Many people have received coverage via health care reform and that has been good for the Commonwealth. However, it’s clear now, that there have been losers too— small businesses. The Globe article yesterday highlighted the situation for small businesses today: http://www.boston.com/business/articles/2009/11/15/blue_cross_rates_for_small_businesses_to_surge?mode=PF
The state is holding hearings to examine the cause of these increases and to assess whether changes should be made to how small businesses purchase insurance. We should examine what has caused these increases in rates, was it the merger with the non-group market (something that can only explain a very small increase, by my accounting), increases due to benefit mandates (like the Rx coverage decision made by the Connector), or simply health care trends (as the BCBS representative posits)? Whatever the reason, this situation is simply unsustainable.
The Connector could have moved on this issue earlier and by implementing a bolder plan for small employers. A defined contribution plan for small employers with full choice of plans for employees similar to that being tested now in Utah would have been a fine start. Instead, they implemented a “pilot” contributory plan (which at last count had only 145 employers with an average size of 3 enrolled). This plan is certainly not the answer small employers were looking for.
All is not lost though. There is something small employers can do right now without any further state action. Drop coverage, pay the $295 per employee fee to the state, raise employee salaries accordingly, and set up a 125 plan. Employees can go to the Connector for the purchase of health insurance. The employee can use pre-tax dollars to purchase health insurance, have a full choice of plans (bronze, silver or gold) and the employer can start worrying about his/her business and stop worrying about this uncontrollable cost.