Despite the economic downturn over the past five years, health care costs in Massachusetts have continued to skyrocket. Over that period, members of the Retailers Association of Massachusetts — Main Street businesses like grocery stores, restaurants, and jewelers — have endured an average annual increase of 14 percent in health insurance costs for their employees. It is true that the 2012 increases were the lowest over those five years, but that doesn’t mean it’s time to declare victory on costs. We must continue to press for lower premiums, particularly for small businesses.
The fault for excessive costs lies with everyone from hospitals to insurers, policymakers to consumers. The solutions aren’t simple but must be grounded in the principles of consumer transparency and empowerment, rather than continuing to cede control to the health care industry itself, or asking the government to figure it out.
The following four principles are the keys to an affordable future for Massachusetts:
■ Big health care in Massachusetts is simply obese and needs to go on a diet. After years of growing far in excess of the rest of the economy, it is time for many providers to slim down. Hospitals should grow no more than the economy in the short term. And with new productivity and efficiencies, some should also contract in the future to reflect what has happened in other industries. Payrolls represent close to 70 percent of hospital costs. Not only have the number of jobs at some providers increased, in no direct correlation to our essentially flat population, but salary and benefits from top to bottom may be out of step with the rest of us due to automatic new dollars coming to them every year from our premiums and taxes. For example, specialty hospital physicians earn considerably more than family doctors — the key practitioner in payment reform — and pay for Massachusetts nurses ranks second-highest in the nation. Consumers and taxpayers deserve full cost and quality transparency as well as payroll reporting by job category in order to prevent excessive pay and benefits.
■ Small businesses need the choices and buying leverage enjoyed by big businesses. The new non-profit small business cooperatives in Massachusetts are paving the way in creating new choices, lower costs, and better educated and healthier consumers. This model should be expanded and replicated across the country for non-taxpayer subsidized plans in lieu of government run exchanges. The exchanges are fine for the subsidized offerings in order to protect the taxpayer, but are a failed model for small businesses. You wouldn’t want the IRS to prepare your taxes and small businesses are not going to buy insurance from the same government that also audits them for compliance and assessments under the mandatory health insurance law.
■ The government must roll back costly mandated benefits and resist new assessments, both of which are arguably thinly veiled tax increases. Under political pressure by various specialty provider groups, far too many mandates and fees, have been enacted, which shift costs onto the backs of consumers and taxpayers under the guise of insurance. In vitro fertilization coverage, required in Massachusetts, is just one example. Everyone should have preventative and hospital coverage. Yet consumers should be given the option to buy other coverage only if they want or need those services — not by government mandate. To tell consumers that they must buy health insurance under the law, and then make them pay for benefits and assessments they don’t want, will never use, and can’t afford, is inflationary and unfair. It also empowers the receivers of our health care dollars, not the payers.
■ Finally, individuals must be financially rewarded for getting healthier and for becoming better consumers of health care. Unlike all other lines of insurance, health insurance has gone too far on socialized costs. If we ever want to get people to lose weight, quit smoking, prevent chronic conditions, and go to the lower cost yet equal quality provider, we must financially reward consumers for doing the right thing. We can agree that we should all help out with the cost of care for those whose conditions were obtained through bad luck; but today we pay too much for the costs of others brought about by bad behavior.
Consumers have leverage, and therefore low prices, for virtually all goods and services they purchase — except for health insurance. Allowing them to take control of their own dollars and decisions will move the economics in their favor. Failure to take these steps, while still mandating we all buy insurance, is simply not sustainable economically, legally, or politically.
Jon B. Hurst is president of the Retailers Association of Massachusetts.