President Obama’s health care law has had perhaps no stronger base of support than Massachusetts. The heavily Democratic state pioneered universal health coverage, and its governor, Deval Patrick, is a staunch defender of the law and a close friend of the president.
But now Massachusetts is pleading for relief from a key aspect of the law, potentially putting the governor and the president in an awkward position.
Last week, Democratic state lawmakers sent a bill to Patrick’s desk that orders him to seek the Obama administration’s blessing to continue offering health insurance discounts to certain small businesses.
Without that permission, business groups say, the federal Affordable Care Act will cause many of those discounts to disappear, and 60 percent of the state’s small companies could see premiums increase.
The bill is unusual in that it forces Patrick to effectively transmit business groups’ grievances with the president’s signature domestic imitative to his allies in the Obama administration.
The governor signed the legislation in private on Friday when the State House was empty and many voters were on vacation. He did not issue a press release, which he often does when he wants to promote bills he is signing.
“It’s a perfect example of when policy slams into politics,” said Joshua Archambault, director of health care policy at the Pioneer Institute, a conservative research group in Boston. “For the last three years, Massachusetts officials have been trying to build the case that the Affordable Care Act will be a complete windfall for Massachusetts, and that is proving simply not to be true.”
Small-business groups that helped push the bill through the Legislature see it as an important moment that could raise their complaints about the federal law to a national level.
“If Massachusetts truly believes we are a leader and we’ve fixed the problems for small businesses, then we should stand up and ask very aggressively for a waiver or a change in the regulations because it’s simply bad public policy what they’re doing to Massachusetts and other states,” said Jon Hurst, president of the Retailers Association of Massachusetts.
Patrick said last week that he asked the Obama administration for a waiver earlier this year and was told it would not be legal. He said he did not believe the bill would persuade the Obama administration to issue a waiver now. The bill also seeks to reconcile differences between Massachusetts’s mandatory health law and the federal version.
“It’s a request that we have made already,” Patrick said Wednesday. “If they want to pass a bill so that they have voted to ask me to do something I’ve already done, fine. No harm, no foul.”
Democrats who backed the bill in the Legislature said it is not enough for Patrick to have asked the Obama administration for a waiver without forcing the issue further.
“We were never able to identify anything as a formal request and a formal response to a full waiver,” said state Senator James T. Welch, a West Springfield Democrat who is cochairman of the Committee on Health Care Financing. “What we’re looking for is a formal request and a formal response.”
At issue is a waiver that would let Massachusetts insurers continue to use nine factors when calculating premiums for small businesses. Those factors allow insurers to provide discounts to businesses that offers wellness initiatives, join cooperatives, or whose employees work in relatively safe industries.
Without a waiver, those nine factors will have to be replaced by just four factors allowed under the Affordable Care Act.
The change could result in higher premiums for 60 percent of Massachusetts’s small businesses, according to an analysis of state insurance data by the Pioneer Institute. About 181,000 businesses could face increases of more than 10 percent, while 47,757 could see increases of more than 30 percent.
“The current policy is taking businesses down a path where they’re going to have to contract, and cut back on employment, and cut back on the number of insured,” Hurst said.
Patrick points out that he has been able to secure some relief for small businesses: The Obama administration is allowing the state to make the transition from nine factors to four over a three-year period, to soften the blow on businesses. Other states that use their own factors will have to make the transition to four in just one year.
“Massachusetts is the only state in the nation to have a three-year transition, so our businesses will fair better than their counterparts,” said Glen Shor, Patrick’s budget chief. Shor also pointed out that the federal law gives tax credits to help small businesses buy health insurance and that many individuals and small companies will see lower premiums.
Brian Rosman, research director at Health Care For All, an advocacy group that supports universal health coverage, said he hopes the Obama administration denies the waiver. He said the nine factors the state now uses “distort the market” by giving discounts to some businesses that must be subsidized by surcharges on other companies.
“The businesses that are now getting this discount are, of course, complaining, and that’s to be expected,” Rosman said. “But the businesses that are paying an extra surcharge should be grateful that the ACA is making the rates in Massachusetts more rational and more fair.”
But even some strong defenders of the federal law say the waiver would give Massachusetts a reprieve from one of its downsides.
“The country is looking at us, and we are, appropriately, leading the country,” said Donald M. Berwick, Obama’s former Medicare and Medicaid chief and a Democratic candidate for governor. “I’m happy to see us request latitude to continue what, I think, is an important example for the country.”