Wellness Programs are discounted by 5% through the Connector. 

c.    Individual health plans distributed by whatever means deemed appropriate by the health plan (whether through direct in-house sales, producer-driven sales, and/or Connector sales).  MassAHU recommends striking Section 26 from SB 2437.

3)   New Massachusetts initiatives which are already addressed in some manner in the federal health care reform legislation should not be included in any reform legislation.  We should avoid having to reconcile differences in the federal vs. state mandates.   Having two sets of standards adds to the cost of insurance in Massachusetts and confusion on the consumer level.  (Federal legislation is already working on provisions of determining Minimum Loss Ratios (MLR) for example.)  MassAHU recommends removal of provisions for MLR as described in Section 108 and 108A of Chapter 175 and replacing it with the MLR as determined by the NAIC definition of Medical Loss Ratio. The NAIC definition of the Medical Loss Ratio is due out by the end of this year 12/31/2010


4)   The proprietary and budgetary impact of using UMass Business Development Center or any public, state or locally funded resources is a duplication of existing services by qualified professional licensed brokers and a duplication of infrastructure and distribution channels already in place.   Section 44, in SB 2437 states: Notwithstanding any special or general laws to the contrary, the Massachusetts small business development center at the University of Massachusetts, as funded shall develop and implement a small business health insurance assistance program to provide free and confidential, technical assistance, counseling and educational tools for eligible small businesses as defined in chapter 176J of the General Laws, seeking to purchase small group health insurance. The program shall, to the greatest extent possible, coordinate with existing chambers of commerce and other small business associations to develop common materials, conferences and educational seminars for small businesses.  MassAHU is concerned that these consultants will not be licensed, professional brokers and the revenue source to fund this duplication of services be pulled from Education, Mental Health or other departments that are already drowning in  budgetary cuts.


5)   Massachusetts reform should work to preserve the level playing field and community rating that has been created through two rounds of health care reform in 1996 and in 2006.  Establishing Association Health Plans, or cooperative health plans, in the under 50 insurance market only fragment the ability to create universal access and pricing in the market.  Association Health Plans do not help to lower costs in the market, do not produce measurable administrative savings, and work to upset the market and pricing outside of the associations.  (Please refer to our prior position statement on AHPs as attached herein).  MassAHU recommends against provisions to establish Association Health plans in the under 50 market in Massachusetts.


MassAHU has addressed several concerns in regards to the SB 2437, Act to Promote Cost Containment, Transparency and Efficiency in the Provision of Quality Health Insurance for Individuals and Small Business.   It is our hope that as the House as it reviews SB 2437 and adopts its own version that MassAHU’s recommendations will be considered insuring that this legislation address not only cost containment, transparency and efficiency but also maintains choice and stability the market. 

Category: Position Statements

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