SB 623/HB 2211/HB 595: An Act to Address the Financial Sustainability of the Health Safety Net Written Testimony

| July 31, 2017

Joint Committee on Health Care Financing
House Bill 595: An Act to Address the Financial Sustainability of the Health Safety Net
House Bill 2211, An Act To Reduce Liability Of Acute Hospitals To Health Safety Net Trust Fund
Senate Bill 623: An Act to Address the Financial Sustainability of the Health Safety Net

The Massachusetts Association of Health Underwriters (MassAHU) is a membership organization of professional health insurance brokers, consultants, and employee benefit specialists and a state chapter of the National Association of Health Underwriters (NAHU).  MassAHU continues to be engaged in advocating on behalf of consumers and small businesses with respect to their health insurance needs. MassAHU opposes House bills 595 and 2211 and Senate Bill 623 and share the concerns of other businesses and provider groups in doing so.

These bills would impose new assessments on health plans and employers to fund the Health Safety Net Trust Fund.  Imposing new assessments adds to the cost of coverage, increasing health care costs for employers and exacerbating the challenge they face to make high-quality, affordable coverage available to their employees.

MassAHU agrees with the facts and reasoning provided by the Massachusetts Association of Health Plans, whose testimony we mirror below, and feel these regulations would place another expensive burden on Employees and Employers, who are already overburden by the cost-shift inherent in the current reimbursement system.

Position of the Massachusetts Association of Health Plans
House Bill 2211 would eliminate the $160 million assessment on acute hospitals for the Health Safety Net Trust Fund and shift that liability to the surcharge payers, who are currently assessed $160 million. This would increase the liability of the surcharge payers to $320 million.  House Bill 595 and Senate Bill 623 would impose a supplemental surcharge on payors, totaling 50 percent of any shortfall in the Health Safety Net Trust Fund.

The Health Safety Net Trust Fund is the successor to the Uncompensated Care Fund, which was established by the Commonwealth many years ago to address imbalances among acute hospitals as to uncompensated care. The original and continuing purpose of the Fund is to reimburse hospitals and community health centers for a portion of the cost of reimbursable health services provided to low-income, uninsured or under-insured residents. As such, the obligation to fund and the opportunity to benefit remains exactly the same for acute hospitals and there is no reason to excuse them from their longstanding obligation.

Shifting this cost to surcharge payers will significantly drive up the cost of health insurance coverage for individuals and small employers at a time when they are struggling with the cost of health care.  Likewise, imposing an additional assessment to fund any shortfall is unnecessary as there has been no data indicating if there is a shortfall or the rationale for assessing payors that would justify the need for this.

Additionally, shifting responsibility to surcharge payers as House Bill 2211 proposes would impact self-funded employer health benefit plans. The current configuration of the Health Safety Net Trust Fund, and the predecessor Uncompensated Care Fund, has never been challenged under the federal preemption provisions of the Employee Retirement Income Security Act (ERISA). With broad based funding that includes both hospitals and payers, the current law avoids an ERISA challenge, as it is not directed solely at health benefit plans. However, if the total liability were shifted to surcharge payers, the chances of a successful ERISA challenge that would preempt the application of the law to self-funded plans would increase significantly. This would be expensive

for the Commonwealth to litigate and would threaten the very viability of the fund. This is a risk not worth taking when the current funding approach under the law has worked successfully for many years and there is no reason to eliminate the longstanding and appropriate obligation of acute hospitals.

For the reasons stated above, MassAHU encourages you to Oppose House bills 595 and 2211 and Senate Bill 623.

Category: Position Statements

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