Governor Deval Patrick formally asked federal officials yesterday to waive provisions of the Affordable Care Act (ACA) that could raise premiums for some small Bay State employers by more than 50 percent.
The governor, in a letter to Health and Human Services Secretary Kathleen Sebelius, requests a limited waiver that would allow Massachusetts to maintain the current nine rating factors in its merged individual and small-business health insurance market, and to maintain its practice of filing rates quarterly, rather than annually. The waiver is justified, according to Patrick, because the merged market has allowed Massachusetts to achieve a best-in-the-nation 97 percent insurance coverage for its citizens.
Associated Industries of Massachusetts, which wrote to Sebelius on July 10 to support the waiver request, immediately asked employers to urge members of the Massachusetts congressional delegation to back the governor.
“We are asking Massachusetts employers to contact their members of Congress and urge them to express their support of a waiver to Secretary Sebelius,” said Kristen Lepore, Vice President of Government Affairs at AIM.
“Governor Patrick correctly notes that Massachusetts has a health insurance system that is a model for the rest of the country. It makes no sense to introduce changes to that system that will increase premiums for struggling employers and their workers.”
Governor Patrick requested regulatory relief under terms of a bill passed by the Legislature last month requiring him to seek a waiver from the rating changes and annual rate filing. The ACA will limit to four the rating factors used to calculate small group health insurance premiums – age, family size, geographic area and tobacco use. Massachusetts law allows for additional consideration of industry, participation rate, group size, intermediary discount and group purchasing cooperatives.
“Of particular concern is the adverse impact that the rating factor changes will have on small employers and their employees. A waiver of rating factor requirements will avoid increases in health insurance premiums for a large segment of our small-employer population and their employees,” Patrick wrote to Sebelius.
The governor maintained that Massachusetts has had a strong guaranteed issue market for small employer health insurance since 1992 and remains the only state in the nation with a merged market that includes both individuals and small businesses. The stability provided by the merged market, along with legislative and regulatory reforms, has created a favorable insurance market for small employers during the past two years, according to Patrick.
A study by Massachusetts health insurance companies predicts that changes brought about by federal health care reform, independent of other rating factor changes, will raise premiums for Bay State employers by an average of 3.7 percent on top of typical base-rate increases. The study found that the rating changes could raise or lower rates for companies by up to 57 percent.
“Implementing CMS-9972-F in the Commonwealth will disrupt the relative stability that the insurance market has achieved in Massachusetts since our markets merged,” Patrick wrote.
The governor also agreed with a legal argument made by AIM in its letter to Sebelius that there is no language in federal health reform that expressly prohibits the government from granting waivers for rating factors. AIM told Sebelius that the Treasury Department’s decision to postpone until 2015 the requirement that larger employers provide health insurance to workers or pay penalties suggests that the administration enjoys broad administrative authority to take actions that advance the overall goal of expanding coverage.
AIM is grateful to the governor and the the Legislature for their actions to moderate the cost of health insurance for employers and workers alike.