Massachusetts Businesses and Insurers Form Coalition to Fight Rising Health Care Costs

Published August 1, 2008

Massachusetts businesses have joined several of the state’s health insurers to form a new consumer advocacy group, the Coalition for Affordable Health Coverage, seeking to slow health insurance premium increases and prevent the financial burden on employers from being further increased through continued attempts by the Massachusetts government to “universalize” health insurance in the Bay State.

Experts commended the new effort. But John R. Graham, director of health care studies at the Pacific Research Institute, also warned, “The state has taken the initiative on health care, and the private sector will have to fight hard to take it back.”

Failed Vigilance

“Massachusetts businesses were not vigilant enough when former governor [Mitt] Romney [R] and the legislature imposed a health reform that is proving far more expensive than promised,” said Graham. “Unfortunately, Massachusetts businesses let the proverbial fox inside the henhouse when they did not resist the state’s imposing mandatory fees on businesses to provide health care.”

Devon Herrick, a senior fellow at the National Center for Policy Analysis, agreed, saying Massachusetts’s current government-based plan is “destined to fail, because it has no cost control whatsoever.”

Among the coalition’s goals are fighting government attempts to increase financial penalties on employers who do not provide health insurance for their employees and opposing arbitrary changes to the definition of “reasonable employer contributions” to employee benefit plans under future overhauls of the state’s health care legislation.

The coalition “wants to prevent the state from raising the level of employer contribution required to avoid a $295-per-employee annual assessment,” said Eileen McAnneny, a coalition cofounder and vice president of Associated Industries of Massachusetts.

Costs Have Ballooned

Commercial insurance premiums in the state have increased by an average of 10 percent in each of the past seven years. Massachusetts’s per-capita health insurance spending is among the highest in the country.

“Many U.S. residents wrongly equate higher spending with better care,” said Charles Baker, CEO of Harvard Pilgrim Health Care, Massachusetts’s second-largest health insurer. “The notion that the more you spend the better you are in health care is a giant urban myth.”

“Allowing consumers to choose a consumer-driven plan that meets their needs is better than forcing people into expensive plans with low cost-sharing, which the Commonwealth Connector Board favors,” said Herrick, referring to the organization responsible for overseeing Massachusetts’s government-based health insurance program.

Cost-Sharing Cuts Waste

Baker agreed, saying the most effective means of reforming the health care system would be to implement “consumer-driven health care, where higher deductibles and copayments are paid by patients as an incentive for not going to a doctor too frequently or use other unnecessary medical services.”

“People can reduce their spending by merely explaining to their physician they have a significant cost-sharing requirement in their coverage plan, and by asking for prices,” said Herrick.

“The RAND Health Insurance Experiment proved 30 years ago that cost-sharing reduces spending by about 30 percent with almost no effect on health,” Herrick explained.

Dr. Sanjit Bagchi ([email protected]) writes from India.