Before the Committee on Financial Services
The Massachusetts Medical Society wishes to be recorded in
strong opposition to Senate 441, "An Act Relative to an Affordable
Health Plan." The MMS recognizes that rising health care
premiums take an especially large toll on many small businesses in
Massachusetts, many physicians are small business owners
themselves. We also recognize that all health care providers
play a role in helping to moderate those increases. However,
we do not believe that this legislation will appropriately achieve
the underlying goal.
If passed, Senate 441 would require all physicians, as a
condition of licensure to accept "Affordable Health Plan" patients
at 110% of the Medicare rates. There is no predicting how
many patients will enroll and how that will impact a physician's
practice. There is no "out", as the bill specifies that the
physician would have to accept all such patients if he/she
participates in any other plan offered by that insurer. Such a plan
has the potential to exacerbate the "churning cycle" practice of
medicine, i.e., in order to remain financially viable under the
stress of lower reimbursement rates more patients have to be seen,
more procedures have to be done, less time is spent with each
patient forcing a decrease in quality and potential increase in the
cost of healthcare.
This bill regulates output prices without any recognition that
providers have limited control over input prices such as labor,
pharmaceuticals and medical devices. There are many factors
responsible for the increase in premiums. Rising unit costs and
greater utilization are the two that are most frequently
mentioned. While H.2100 may address unit costs by forcing
providers to accept 110% of Medicare rates, it does little to
address utilization, consumer preference, administrative costs,
employer demand, broker commissions, and health plan rating
practices that determine small group premiums. In fact, by
prohibiting the ability of physicians to cover the necessary costs
of care, this bill will only serve to exacerbate the impact of
chronic underfunding by government payers. It is also worth
noting that the bill contains no requirements for health plans to
do anything to reduce costs other than to offer an "affordable"
product. Nor does the bill address the flexibility insurance
companies have to differentially adjust rates for individual groups
and employers, flexibility that the insurers have used to great
effect, as illustrated by the significant differences in reported
premium increases among small groups. In order to effectively
moderate the rise in premiums, it is necessary to understand all
parts of the cost equation- until that is accomplished, legislation
such as Senate 441 is ill advised.
The MMS urges the Committee on Health Care Financing to report
Senate 441 out of committee unfavorably.
