Division of Insurance Certifies Two Group Purchasing Cooperatives, Creating Options for Small Businesses and Individuals to Potentially Save on Health Insurance
BOSTON - January 3, 2012 - The Patrick-Murray Administration's Division of Insurance today announced it has certified the first two organizations as group purchasing cooperatives, creating another potential avenue for small businesses and individuals to save on health insurance rates.
The group purchasing cooperatives were established in economic development reform legislation signed by Governor Patrick in August 2010. The Retailers Association of Massachusetts and the Massachusetts Association of Chamber of Commerce Executives have been certified as group purchasing cooperatives, beginning Jan. 1, 2012.
"Cooperatives are a key part of the Patrick-Murray Administration's efforts to lower health care costs for small businesses and working families," said Insurance Commissioner Joseph G. Murphy. "Small businesses will be gathered under one umbrella and the approved cooperatives will obtain combined market power that can lead to lower rates for cooperative members."
"This is an important step forward as it gives small businesses, their employees and families a shot at paying similar premiums for similar coverage as big businesses and government now do," said Jon B. Hurst, President of the Retailers Association of Massachusetts. "The Patrick Administration and the Legislature deserve real credit for implementing this group buying tool as it is going to provide real relief for small employers."
By law, up to six certified group purchasing cooperatives can take on as many as 85,000 small group covered lives, as stipulated in the legislation signed by Governor Patrick. Along with offering potential lower health insurance rates, the cooperatives must also coordinate wellness programs for members. After achieving cooperative status, the cooperatives now will ask insurance carriers to develop products that are designed by the cooperatives. The cooperatives may be able to offer products in the spring or summer of 2012. Additional applications are being reviewed and may be approved in the next few months.
There are currently 45 qualified associations from around Massachusetts that can enter into agreements with the cooperatives (see the list of all qualified associations). This includes 32 local or regional Chambers of Commerce, and other professional and industry organizations. Robert Bradford, the President of the North Shore Chamber of Commerce which is one of the qualified associations, said the approach will help stabilize health insurance costs for small businesses.
"The creation of small group health insurance collaboratives is welcome news for the small business community. The ability to join a health insurance co-op will make a real difference to small businesses who have long struggled to provide appropriate and affordable health coverage for their employees," said Bonnie Biocchi, the President and CEO of the MetroWest Chamber of Commerce, one of the qualified organizations. "The MetroWest Chamber of Commerce applauds the leadership of Governor Patrick and his colleagues at the Division of Insurance for pressing forward on this important issue."
The formation of the cooperatives is part of Governor Patrick's larger health care cost containment efforts. The August 2010 law also included the mandatory creation of limited network plans by health insurance carriers, which will be at least 12 percent less costly than regular network plans. Many of those plans, which either have tiered or smaller provider networks, are to be available in many parts of the state in early 2012. The Administration also anticipates the Legislature will take action on cost containment legislation in early 2012, which will include payment reform that will lead to savings.
"Small businesses and individuals have struggled for years with rapidly increasing health care costs, and putting the brakes on those increases is a top priority for the Patrick-Murray Administration as we maintain one of the best economic development climates in the nation," said Barbara Anthony, the Undersecretary of the Office of Consumer Affairs and Business Regulation. "Group cooperatives, like limited network plans and Governor Patrick's pending cost containment legislation, are part of a coordinated effort to bring costs down."
For more information on the Division of Insurance and health insurance costs, visit www.mass.gov/doi. The Division of Insurance is an agency within the Office of Consumer Affairs and Business Regulation. Follow the Office at www.mass.gov/consumer, its Consumer Connections Blog and at its Twitter feed, @Mass_Consumer.