October 8, 2003
Waltham, Massachusetts

Testimony of NASRO President Robert G. Gaw to Massachusetts Legislature's Joint Health Care Committee in Support of Bill S.686 to Establish New State Universal Health Insurance Benefits for Massachusetts Residents.

Mr. Chairman and Members of the Committee, I am here today at Gardner Auditorium at the Massachusetts Statehouse, in Boston to offer you the testimony of our business association in support of Bill S. 686 to establish the Massachusetts Health Care Trust.

In our view, the failure of the federal government to act to provide businesses with relief from the hyper price inflation in health insurance premiums of the past twenty years requires immediate state government intervention. Over the past twenty years our business members in Massachusetts have seen the average cost of the most comprehensive HMO health plan rise from an average of $68 a month for employee only coverage in 1983 to an average of $370 a month in 2003 for the same health plan.

In almost any other business this record of failure to control costs would result in business failure for the businesses raising the prices. Except, because health insurance is a business already highly regulated by state government, business failure is not an option so long as the state government allows these price increases to be passed through to businesses and to employees.

It has reached the point where frequently the monthly cost of family health insurance in Massachusetts is now equal to the monthly cost of a home mortgage payment or a rent payment. And we all know how much the price of housing in Massachusetts has also been inflated over the past twenty years.

Most of NASRO's members are small businesses and self-employed people who as people are directly paying for these premiums and on behalf of our members I am here today to speak for them and to help end the speculation that most businesses in Massachusetts do not support a new Massachusetts Universal Health Insurance benefit program.

NASRO members are practical people who are asking you to vote out of committee Bill 686 and allow a Senate and House vote because we know that it will take the power of state government to free us from being dominated by the market power of a small number of health insurance companies, drug companies and health care provider organizations. In order to vote this bill out of committee NASRO knows that the leadership and the members of the legislature need to envision exactly how we will be able to transition to a new health insurance system.

New roles must be found for the private organizations that currently run the health insurance system. Massachusetts health insurance organizations need to be transformed into claims administrators that compete for state contracts as is done with the highly sucessful government run Medicare program and no longer be responsible for manageing our risk. HMOs and other health care organizations need to be transformed into being strictly health care provider organizations and no longer be responsible for managing our risk. Health insurance marketing and sales organizations, including health insurance agents and brokers need to be transformed into communications and service organizations that operate in every Massachusetts town and in every city neighborhood. As part of a transition to a new health insurance system they will need to be capable of enrolling all eligible state residents and providing member service on an on going basis.

Our small businesses, non-profits and self-employed people have had considerable experience with how health insurance risk management is currently managed under the present health insurance system. Instead of having a socially responsible system that provides the same premium rates per person, the self employed person has the highest rates, the small businesses have the next highest rates and the large employers the lowest rates. This health insurance risk management based rating system has lead to the existence of a caste system of health insurance in Massachusetts that encourages businesses to make business decisions based on health insurance instead of normal business plan goals and objectives. This carries over to hiring decisions and is leading to businesses not hiring employees.

On top of this health insurance risk management rating system is a system of demographic segmentation that rates businesses based on the age of their employees. This is leading to a health insrance system that rewards businesses for hiring younger workers and can triple the monthly cost of hiring older workers.

When we compare these real world problems with the fears raised by the opponents of a Massachusetts Universal Health Insurance benefit program, who support an employer mandated system, we question their grasp of the financial realities that are confronting us all. The new state payroll tax needed to finance a Massachusetts Universal Health Insurance benefit program will be far less than the monthly premiums self employed people and small businesses are currently paying to the health insurance companies. It is certainly far far less than what we all would be paying for under an employer mandate system favored by the insurance companies and the health benefit administrators of conservative business and labor associations who have a vested interest in preserving their businesses.

Under a Massachusetts Universal Health Insurance benefit program everyone will be paying into the system, including younger employees, so no businesses will be placed at a competitive disadvantage for being socially responsible and providing their employees with good benefits, as is now the case. The exact benfit plan design adopted under a state run system will need to be reasonable and cost effective and eligibility controls strictly enforced to protect the new state system from being flooded by out of state residents in order for the system to be financially viable.

The issue of waits for treatments under a new state system is another objection that ignores the growing waits that are ocurring in the current system. It is well documented by number of recent studies that there is a growing number of businesses that are dropping health plan coverage or installing poor benefit plans is leading to a growing number of uninsured people that are uninsured at various times throughout the year. Without health insurance coverage the current waits are as long as it takes for people to afford to self pay large dedutibles or the premiums.

In conclusion, another way to recognize how poorly served most of us are by the current health insurance system is to take a look at the impact of improved communication between countries around the world and of the new immigrants who bring the experiences of their birth countries. A growing number of new immigrants are taking up the option of returning home for medical treatment, where although their birth country may be far less wealthy than the United States, it has a system of universal health insurance. Just think of what type of improved health care system could be built in the United States where GNP translates into a per person annual income of over $35,000 a year. The United States lead by the state of Massachusetts could rise to a number one ranking in vital health care statistics instead of being at the bottom of the developed world, where it is ranked today. If a large and developed state such as Massachusetts leads other states will follow just as they have backed us up before when we had the will to act first on most of the major social reforms of the past 250 years.