In a surprising editorial yesterday, the Boston Globe has flipped on its full support for the ACA in Massachusetts. Without realizing it, they have also made a strong argument for not supporting the law’s one-sized-fits all blunt approach to reform in other states as well.
In a letter to federal regulators the day after Christmas 2012, Massachusetts officials floated the idea of a waiver from the new rating factors for small businesses. They warned that the changes will result in a significant number of citizens experiencing, “extreme premium increases.”
Recently finalized federal ACA regulations shut the door on that flexibility. Instead the state will now replace current law which statutorily requires rating factors within a 2-to-1 rating band, and allows insurers to rate on factors such as– age, industry type, participation-rates in a program, group size; intermediary discounts; and group purchasing cooperative discounts– with new federal rules that only permit health plans to adjust premiums based on individual versus family enrollment; geographic area; age (within a 3-to-1 rate band); and tobacco use.
For state officials to acknowledge an impact of the ACA of this magnitude publicly is a first in recent Massachusetts history. State leaders have spent the last 3 years trying to argue that the ACA only means wonderful things for the Commonwealth. In the meantime, I have been working to deepen the discussion about the impact that Obamacare will have on Massachusetts. (Examples here, here, here, here, here, and here.)
But back to The Globe editorial:
The overall result of those federal regulations is that small businesses with fewer industry risks, a proactive wellness approach, and (relatively) more employees will end up subsidizing companies that would otherwise be more expensive to insure. Because small businesses and individuals are merged into one pool as far as assessing risk, firms will also end up subsidizing the costs of coverage for people buying individual plans.
The Globe continues,
Failing to give credit to small firms that take meaningful steps to help their employees stay healthy is counterproductive…
Putting aside the fact that the small-group market has been subsidizing individual plans since 2006 when the markets were merged, this problem is even worse than The Globe points out. The incentives to self-insure under the ACA will be even greater for companies with 50-100 FTEs that have a relatively healthy workforce. These companies can self-insure and be exempt from all state, and some, federal mandates. This will result in an even sicker population being left in the small group marketplace, and higher premiums as a result. Robert Pear of NYT scratched the surface of this in a recent article. (I plan to write more on this in the future.)
Yet, The Globe is missing an even larger point. Using their counterproductive rationale, they should also object to community rating, rating bands, and guarantee issue rules as well. In other words, they should be advocating waiving the requirements that younger citizens at the beginning of their earning potential subsidize the care of older citizens that are at the top of their earning potential. Or reward individuals that are choosing to live a healthy lifestyle. Whether they realize it or not, Obamacare takes this choice away from states and hands down a one-size-fits-all set of regulations on all of these fronts.
But the end of the editorial is the most blatantly parochial:
The Obama administration needs to pay special attention here. Imposing one-size-fits-all regulations on a state that already has universal health care and is leading the way on cost containment is counterproductive to say the least.
Previous Globe editorials during the election would lead one to believe that Obamacare and Romneycare are the exact same, and any critics that say otherwise are only being political. Well today’s editorial walks back from that position, recognizing that states do in fact have different and unique markets. So why is Massachusetts so special that it deserves a waiver?
For The Globe it appears that coverage is king, regardless of the cost implications, or if we are even getting a good value. But what if other states have a unique advantage over the Commonwealth, don’t they deserve a waiver? Or what if they will be counterproductively impacted by the ACA’s regulations?
For example, market “reforms” being introduced for the first time in dozens of states nationally will cause premiums to spike anywhere from 30%–100+%, especially for young adults. Can we expect an editorial defending their efforts to obtain a waiver soon?
Massachusetts has embarked on a seven year experiment. It has worked on some fronts and not on others (Pioneer compiled a whole book on the subject). Yet to argue that we are special because we are leading the way on cost containment is a little premature, as highlighted on the front page of the Globe just yesterday, and should beg the question if the entire ACA’s “one-size-fits-all” approach is misguided.
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