Testimony of the Retailers Association of Massachusetts
William C. Rennie, Vice President

Before the Joint Committee on Health Care Financing
May 6, 2009

Re: H.1106, An Act Relative to Prescription Drug Coverage &
 S.526, An Act Relative to Prescription Drug Coverage 

The Retailers Association of Massachusetts (RAM) is a statewide trade association of over 3,000 member companies.  Our membership ranges from independent “mom and pop” retailers to larger, national retail chains.  The retail industry's contributions to the Commonwealth include over $100 billion in annual sales; $4 billion in annual sales and use taxes; approximately 18% of Massachusetts jobs; and operation in over 38,000 locations across the state.

On behalf of RAM, I appear before you today to offer comments on legislation relative to the Commonwealth Health Insurance Connector Authority's ability to mandate that prescription drug coverage be included in the Minimum Creditable Coverage (MCC) standard.  We support S.526 and H.1106 which seek to eliminate the prescription drug coverage mandate.

RAM members, small businesses and their employees are looking to health care reform not to limit but to increase their options both on choice and affordability of product.  The cost of health insurance and health care is a major barrier to economic growth in Massachusetts and employers struggle on a daily basis to afford to provide coverage to their employees.  Given that the Connector was envisioned to be a vehicle by which small businesses can access affordable products, we believe that insurance providers must be given as much flexibility as possible to craft and design low cost offerings.   

These bills would permit consumers and employers to purchase health care coverage in the commercial marketplace that does not include prescription drug coverage without violating the standard for MCC.  At a time when consumers and employers are struggling to deal with rising health care costs, this bill will help to ensure that they have the ability to determine the coverage that best meets their needs.  In May of 2008, nearly 50,000 Massachusetts residents were enrolled in a plan without prescription drug coverage. Effective January 1, 2009, those same individuals were 
forced to buy up in coverage to a plan that included prescription drug coverage to comply with MCC or face a tax penalty under the individual mandate.

As a result of the change, thousands of individuals and the employers that provide their coverage were forced to purchase more expensive coverage even though their previous existing plans met their needs.  Many consumers do not take prescription drugs, opt to purchase them in pre-tax dollars through a flexible spending account, or opt to pay lower monthly premiums and pay out-of-pocket if and when they must fill a prescription.  For individuals who wish to have prescription drug coverage, there are multiple options available to them.  Many retail pharmacies and other entities, such as AAA, offer programs for discounts on prescription drugs. Many retail pharmacies now offer a long list of drugs for as little as $4.00.

Again, mandating the inclusion of prescription drug coverage in all policies eliminated a number of lower cost products previously available in the market and guaranteed immediate cost increases for those individuals that were in such products.  The standard set by the Connector Board takes a one size fits all approach and imposes it upon a very diverse population.  For all of the progress we have made on access to health insurance, we have yet to address the important issue of cost.  Important steps were taken last session but will take time to implement.  The stricter MCC standard has added further to the cost burden on the purchasers of health insurance, with small businesses and their employees bearing a disproportionate share of those costs given their lack of choices in today's market.  We believe it was unfair to add these additional costs and further restrictions onto the backs of the Commonwealth's small businesses, who continue to wait for the Connector to deliver small employer group plans.  Those contributory plans, initially expected to be available as the Connector launched in the spring of 2007, were promoted to thousands of small employers across the state at numerous health reform education and compliance seminars.  Small employers and their employees were told that these plans were what was in the new law for them.  Fast forward to today and small businesses are still waiting, having suffered though more years of double digit health insurance premium increases.  In light of this broken promise, we believe that the imposition of the amended, stricter MCC standard on January 1 was unjust.

RAM believes that minimum creditable coverage should be just that – the minimum necessary to qualify an individual under the individual mandate.  MCC was not meant to be a universal standard of adequacy.  Through this reform, while the Commonwealth seeks to address the issue of access for the uninsured, we must make every effort not to increase the burden on employers currently offering coverage.  Health care costs remain the number one concern for Massachusetts employers.  Requiring further expanded coverage of specific benefits and limiting options available will only make it more difficult for employers to continue to offer coverage, as the new standards have forced many employers and their workers to purchase more expensive plans.  Massachusetts is now the only state in the nation to require that all adults purchase health insurance and that all of its residents have prescription drug coverage. 

RAM favors a standard for MCC that does not mandate the inclusion of prescription drug coverage and asks the Committee to favorably endorse this legislation.

I thank you for the opportunity to comment and look forward to working together with you on the continued implementation of Chapter 58.  Please do not hesitate to contact me if I can be of any assistance to you with regard to your considerations of these matters.