BOSTON — There were five "key themes" listed on the poster board next to Gov. Charlie Baker as he introduced a sweeping health care bill on Friday afternoon, including one that is also supported by an executive order the governor signed the same day.
In addition to rejiggering how health care providers and insurers spend money, the governor's bill also looks to "promote insurance market reforms," the fourth of five key themes read. To execute that task, Baker on Friday signed an executive order to create a commission to study the health of the Massachusetts merged market, in search of a better understanding of what's driving health care costs up for small and mid-sized employers.
"Massachusetts has the lowest uninsured rate in the country, but continues to be one of the most expensive states in the country for health care," Lt. Gov. Karyn Polito said at Friday's press conference. "As I've traveled the state, I've heard from employers and individuals about the rising health care costs. A stable and affordable insurance market is key to maintaining our near-universal coverage levels."
The latest annual report from the Center for Health Information and Analysis showed that between 2017 and 2018, premiums increased by 5.6% overall — to $509 million per member per month. The previous year's growth rate was 4.8%. In 2018, Massachusetts employees directly paid 26 to 30% of their total premium costs, CHIA said.
The governor's executive order convenes the "Massachusetts Merged Market Advisory Council," a group of insurers, employers, brokers and consumers to look into "many of the emerging federal policy changes and dynamics that may impact the Massachusetts merged market," Baker wrote in his legislative filing letter.
In 2017, there were 289,565 people buying insurance as an individual, representing 6.2% of the total, and the small group sector accounted for 473,157 people or about 10.2% of the total, according to CHIA.
Along with the secretary of health and human services, insurance commissioner and Group Insurance Commission chief, the unpaid group will "oversee an independent actuarial analysis of the merged market" and produce a report that considers the stability of the risk pool, cost and premium growth drivers, strategies to "promote affordability for the small group market," and the establishment of a reinsurance program.
The group's report is due April 30, 2020.
At his press conference Friday, the governor said his administration "talked a lot" about whether to go with a merged market commission or to propose its own legislative reforms in the bill he filed before deciding "the best thing to do here is to get an agreement on the facts first."
"The reason we went with the fact-finding commission was because it became very clear to us, the more people we talked to, that depending upon which piece of this elephant you have your hands on, you have a different appreciation and understanding for what it is that's actually happening in the individual and the small group market," Baker said.
After opening the door to the idea in a 2006 health care law, Massachusetts merged the individual and small group insurance markets in July 2007 with the expectation that small group premiums would increase 1 to 1.5% and that individual premiums would drop about 15%, and that more people would become insured.
A 2018 report from PricewaterhouseCoopers found that "the estimated premium impacts were fairly accurate, with small group premiums increasing by 2.6"%. The report said Massachusetts, Vermont and Washington, D.C., are the only jurisdictions to have implemented a merged market.
"If you go all the way back to when this was originally done I opposed the merging of the individual and small group market, but I looked at the data, I talked to a lot of the players, the commissioner [of insurance] spent a ton of time with us on this, and we really need to get some agreement about the facts, and the commission we thought was the best way to do that," Baker said.
Asked Friday whether the commission will look at de-merging the markets, Baker said, "it's going to look at every element of it."