Bad for Business: HHS pricing restrictions could hurt Massachusetts employers
Massachusetts employers who were at the forefront of healthcare reform in 2007 know firsthand that health reform is expensive. Employers in Massachusetts had several direct and indirect fees and taxes added on to their healthcare premium over the last five years. We had hoped the bulk of those rate spikes were behind us, but not so, based on recently released HHS regulations regarding PPACA, the federal health care reform law.
In addition to the number of new fees and taxes being added to health premiums in 2014, (see my earlier blog item on Obamageddon) comes troubling calculations and new rating restrictions that may adversely impact most Massachusetts employers, particularly those with less than 100 employees. WGA’s Health Reform consultants have analyzed many of these new pricing restrictions and anticipate cost increases of between 3% and 14% on top of annual trends (8%) and the other PPACA taxes (3%) detailed in an earlier blog.
Specifically, carriers will no longer be able to provide a pricing decrement to:
- preferred industries, (think office workers)
- industries with a larger number of employees, closer to 100 vs. say 5
- employer plans with an in-house wellness initiative
In addition, groups under 100 employees will no longer be able to offer 4-Tier rates, hurting single parents and spouse-only employees, and carriers may be forced to move every renewal to a January 1 calendar year rate.
We are hopeful that the Patrick administration, the Division of Insurance, and other state regulatory agencies, will work with HHS to obtain some relief to these overly restrictive pricing guidelines which will be bad for businesses and worse for covered employees in Massachusetts. Stay tuned.
About the Author
Christopher Nadeau is a Principal at William Gallagher Associates (WGA) and head of the Employee Benefits Group. He counsels his department to develop and redesign employee benefits programs to match the corporate philosophy, long-term needs and objectives of their clients. He is also an industry leader on Healthcare reform and the cost impact and administrative burden on employers.