Mass. ranked worst, R.I. 10th-worst <br> for policies affecting health costs

OAKTON, Va. – Rhode Island is the 10th-worst state for policies affecting the cost of health care for small businesses, and Massachusetts is the worst, in the latest ranking by the Small Business & Entrepreneurship Council.
“If policymakers are serious about having a positive impact on health care, then significantly limiting the number of mandates and regulations makes sense at the federal and state levels,” the SBE Council said in a statement today.
The advocacy group’s Health Care Policy Cost Index was prepared by the SBE Council’s chief economist, Raymond J. Keating, based on several measures. Its ratings add points for each policy considered to boost costs for businesses.
The index – whose rankings are similar to those assigned by the SBE Council in December, in its Small Business Survival Index (READ MORE) – is based on evaluations of each state’s position on five key measures:
• Mandates imposed on health insurers, such as Rhode Island’s requirement that health insurers must cover the cost of treatment for Lyme disease. “These mandates, while often sounding reasonable, carry real and sometimes significant costs,” Keating writes in the report, dated Feb. 3. For each such mandate a state imposes, the index adds 0.05 points to its score.
• “Pay or play” mandates for businesses. Such rules, under which a state requires employers to either provide health insurance coverage to their workers or pay a tax toward government-provided care, are “the most costly mandates for businesses,” Keating says. The index assigns 0 points to states without such a mandate and 1 point to those with pay-or-play policies.
• Community-rating mandates for the small-group market, requiring that insurers charge the same fees to all clients in a defined region regardless of their health risks. “That translates into higher costs across the board,” Keating writes. He gives a score of 0 to states with no such mandates, a 0.33 to states imposing “rate bands,” a 0.66 to states imposing adjusted community rating and a 1 to states imposing “pure” community rating.
• Guaranteed-issue mandate for the self-employed group-of-one market: “Guaranteed issue means that individuals may not be turned down for health insurance coverage no matter the condition of their health or risk status. So, incentives for people to purchase health insurance before they become ill are removed. A guaranteed-issue mandate raises health care costs, in this case for the self-employed,” Keating says. He assigns a score of 1 to states with such guaranteed-issue mandates, and a 0 to states without such mandates.
• State tax deductibility for health savings accounts (HSAs). These tax-free accounts “provide much-needed choice, competition and consumer control,” Keating writes. States that impose no personal income tax, or offering a tax credit to individuals who make contributions to an HSA, receive a score of 0; states that tax such contributions receive a 1.
Rhode Island and Massachusetts both offer tax deductions for HSA contributions, so each state received 0 points in that category.
The Ocean State – unlike its northern neighbor – also has no pay-or-play program, so it received 0 points in that category while Massachusetts received 1. (Note: According to Consumer Reports’ Health.org, “Massachusetts currently has the country’s most comprehensive pay-or-play plan, with requirements that all individuals have health insurance, either through their employer, through a subsidized government program or on their own. Massachusetts citizens who do not have health insurance face penalties.”)
But Massachusetts and Rhode Island each received 1 point for imposing a guaranteed-issue mandate. Both states also were penalized for their community-rating mandates: Rhode Island received 0.33 points for its rate-band program, while Massachusetts received 0.66 points for its adjusted community-ratings mandate. And Rhode Island was penalized another 2.35 points for individual mandates, while Massachusetts was penalized 2.15 points.
Massachusetts was last among the 50 states and District of Columbia, with its final score of 4.81 points. Next highest were Washington state and Maine (both 4.31 points), Connecticut (4.21), Vermont (4.01), California (3.83), Maryland (3.83), Colorado (3.83), New Jersey (3.76), New York (3.75) Florida (3.73) and Rhode Island (3.68).
Receiving the “best” ranking for health policy costs was Idaho, with 1.08 points. It was followed by Utah (1.48), Iowa (1.58), Michigan and Ohio (1.63), Alaska (1.73), South Carolina (1.78), South Dakota (1.88), Pennsylvania (1.90) and, tied for 10th place, Nebraska and Wyoming (1.93 points apiece).
The index is based largely on data from reports last year by the Council for Affordable Health Insurance and the Henry J. Kaiser Family Foundation. It also includes data from the American Benefits Council, the State of Vermont, the Hawaii Uninsured Project and Families USA, as well as a 2007 Kaiser Foundation report on the small-group health insurance market.
The Small Business & Entrepreneurship Council is a nonprofit research and lobbying group founded to protect and support the small-business sector. Additional information – including the five-page report, “Health Care Policy Cost Index: Ranking the States According to Policies Affecting the Cost of Health Care,” by SBE Council Chief Economist Raymond J. Keating – is available at www.SBECouncil.org.