Massachusetts small businesses are getting help to pay for health insurance

Megg Mueller | May 20, 2010

Massachusetts may have come up with a way to offset the cost small businesses face as the provisions of the health care reform law come to light. The state of Massachusetts already requires their residents to carry health insurance coverage, and businesses with 10 or more full-time workers must provide some sort of medical insurance option for their employees. As many businesses struggle just to keep the doors open and the lights on, the hardship of providing adequate health insurance is being keenly felt--in Massachusetts and across the country.

To help these small businesses, the Massachusetts State Senate has approved a bill that requires its wealthier hospitals to "donate" $100 million dollars to help offset an employer's premium contributions, according to a story in the Los Angeles Times. Donate is not really the right word, as hospitals will have no choice but to contribute if they've actually made money.

Other facets of the bill:

  • Companies with 50 or fewer workers will be allowed to form cooperatives where they can purchase insurance at a lower cost.

  • Insurance providers have to put at least 90 percent of premium dollars toward health care costs, and 10 percent or less toward administrative costs.

  • Rate increases have to be sent to the Division of Insurance three months before they are due to take effect. The division requires to review the rates to see if the increases are reasonable.

  • Before the bill, employees' age is measured in five-year brackets, so every five years, employees move into a new bracket, resulting in an increase in costs for businesses. The new bill requires yearly age accounting, which may help to avoid that jump.
Hospitals are being targeted it would seem, because unlike many businesses in America today, they are actually making money. In fact, according to a story in the Boston Globe and reported on Boston.com, 80 percent of hospitals in the state actually made more money in 2009 than they did the previous year. The Governor Deval Patrick's office claims the state's hospitals had $17.2 billion in total net assets as of September 2008, which is the last date data is available. Hospitals are arguing those figures don't reflect the real picture, which includes the huge losses that were felt in 2009.

The state may be trying to address the discrepancy between those in the health care business who are making major profits, while others can't afford to insure their employees. The problem is, hospitals aren't the only bad guy in this scenario, nor do hospitals report revenue, income and losses in a regulated manner. That means, while one hospital may be appearing to do too well by state standards, another may be reporting lower numbers just based on a different accounting procedure. Where is the fairness in that? In an attempt to spread the burden of health care costs to everyone, the state of Massachusetts has simply added one more indefensible and litigious layer to the already huge pile that is our country's health care system.

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