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Massachusetts health care — wonky, with a healthy dose of reality

Senate Takes Up ACA Bill Today

Senate Takes Up ACA Bill Today

June 26, 2013

The Massachusetts state Senate is planning to vote today on legislation to implement the Affordable Care Act in Massachusetts.

The bill (H. 3452) was approved by the Senate Ways and Means Committee yesterday. The Committee recommended several technical amendments, and one curious symbolic amendment that purports to address a lingering, bogus issue that apparently cannot be put to rest.

The issue is the gradual phase-out of a number of state premium adjustments that are banned by the ACA. We've written about this several times (here, and here), and yet the meme keeps spreading that the ACA will cause premiums to spike for small businesses in Massachusetts.

You can look at our original post for a fuller explanation, but in essence state law has allowed insurance companies to tack on a surcharge on top of base premiums for individuals and smaller small businesses, with up to about 35 employees. The same law has allowed insurers to give a discount to larger small businesses, with from around 35 to 50 employees. The surcharges and discounts balanced each other out, but distorted the market.

The ACA bans both the special surcharges, and the special discounts. They are supposed to go away on January 1, 2014, but the state got a waiver letting us have a 3-year transition period where they phase out in stages.

So those firms that now get an unjustified discount will lose their discount over the next 3 years. Their rates will go up. And those companies that now have surcharges will stop having to pay the extra surcharge. Their rates will go down. In the end, everyone will be at the standard, fair base rate, without artificial discounts and surcharges.

Here's the bottom line: A study commissioned by the DOI found that on whole, three-fourths of all people in individual or small group plans will either see a premium decrease, or a modest premium increase (under 3.3% a year).

Those firms facing "increases" are really only losing a discount they didn't deserve. And this analysis doesn't take into account new wellness tax credits, as well as the federal ACA small business tax credit.

Anyway, the Senate Ways and Means amendment demands that Governor Patrick try again to get a waiver from the federal law (we were the only state to get a 3-year phase-out), which, if granted, would mean higher premiums for thousands of individuals and smaller small businesses.

We will be advocating for some other amendments during the floor debate, including extending current affordability protections now part of the Commonwealth Care statute, and ensuring transparency for new federal funds Massachusetts will be getting due to the ACA.

We congratulate the Senate on its strong support of the ACA, and expect a bill to be at the Governor's desk shortly. Friday would be a fitting day, the anniversary of the Supreme Court's decision to uphold the ACA.
-Brian Rosman